Here's a prediction for you. By 2020 China will be the next top super power. Our demographics (and our political structure) put us at a hudge disadvantage to compete towards the end of this decade.
Joe,
I agree with your general sense that China is the great emerging force in the world -- though I would also keep an eye on India, which is always underestimated in these kinds of forecasts. I doubt if China will be at our level militarily within 20 years, but by then its real economy should be much larger than ours, if the Chinese government maintains its recent commitment to economic expansion.
Unlike you, I actually believe our political structure is our greatest advantage in competing with China, with the exception of one economic scenario which I'll note in a moment. In general, I buy into the "open-society" argument that says the de-centralization of decision making, leavened by the free flow of ideas and the freedom of self-criticism (dissent), is far superior to centralized planning and the suppression of dissent. Our culture and our political structure allow our people to be far more broadly curious, innovative, entrepreneurial, and self-correcting (self-critical) on an aggregate scale than closed societies, where political stability is grounded in submission to common authority and absence of dissent.
I want to emphasize that I'm not trying to say that Chinese individuals lack curiosity, innovative thinking, entrepreneurial attitudes and skills, and the ability for self-criticism. Not at all! But I am trying to say that their political structure depends heavily on the suppression of these qualities, and as a result China does not benefit as much as the U.S. does from the aggregate "synergies" that arise when these individual qualities are submitted to an open marketplace of ideas, talents, and efforts.
My favorite examinations of this idea are in Stephen Ambrose's great books, D-Day and Citizen Soldiers. He contrasts the highly diffuse, localized command structure of the U.S. military with the centralized command structure of the German military and shows time and again how the Americans benefitted from the fact that their junior officers had the authority and the skills to make on-the-spot decisions based on local situations and the needs of the moment. German junior officers, by contrast, had much less freedom to innovate in the field and suffered from the poor decisions and the tardy directives of their central command.
There is one situation, though, where China's more authoritarian political structure may be an advantage: if our debt bubble explodes and shatters the American monetary system, our society will descend into chaos -- and we will effectively lose our immense wealth even as we live in the shadows of our great factories, infrastructures, etc. The reason is that money coordinates our activities on an aggregate level, and in the absence of money we'd lose the foundations of trust and confidence that underwrite our collective labors. If China suffered a comparable financial catastrophe, it would have much more capacity simply to conscript people as workers and keep its utilities operating, its factories running, and so forth. An authoritarian society doesn't necessarily lose its effective wealth in the absence of a monetary system, so long as it can enforce common objectives on its people through other means.
