David Goldman, who writes at PJ Media largely on issues of foreign affairs, has just weighed in with a new (March 12) piece called “Why China Is Winning.” Goldman’s article never states explicitly what exactly China is “winning,” but from the context it looks to be some combination of economic success and/or military hegemony.

And why is China “winning”? Goldman’s answer boils down to one word, “meritocracy”:

Meritocracy will win, because it always does, and all the more so in a high-tech, winner-take-all world.

In predicting China’s imminent “win,” Goldman joins a long list big-shot pundits. To cite just a few examples, there was Ian Bremmer in Time Magazine in November 2017 (“How China’s Economy Is Poised to Win the Future”); Fareed Zakaria in The Washington Post in October 2017 (“China is winning the future. Here’s how.”); and of course, the unforgettable Tom Friedman in the New York Times back in September 2009 (“[W]hen [a country] is led by a reasonably enlightened group of people, as China is today, it can . . . have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.”).

The difference is that these prior predictions of China’s impending “victory” came from the political left, whereas Goldman comes from the political right. The left can be counted on to issue endless forecasts that socialist systems will shortly eclipse capitalism. (Recall, for example, the predictions in Paul Samuelson’s best-selling economics textbooks, as late as 1980, that the Soviet Union would soon overtake the United States economically.). But Goldman isn’t from that crowd. Is he on to something that we ought to worry about?

My short answer is no. China’s system has enormous disadvantages, mostly self-inflicted by the ruling Communist Party, that show every prospect of greatly hindering and undermining its ongoing economic advance. Fundamentally, the Chinese leadership, much like our own left-wing politicians and economists, lacks basic understanding of what makes the United States (and to a lesser degree, many European countries) the great economic successes that they are.

On the other hand, the United States has the complete ability to destroy its own highly successful system. That is our real risk.

What are these people who predict China’s imminent “victory” missing? Here are some of my answers:

• We have something far better than “meritocracy.” What we have is trial and error. “Trial and error” is a much superior descriptive term for our system than the commonly-used but highly misleading term “capitalism.” “Meritocracy” means that some method is implemented to identify the smartest and most talented people and put them in leadership positions. Even assuming that the method for identifying the smartest people is perfect in all respects, the fact remains that the smartest people are not all that smart. Their plans are flawed. They make mistakes. In the trial and error system, everybody gets to try their hand at starting and growing a business. We have 330 million such people, and somewhere among those 330 million will be some great ideas that the “smartest” people would never have come up with. Meanwhile, bad ideas, many emanating from the so-called “smart” people, get quickly eliminated by economic forces. In other words, “meritocracy” does not always win.

• Furthermore, China’s system is not really a “meritocracy” at all; and if Goldman or anyone else thinks it is, they are letting themselves be very easily deceived. In China and any other state that permits no political competition, there is something far more important to career advancement than “merit,” and that is the ongoing demonstration of absolute loyalty to the reigning political powers. The process of suppressing anyone who is less-than-completely loyal inevitably leads to waste of enormous amounts of the best talent. We can see that process playing out right now in Hong Kong. In support of his “meritocracy” thesis, Goldman cites the Chinese system of university entrance exams that he calls “flabbergastingly difficult.” He provides a link to some examples of essay questions from recent exams. I would agree that many of the questions are baffling; but “baffling” is not the same as “difficult.” I think the idea is quite transparently to induce the exam-taker to find something to say that somehow addresses the question while also expressing loyalty to the regime. This is a great way to find and promote highly motivated and perhaps even clever automatons and yes-people, while passing over any independent thinkers. So no, this is not a system that “always will win” in world economic competition.

• Are you aware of the recently-implemented Chinese “social credit” system? This is the dystopian endgame of the totalitarian state, where every aspect of everyone’s life is tracked and compiled — by the state — into an all-encompassing “credit score.” They use everything from school records to pervasive facial-recognition cameras to bank monitoring to compile the scores. If you want to learn more, check out this piece by Gordon Chang at the Gatestone Institute from September 2018. Excerpt: “China's "social credit" system, which will assign every person a constantly updated score based on observed behaviors, is designed to control conduct by giving the ruling Communist Party the ability to administer punishments and hand out rewards.” The credit scores can used to allocated societal perks of all sorts, from the best jobs at the top to, at the bottom, restrictions on freedom of travel. The question is, how many highly talented people will escape out from under this as soon as they get a chance?

• China’s system also lacks the information needed to make good decisions about how to allocate resources. It lacks this information because it suppresses the information, whether intentionally or unintentionally. This happens in two ways. One is the suppression of price signals, which in a well-functioning economic system are the keys to determining how much to produce and of what. Take away price signals, and resources are systematically mis-allocated. Unlike other socialist systems (e.g., the Soviet Union, North Korea), price signals have not been completely eliminated in China, and it is difficult for an outsider to learn in detail how much price signal suppression exists there; but a very important example where such suppression is pervasive is in the allocation of credit, where favored government-backed enterprises have preferred access. This is a prescription for eventual stagnation.

• The second way in which China systematically loses the information needed to make good economic decisions is through the reporting by functionaries up to the party central command. As in all one-party systems, there is enormous pressure on the functionaries to report favorable information. The five-year plan has been achieved! Failure to report success immediately risks your job and your career. If you have any doubt about whether such processes are at work in China today, take a look at China’s coronavirus statistics as reported at worldometers.info. Supposedly, China, the place where the disease originated and initially spread, to this day has only three deaths per million population from the disease. This compares to death rates of over 1000 per million for nearly all U.S. states and most major countries of the world. China’s figures on their face are preposterous. They could only have come about by local functionaries having been directed to suppress the disease, and then being scared to death to report any other result. Meanwhile, real information about the prevalence and spread of the disease is simply unavailable, not only to world health officials trying to understand what is happening, but even to the Chinese leaders themselves. The underlings are too scared to report the truth. And you can be sure that if this phenomenon is occurring as to coronavirus statistics, it is also occurring as to statistics for many if not most other matters reported up through the chain of command. As a result, all Chinese economic statistics — for example, GDP and per capita income — are highly suspect and dubious. Remember, when the Soviet Union collapsed, its economy turned out to be barely 20% of what had been previously reported. I have no reason to think it’s that bad in China, but then again I don’t know, and neither does anybody else — including Xi Jinping!

• Next, China continues to suffer from the massive self-inflicted wound of its one child policy. The policy went into effect in 1980. Although the policy was officially ended in 2015, a limit of two children remains in place. China has been left with a very low (below replacement rate) birth rate and a dramatically aging population.

• And finally, there’s what I have called the Roman Empire Model of Governance and Succession. Here’s how that works: An all-powerful leader serves for life. When he dies, there is no generally-accepted succession plan other than that the current leader can try to pick his successor and see if that sticks. If it does, great, for now. If it doesn’t, maybe things degenerate into a power struggle of all against all. Who knows? In the case of the Roman Empire, the first 41 years under Augustus were a time of great power and glory. The very next guy (Tiberius) started the great tradition of succession by assassination and/or poisoning, followed by power struggle. By 54 AD you had Nero, and on downhill from there. In the modern world, other examples of the Roman Empire Model of Governance and Succession have included the Soviet Union, North Korea, Cuba, Venezuela, and most of sub-Saharan Africa. Can anybody name a country that has followed the Roman Empire Model for any substantial period of time and continued to thrive and prosper?

So place your bets on how China is going to do over, say, the next 20 to 50 years. To assist, let me give you a few data points:

• According to the Chinese Xinhua News Agency in 2017 (latest I can find), the number of Americans studying the Chinese language was 227,086. The number of Chinese people studying English is approximately 400 million (2020 data). Quite a contrast there. That might tell you something about what people on the ground think is the “wave of the future.”

• It doesn’t take much looking to find extensive evidence that wealthy Chinese want safe havens for their money outside China. For example, consider the American “trade deficit” with China, reported at over $300 billion for 2020. Although ex-President Trump liked to describe this as China “winning” a trade war, a much better way to look at it is capital flight from China. Where does that money end up? Here’s a 2018 piece from CNBC reporting on wealthy Chinese investors buying highest-end real estate in places like New York and London. (“The Big Apple is second only to London in its popularity among foreign investors. . . . One of the key groups is Chinese buyers. . . . ‘Chinese clients have been buying $5 million-plus condos on Fifth Avenue and Park Avenue, $1 million to $2 million condos on the Upper West Side, and $2 million to $5 million condos in Tribeca and SoHo,’ said Carole Armstrong, a real estate agent with DJK Residential, citing some of the city’s ritziest areas.”). In the main, these are not apartments that the buyers plan to live in, at least for the majority of the time. Rather, they are purchased as a store of value. Has anybody ever heard of wealthy Americans buying high-end real estate in Peking or Shanghai as a safe haven for their money? Of course not — the whole idea is ridiculous.

Note that I am certainly not saying that China poses no risks to the U.S. or the rest of the world going forward. Its aggregate GDP definitely is closing in on that of the United States, not because China has become nearly as wealthy, but rather because China has four times the population. (Its per capita GDP is on a par with Mexico or Brazil.). With the large GDP, China can afford a large military. A large Chinese military can become a major problem for the world, particularly if — as I think is inevitable — China become increasingly unstable politically over the coming decades. But that is a very different problem from China somehow “winning” economically.

Meanwhile, the real threat to the U.S. lies in its own adoption of the kind of government-directed economic policies that characterize all the second- and third-rate countries of the world. Unless the current Congress somehow gets stopped, we are soon to have massive direction of economic activity by the government (e.g., the Green New Deal) together with huge tax increases to shrink the private sector. And add in HR 1 as our own first giant step toward the Roman Empire Model of Governance and Succession. It is possible for us to “lose” to China in the world economic competition, but really only if we shoot ourselves in the foot, or possibly the head.