Obama, China, and the Sputnik Moment

The libertarian Reason Magazine offers a perspective on President Obama’s comments about China in his recent State of the Union address:

In his State of the Union address, President Barack Obama urged Americans and Congress to embrace this generation’s Sputnik moment and spend more on technology and innovation to spur economic growth.

America is losing its edge to nations like China, Obama suggested, because we have failed to commit to a long-term vision to be competitive in this digital age. “China is building faster trains and newer airports,” the president said. “Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a ‘D.’”

“Within 25 years, our goal is to give 80% of Americans access to , which could allow you go places in half the time it takes to travel by car,” said President Obama. “For some trips, it will be faster than flying—without the pat-down.”

The president’s comments raise an important question: How relevant are China’s investments in infrastructure to the challenges of U.S. economic competitiveness? Unfortunately, if China’s commitment to high-speed rail is a benchmark for the kind of commitment President Obama believes the U.S. must make to remain competitive, we may be learning the wrong lessons.

First, China’s transportation spending is very specific to its circumstances and its investment in high-speed rail should not be seen as independent of its need to develop a comprehensive transportation network. China eclipsed Japan last year to become the world’s second largest economy, but this achievement is not as significant as it might appear. While the amusement park glitz of the Bund in Shanghai and the skylines of Beijing, Guangzhou, and other cities are suitably impressive, they represent a nation in transition from poverty to middle-income status.

Watch Obama’s State of the Union:

January 27, 2011, 12:46 PM
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Categories: Economy