Tuesday, December 30, 2014

China's economy isn't No. 1 — but if it were, so what?

by Jeff Jacoby

HAVE YOU been lying awake at night, fretting over the news that China has surpassed the United States to become the world's largest economy? If so, let me offer some reassuring advice: Turn over and go back to sleep.

The International Monetary Fund's most recent compilation of global economic data isn't exactly a page-turner, but buried among its eye-glazing statistical appendices was a detail that had some financial writers hyperventilating. In 2014, the IMF estimates, China's economic output will total $17.6 trillion, putting it slightly ahead of the United States, where GDP this year is valued at $17.4 trillion. That means China now exercises 16.5 percent of the world's economic clout, outranking the United State, with 16.3 percent.

Assuming the IMF's calculations are right, the flustered headlines aren't surprising. "It's official: America is now No. 2," announced MarketWatch. "China just overtook the US as the world's largest economy," a Business Insider story was titled. Vanity Fair's forthcoming issue proclaims this "The Chinese Century" — and illustrates it with an image of a panda crushing an eagle.

But what if those IMF calculations aren't right? Or to be more precise, aren't all that meaningful?

The standard yardstick for measuring and comparing different economies is to convert each country's data into a common currency (typically the US dollar), using prevailing foreign-exchange rates. By that benchmark, China's economy still lags well behind America's, by roughly $7 trillion as of 2014.

It is only by expressing each country's GDP in terms of what analysts call "purchasing-power parity," or PPP, that China can be portrayed as the foremost economic power on Earth. This is a way of adjusting the value of national currencies to account for different costs of living in different countries. The intention is to yield a value that makes comparisons more realistic, at least in terms of buying power — "so a Starbucks venti Frappucino served in Beijing," as MarketWatch's Brett Arends puts it, "counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders."

But while purchasing-power parity is a useful theoretical concept, it isn't money in the bank. Theoretical concepts can't be spent. The Chinese can't use PPP currency to pay for airplanes and oil and computers. They have to pay, like everyone else, in real currency at prevailing exchange rates. And by that measure, the United States remains the most potent economic force on the planet.

More to the point, China is nowhere near outstripping America in per-capita terms, the most important gauge of a nation's economic strength.

With a population nearing 1.4 billion, China has a vast distance to cover before its economic output per person begins to resemble America's. According to the IMF, China's economic output this year — after adjusting for purchasing power — will amount to $12,893 per person. The comparable value for the United States is more than four times as much: $54,678. Even a booming Chinese economy will need time to close such a yawning gap. It took Americans almost 75 years to pull it off. China's per-capita GDP stands today where America's stood in 1940.

And China faces a daunting challenge. Its fertility rate has fallen sharply, and its population is aging. In 1980, its median age was 22; today it is 35; by 2050 it is likely to reach 49. With fewer children being born today, China's workforce will shrink tomorrow, even as its population of nonworking elderly swells. As the Economist observes, "China will grow old before it gets rich."

That isn't a prospect we should relish. There is no competition for the title of World's Largest Economy; with or without the "We're No. 1" bragging rights, Americans' quality of life will remain high. We should welcome other people's progress up the economic ladder, just as we welcome their advances in democratic liberties and human rights. And we should regret any handicap that impedes their gains — whether that handicap is an authoritarian Communist government or a looming demographic collapse.

A world of burgeoning GDPs will be a happier, healthier, cleaner, and more educated world. Nearly one-fifth of the human race lives in China, and the better off those men, women and children are, the better off we're all likely to be. When other nations prosper, America isn't the poorer.

China ranks No. 1 in some things — population, exports, electricity, telephone use. By the most meaningful standard, however, its economy is still far from the world's most largest. Will it get there one day? Let's hope so.



Be less romantic about the past

by Jeff Jacoby











The cynic's definition of optimist is a man who never had much experience. Bettmann knew better, and was happier for it. He relished being "a man of experience who remains a confirmed optimist." Forty years on, his book is still in print — and more than ever an antidote to the blues, holiday or otherwise.



CNN Executive Asks Pro-Israel Teenage Activist: 'Are You Brain Dead?'

Brain dead to call terrorism terrorism, apparently.  Such is the world of CNN



The attackers were two Palestinian cousins, Abed Abu Jamal and Ghassan Muhammad Abu Jamal, and the student at Golda Och Academy in West Orange, New Jersey, said she was horrified when the first CNN headline on the incident read “Two Palestinians Killed,” followed by “Four Israelis, Two Palestinians Killed” in a story that claimed the violence took place inside a mosque and not a synagogue.

“CNN does not have a great reputation for a fair and balanced coverage of events involving Israel,” the student noted before stating that many cars throughout the country have bumper stickers with Hebrew words that translated in English read “CNN Lies.”

One month later, on December 21, more than 700 Jewish teenagers from around North America gathered in Atlanta, Georgia, for the United Synagogue Youth’s 64th annual international convention.

On the following day, Nagelberg joined approximately 30 other students and staff members “to listen to representatives from CNN, which has headquarters right next to our convention center.”

During an hour of listening to Davis and CNN's mobile editor, Etan Horrowitz, “I felt my jaw drop lower and lower in disbelief, and the scowl on my face grow increasingly intense in anger and frustration,” she stated.

“Davis told me and my peers and staff that it is up to us, and everyone else, as consumers to check other news sources if we think we may want more information,” Nagelberg recounted.

“I was confused” by his remarks, she indicated. “Isn’t it a news organization’s job to provide the facts? While an educated reader should always check a variety of news sources for different presentations, one should expect a leading news distributor to get the basic story right.”

Nagelberg continued: “Davis’s explanations for the aforementioned, horribly misleading and false headlines boiled down to human error.”

He then said that “these headlines only surfaced for minutes before being taken down.” However, he claimed, someone took a screenshot and circulated those headlines around the world, which was not CNN's fault.

“As our time with the CNN execs came to a close,” Nagelberg stated, “Davis explained to those of us that … when one person has an opinion about anything, a news report may seem wrong to that person. However, to everyone else, it could be perfectly right.”

After deciding that the answers the students received were nothing short of “a farce,” Nagelberg “decided to go get in one last word” with Davis, who said that calling the incident “a terrorist attack” would mean they had jumped to a conclusion without any evidence to back it up.

“Okay,” the high school senior said, “fully understanding the weight that the word 'terrorist' carries. But by the time it was known that it was four Israelis and two Palestinians, it was known that there were meat cleavers and stabbings involved. Why couldn’t you call it an ‘attack’?”

His response? “You’ve got to be kidding me! One word? Are you brain dead?”

At the end of her article, Nagelberg had harsh words for Davis.

    "To answer your question: Yes, I am serious. Yes, it’s one word. It makes a difference. No, I am not brain dead. I am a 17-year-old girl from New Jersey who is appalled by the biased media coverage of Israel here in America.

    How many mornings must I wake up in fear as I reach for my phone to scroll through countless stories, from countless news organizations, trying to get a complete picture of what happened in my homeland while I slept?

“How many hashtag campaigns, angry teenagers [and] nasty emails must you see before you understand that your news is not balanced, is not fair, and is not accurate?” she continued.

“I cannot sit back any longer and watch people like you continue to misreport the truth,” Nagelberg stated. “The time for change is now, and if you are not prepared to be a part of the change, I ask you: ‘Are you serious? … Are you brain dead?’”

If this pro-Israel activist isn't getting the information she's looking for on CNN, perhaps it's time to turn to another cable news channel, one that has “fair and balanced” as its motto.







No comments: