Is China Trembling?

Joe Biden has gotten the rhetoric down. The reality, not so much.

When presenting his massive infrastructure spending plan, Biden told us that it was going to help America to compete against China. It was a joke, of course. The plan enriches public sector employee unions and throws a blizzard of money at the green new deal, with large dollops designated for care and compassion. Ask yourself how much is designated for the teachers who have actively destroyed the minds of America's children by forcing schools to lock down during the pandemic?

I have occasionally noted that the Democratic Party is the Girl Party, and that means, it dislikes competitive enterprise and loves charitable giving. It never explains where the money is going to come from, but today’s Democrats believe in something called modern monetary theory. Therein you can print as much money as you want and never have to pay it back.

Famous last words. It’s bad enough that American politics are broken. Now the country is spending its way to hyperinflationary oblivion. 

David Goldman has examined the plan. He is not impressed. The sums designated for infrastructure are paltry compared with what China spends, and compared to what is needed. But, lots of money for home health care workers… there, that will help us to compete against the Middle Kingdom.

How about transportation infrastructure? At the least, we are sorely in need of new roads, bridges, even railroads.

Labeled an infrastructure package, it offers just $447 billion for transportation infrastructure over eight years. That’s less than a quarter of the most widely accepted estimates for the US infrastructure deficit.

The big money is going to underwrite the Nanny State:

Most of the $2.3 trillion will buy votes rather than infrastructure, including $400 billion for “elder and disability care,” $213 billion for “green and affordable homes,” $174 billion for electric vehicles, $137 billion for “school and childcare infrastructure,” $100 billion for “job training” and so forth.

It’s vote buying, all the way. As for research and development, there is precious little left for that:

It’s a smorgasbord for Democratic Party urban constituencies that leaves $180 billion for “R&D in tech of the future” and $300 billion in manufacturing subsidies as an afterthought.

Most R & D, Goldman explains, comes to us from corporations. Now, however, the Biden plan will siphon off corporate profits, the better to fund solar energy plants and windmills and babysitters:

Most incongruous of all is the accompanying corporate tax hike, to a 28% base rate from the present 21%. Corporations fund most of the R&D that turns into new products. That will suck $695 billion out of corporations, according to the Biden calculus, or three-and-a-half times as much as the $180 billion in additional  proposed R&D spending.

So, we are ensuring that China will take the lead in scientific research. Biden is preventing corporations to innovate but it is funding universities and instructing them to waste money in the war against the weather.

And that $180 billion will go mainly to universities, with an emphasis on climate research and other fluff. That’s $180 billion over eight years, or an average of $22.5 billion a year in new money. China’s National People’s Congress last year mandated $560 billion per year of funding for new technologies.

The cost of hiring R&D staff in China is a third to half the comparable cost in the US, so China’s tech spend is closer to $1 trillion a year in terms of purchasing power parity.

So, dollar for dollar, the Biden administration has given up on competing with China. It is trying to make us all comfortable while we watch history pass us by.

To restore federal R&D to the level that prevailed when the United States created the digital economy, it would have to spend each year the $180 billion that Biden proposes to ladle out over eight years.

As for why it costs so much to build infrastructure here, the reason lies in labor unions and bureaucrats. Think about it, we have more bureaucrats per capita than China. Or anywhere else, for that matter. Yet, these workers always vote Democratic and they will be rewarded for their loyalty and their inefficiency in the Biden infrastructure plan.

American infrastructure is more expensive than in any other country in the world, largely because entrenched political interest and construction trade unions crowd the public trough.

New York’s Second Avenue Subway extension cost $6 billion, or $2 billion a mile, the most expensive urban mass transit ever built. The average cost of underground subway lines outside the US is $350 million a mile, or a sixth of New York’s cost.

Boston’s “Big Dig” project, originally budgeted in 1998 for $7.2 billion in today’s inflation-adjusted equivalents, will cost $22 billion.

Goldman prefers regulatory reform, the kind that the Trump administration was advancing, but that is not a dim memory of a lost past.

Without comprehensive regulatory reform, Biden’s  $447 in transportation infrastructure spending will make barely a dent in America’s requirements. China meanwhile builds 10,000 kilometers of new highways and 4,000 kilometers of new rail lines a year.