I disagree with a lot of this.

The Chinese value the appearance of working hard, not actual hard work. Cheating among Chinese students is pandemic. Chinese companies regularly publish misleading or outright fraudulent earning statements and quarterly reports. While the Chinese government seems to be taking steps to reverse these trends, it will take a long time to undo their culture of corruption. Contrast this with the American culture of honesty; fraud and cheating are national scandals, not the norm.

Second, the US currency is the world reserve currency because the world trusts that the US will keep paying interest on the debts. A trillion dollar debt is not actually that large, and this is reflected in the near-zero interest rates on treasury bonds. If there was a belief in the market that America would no longer be able to pay off the debts, interest rates would be sky-high. But the opposite is true. The national debt is just a talking point for people who don't understand economics. (The largest owner of American debt is...America!)

Finally, I am unsure what evidence there is that the US culture has moved away from innovation, risk-taking, etc. If anything, there are many more entrepreneurs today than there ever has been before; the maker movement, youtube celebrities, and startup culture is evidence of a growing number of people who are not employees of large corporations, but independent businesses.

Should the goal of the US be to emulate happy, stable, wealthy, smaller economies but arguably more egalitarian northern European democracies?

Or rather, should we chase China in a race to the bottom? Lower corporate taxes, longer working hours, reduced environmental protections, with the goal of creating a fabulously wealthy klepto-capitalist ruling class? How dare people criticize kids burning the candle at both ends to make other people billions of dollars, China is beating us!

> One thing that I’ve found puzzling over the last ten or so years is the anger directed towards people who choose to work hard

That feels somewhat disingenuous. If 'sama is referring to the sentiments expressed on this board, from what I've seen, it's not anger towards people choosing to work hard, but anger towards demands of hard work of others from those who stand to benefit at their expense.

Ie, the anger is towards VCs who talk glowingly of start-up founders working themselves to the bone and, in turn, towards start-up founders who talk glowingly of 0.01% equity-holding employees grinding out hour after overtime hour.

Why ignore the elephant in the room? The U.S. is more unequal than it has been since before WWII [1], and that is a big reason why its growth is stagnating.[2] It's time to stop taking seriously any analyses that do not address this.

[1] http://www.epi.org/publication/income-inequality-by-state-19...

[2] http://www.washingtonpost.com/business/economy/income-inequa...

I don't mean to eye-roll, but Sam on economics tends to be, well, meh. The thing I always remind people when they say that China will take over the world is that everyone said the same thing about Japan in the 1980s (remember the movie/novel Rising Sun?). What happened?

Well, the mercantilist economic toolkit has an endgame. Neither Sam nor I knows when it's going to let them down, but building an entire economy on cheap labor and radical amounts of investment is hard to sustain. Eventually you need things like domestic demand and that requires wages, which short-circuits the export machine. Japan got caught in that trap, and China will eventually too.

As a native Chinese (I'm tired to claim this every time when commenting on China related topics.), I think the op needs to do a lot more homework on China. It's not an easy task to know something you are not familiar with with just numbers, even if one has more than enough numbers.

The main fallacy in that article is that USA is important because innovation. The conservative solution proposed by the author is to go back to an hypothetical golden age "that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things", like the good old times before.

My question is: what are you talking about? The "social" America of the '50s and '60s? The America of the technological boom of the 90s?

America is even more innovative today than decades before. More risks are taken today than before (the crisis of 2008 is also proof of that).

Are you sure that lack of innovation is the problem? Do you think that china is getting bigger and bolder because more risk taking? LOL no. They are conservative and fatalistic and hierarchical as ever.

I think that the American disease should be explained in another way.

In other words, stop complaining about unsustainable work habits leading to physical and mental problems among founders, and let venture capitalists turn that hard work into (a) profit for them while (b) keeping you all safe from Chinese Dominance.

Mentioning China's lack of environmental regulations is just a red herring that distracts people from the real solution. Consider the following:

It's illegal for me to build a cruise missile in the US. Likewise, it's illegal for me to import a cruise missile into the US.

It's illegal for my startup to pollute when I produce a Gizmo in the US. However, it's totally legal for for me to import said Gizmo from China after I paid someone there to pollute for me.

Any sane environmental regulation must be applied at the point of sale as well. The problem here is our environmental regulation. We can't change what China does but we can change our broken laws.

Two disparate observations:

1. US GDP per capita is still almost 8x that of China: $53,042 US vs. $6,807 China (http://data.worldbank.org/indicator/NY.GDP.PCAP.CD). While there are other ways to measure this (such as the PPP Sam cites), the magnitude of difference remains large. So even if China's economy in the aggregate is larger than the US's, the US is still much richer per capita.

2. As China grows richer, I expect the US will too. In modern inter-connected economies with few trade barriers growth in one generally benefits the other too. One example would be as one country's citizens gain greater purchasing power, they become bigger consumers of the other country's goods and services.

It's difficult to explore this question without being accused of racism, but I'd like to better understand why some cultures are so much more economically successful than others. The Chinese are such a great example of this. Wherever they go, they seem to end up being very successful. For example, in the Philippines it's claimed that Chinese are 1% of the population, but control 60% of the economy (http://opinion.inquirer.net/31223/ethnic-chinese-dominate-ph...).

> The other stark contrast is how much harder people in China seem to work than people here, and how working hard is considered a good thing, not a bad thing.

It is a survival thing, not an inherently good thing. Those factory workers or university students aren't working 14 hour days because of the 'virtue of hard work'. They're doing it because they have to in order to stay alive in the continious stampede of progression that is China.

See how 'hard' most Chinese people work once they've got money. Most of the hard work of wealthy Chinese to conceal their wealth in western coutries.

  The historical track record of the largest economy being
  overtaken by another is not good.  Sometimes it’s
  violent.  (For example, Germany and the UK in 1914.

As I understand it, the Kaiser's geopolitical motive was to avoid being dominated by the Dual Entente given Russia's growing strength. He expected GB to stay neutral given it was generally more friendly to Germany than Russia and was fairly isolated from European mainland issues given its interests in the colonies.

In any case, why compare UK GDP and not British Empire GDP which at that time would have dwarfed Germany?

What's interesting is that it's very common for wealthy Chinese to invest in / move their families and their money into the States. Just look at places like Seattle, where around one-third of all $1+ homes are purchased by foreign Chinese, and according to this NYT article, three-quarters of their purchases are all cash. *

* http://www.nytimes.com/2014/09/21/business/in-suburban-seatt...

After listening to a recent episode of Invisibilia, I've become somewhat convinced that one of the root ills of current American society is extremely low expectations.

Whenever I think of countries like China, I think of an entire population driven to be more excellent. I know that's not true in general (people are people everywhere), but I still feel there is a stronger expectation that, as a human, you will do more than just exist and consume junk food and mass media.

America feels sluggish to me... safe and dumb and comfortable but not content. It's like the feeling I get when I spend an entire weekend on the couch binge-watching Netflix.

I look forward to the day where nationalism is seen as an anachronism. I know this probably wasn't the primary message of this post and that YC has funded a number of non US startups but if you swap US and China in this post, I wonder what kind of reception it would get.

> We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work [2], and radical thinking, and minimizes impediments to doing new things.

I think a major reason the middle class was able to live a fairly cushy lifestyle without doing much real work was some combination of:

- A massive supply of overseas slave labor, coupled with a complete lack of environmental regulations both domestically and abroad.

- Being able to tax people overseas by deflating the dollar.

- Heavy investment in infrastructure.

- A large population boom.

In other words about 20% sound policy, and 80% finding ways to steal money from other people and future generations. Since we're no longer investing in infrastructure or doing much in the way sound policy, and we're also losing our ability to steal money from others, I don't really see how the U.S. is going to sustain itself regardless of hard work, innovative thinking, immigration policies, etc.

Speaking from personal experience, the atmosphere in the U.S. is a lot better than in China, in terms of the recognition of importance and respect to science and technology fields as well as scientists and engineers. I feel an implicit discrimination towards engineers in Chinese culture in the sense that "you are regarded successful if you hold a management position and live a (perceived) decent lifestyle, but not if you get your hands dirty, tinkering around stuff and being managed." when I worked in China. In Chinese college, the "elite majors" including cooperation and government management usually have the highest bar of admission.

This post isn't particularly well thought out or argued, but special mention must go to footnote [2] for being self serving nonsense. While those complainers do exist and are wrong about some aspects of the situation they are quite right to criticise the exploitative start up ecosystem.

A third of China's population are still farmers -- compared to the US's low single digits. It's per capita GDP is somewhere around Peru's and Iraq's. While this has been rapidly changing, it is yet to be seen how much of China's rapid growth the last couple of years is propped up by government malinvestment (ghost cities, etc.). We've seen high growth rates in many countries throughout history. The question is whether this is sustainable, and how much of the low-hanging fruit of growth China has already used up.

I lived in Shanghai and worked at a startup for a year after college. The startup expat and startup local communities are surprisingly developed.

There are a lot of co-working spaces, hacker spaces, and start up events. For anyone interested in China, you can live in Shanghai without speaking Mandarin.

Western training in programing, design and product is highly valued. Salary offerings are lower by a factor of 10. Regardless, its easy to live and identify alternative income sources.

I'd love to answer any questions for people interested in the Chinese startup space.

I think idea of the RMB being a reserve currency is laughable. It's controlled by an authoritarian government whose only history with the currency is to manipulate it in their favor. And said government has repeatedly made it difficult for foreign companies to do business in the country. Why anyone would think that people would trust such a currency is beyond me.

One major point often overlooked in this discussion is, that nobody trusts the Chinese government. In foreign policy, China has to pay dearly for very little trust/support in return. Therefore I don't see the dollar getting dethroned any time soon.

I also don't believe that China is getting risk management right. Corruption in government and industry, extreme growth rates and untrackable webs of debts will sooner or later stop Chinese growth unless it transforms into a much more liberal or democratic form of government.

For China, it's still a long way to the top.

Just one caveat: http://blogs.wsj.com/indiarealtime/2015/02/11/its-official-i...

He's Paul Krugman in (I think) 2003 discussing how people overstate the value of the dollar being the world reserve currency:

http://web.mit.edu/krugman/www/seignor.html

The US could easily remain the world's only superpower if it was ruthlessly focused on doing that. Actually it would have been easier 40-50 years ago. The opportunity is fading away.

Interestingly, the US often behaves as if it wants to control the world. So either this is a misperception, and the leaders of the US don't want to control the world (and they're spectacularly bad at public relations), or they're spectacularly bad at implementing their plan.

With all the advantages the US enjoyed last century it would have been possible. Maybe actual control of the world territorially is unnecessary, and some group is content to control the world financially. Or maybe the people implementing whatever plan have some perspective that make whatever they're doing make sense to them.

I wonder if that perspective is actually good for the US (it probably is not meant to be, other than for the elite). Perhaps they're using a flawed model that will seem painfully obvious later. I'm guessing it is something like the banking crisis. Some guys are following a flawed model that they think should work, and other guys are looking out for themselves, and eventually the whole thing will fall apart.

> People generally have to buy energy (oil) in our currency, which adds a great deal of support (though we’ve already seen the very beginnings of the PetroYuan).

Can someone explain why using USD as a medium of exchange supports the USD? I can see this effect insofar as central banks will hold a trade-weighted basket of currencies and having more trade in USD will increase that share of the basket. Other than this effect, is there (an) other(s)?

> The most important story of 2014 that most people ignored was the Chinese economy overtaking the US economy. (This is using the purchasing power parity metric, which incorporates differences in the price of goods, but the Chinese economy will overtake on other metrics soon enough.)

It is an important story, but I think it was largely ignored in the U.S. because it is essentially a domestic Chinese story. PPP GDP equivalence is a major step on the path of bringing Chinese living standards up to those in the U.S. and Europe. That is an achievement that will be good for the world, but it will really great for China.

If you want to compare China and U.S. as players on the global stage, then I think in most cases one will get a clearer picture of relative strength by sticking with nominal GDP. China's nominal GDP is bit more than half the U.S. GDP. It helps understand why the U.S. has the dominant currency, dominant military, etc.

China has grown its economy tremendously by taking the world's IP (by contract or theft) and building goods to export. That's how the U.S. caught up to Europe 150 years ago, so unlike other posters I don't think it's a terrible thing.

But it is true that China, to become a true economic superpower, must start creating innovative Chinese goods that other Chinese will buy, and which they can export. So Americans aren't just buying Apple phones that are made in China, but are buying Chinese products, the way they buy Japanese cameras or German cars.

That could be difficult to achieve, because the Chinese government does not permit free exchanges of ideas and views...which can make it hard to innovate. By its very nature, innovation makes people uncomfortable, and China's leaders do not currently permit things that make people too uncomfortable.

China is also the most indebted country in world history, and has acquired that mantle at a faster pace than any other country in history.

http://i.imgur.com/iwarkOm.png

From everything I've seen in the financial press about their rapid accumulation of shadow debt, the situation is even worse than that chart reveals.

So at at a time when robots are set to overtake human labor, China's demographics are rapidly aging, and they lack even a meaningful social safety net - you want me to buy the bogus claim that China is about to become the next dominant economy? Not a chance in hell.

In another five years they'll likely have accumulated another $20 to $30 trillion in new debt, all going toward faking economic growth so they can pretend their economy didn't stop growing six years ago when the global consumer crashed.

Back in reality, accounting for real inflation, and accounting for their need to leverage extreme debt to fake growth, China's economy is not growing at all, and is most likely headed toward decades of Japan style stagnation - in a best case scenario.

Worst case scenario, they get old way before they get rich (guaranteed), their 400-500 million farmers revolt as their future potential goes sideways, robots take half their manual labor jobs, they stack up $80 trillion in debt (on a third rate currency that nobody trusts even today), and collapse into social chaos and revolution, as the party fails to deliver on decades of promises.

Those 400-500 million farmers? China should have maybe 15 to 25 million farmers. So they have 400+ million unemployed persons the Chinese system is intentionally holding in stagnation to avoid upheaval, because there's zero chance China can create half a billion new jobs, much less at a time when the age of robotics is upon us.

It seems like people are advocating for centralized solutions to "problems". But after recently reading Mitchel Resnick's book _Turtles, Termites and Traffic Jams_, I can't but help wondering what decentralized solutions might look like?

Here's a piece by him describing "decentralized" more: http://hci.ucsd.edu/102a/readings/LearningAboutLifeAnnotated...

Edit: And here's a similiar non-PDF piece: http://web.media.mit.edu/~mres/papers/JLS/JLS-1.0.html

>My explanation is that this is simply what happens in a low-growth, zero-sum environment.

Or perhaps it's due to globalization. There are other cultures in the world that don't value working very hard at the expense of other things in life. Perhaps it's sometimes good to listen to the arguments at look at values from other cultures. For example, working hard might not maximize the well-being of a person.

Now that the internet is widely used more and more people in the United States are exposed to other cultures around the world. Especially Europe, which includes many countries that have a reasonable standard of living, yet work slightly less.

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I have seen precisely this kind of national soul searching before.

The UK entered WWII the world's greatest power and exited as a small bankrupt island. But did the myth of exceptionalism evaporate with the change in status - hell no.

The UK's leading role in the world derived not from the exceptional nature of its people and/or institutions but from the fact that it was the first nation to fully embrace and benefit from the industrial revolution. If you want to understand the relationship between that kind of lead and innovation take a look at the stream of inventions, discoveries and innovations that the UK spawned at the time.

Similiarly, The US's leading role in the world derives not from the exceptional nature of its people and/or institutions but from the fact that it was the first LARGE nation to fully embrace and benefit from the industrial revolution. Unlike the small island that was the UK the US was large geographically and demographically and rich in natural resources that were readily accessed. The large domestic market enabled the US to steamroller over smaller foreign markets and competitors.

For the first time in its history the US is facing (as did the UK) an international competitor that has a bigger domestic market. This is a massive change.

Will the US do a better job adjusting to the new reality? Hell no!

If you want a good insight into the likely pattern of evolution of US culture study post war Britain.

The RMB is growing in importance and rapidly becoming an increasingly stable financial instrument in global trade. That is not to be debated.

Even though China's economy has overtaken the US in scale, there is one MAJOR issue that is commonly overlooked when contemplating the possibility of them becoming the go-to global currency... They are still an authoritarian state that controls and manipulates the free flow of information in-and-out of its borders. Baidu, Tencent, Weibo, and Alibaba are all still clones of basic US internet infrastructure. Until there is a great lifting of restrictions on the flow of information inside of China, I don't see them building the next Google anytime soon. (Baidu does have Andrew Ng doing some cool stuff in Deep Learning tough!)

I'm not trying to say there isn't innovation coming out of China, just that there won't be a technological renaissance to the likes of Silicon Valley until people can communicate more openly online about potentially dangerous ideas.

Can the RMB survive and increase its power with constant tension with HK and Taiwan over political ideology? I'm not sure... If the Chinese can slowly open up its internal lines of communication without massive protests or radical power struggles, they will be unstoppable.

The only question left in my mind is when given the choice to purchase technical infrastructure from the likes of Google/Facebook or Baiudu, what are developing markets (SEA, Africa..) going to pick. Chinese tech companies ideals might be more inline with rapidly developing companies than the old guard in SV..

Regarding exceptionalism, I had a course in law school taught by Justice Scalia. His first words were, "I believe in American exceptionalism and if you don't, you can find the door." His intentions were to provoke us and he was baiting a brave law student to disagree with him.

Required reading for the course included De Tocqueville's - Democracy in America - as to "leave it to a Frenchman to explain America to Americans." In summary, it was a hell of a course!

Some choice quotes I've acquired from Wikipedia:

    > The main area of noncooperation with the United States
    > [was] resistance to repeated United States efforts to
    > ... open its market more to foreign goods and to change
    > other economic practices seen as adverse to United
    > States economic interests.

    > The relative economic power ... was undergoing sweeping
    > change ... This change went well beyond the implications
    > of the United States trade deficit ... The persisting
    > United States trade and budget deficits ...
    > led to a series of decisions in the middle of the decade
    > that brought a major realignment of the value of ...
    > currencies ... the ability to purchase more United States
    > goods and to make important investments in the United
    > States [resulting in them being] the main international
    > creditor.

    > ... growing investment in the United States ... led to
    > complaints from some American constituencies ... seemed well     
    > positioned to use its economic power to invest in the
    > high-technology products in which United States ... were
    > still leaders. The United States's ability to compete under
    > these circumstances was seen by many ... as hampered by heavy
    > personal, government, and business debt and a low savings rate.

I am (and I suspect most of the readership is) too young to remember the fear the US felt about Japan in the 1980s, but a dense, ageing population and arguable a cultural rigidity capped growth.

The secret to this is not genetics or something in our drinking water. We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things.

It's disappointing (though not surprising) to see Altman dismiss the possibility of genetic differences between populations playing a role in differential economic success. While it's true that the US population has enjoyed many non-genetic advantages, genetic and non-genetic factors are not mutually exclusive. Showing that non-genetic factors do play a role is not the same as showing that genetic factors don't play a role. (I'm tempted to call this the "Guns, Germs, and Steel Fallacy," since Jared Diamond's work on the subject is essentially a book-length expansion on this basic error.)

If you read Larry Bird's biography, you'll learn how in high school he became obsessed with basketball, practicing at every opportunity and shooting 500 free throws every morning. He also had the good fortune of having a series of outstanding coaches and living in a culture that valued basketball prowess. On the other hand, he also grew to be 6'9".

I'm wondering how important it is to be the economical super-power?

This reminds me Steven Colbert interviewing Thomas Piketty. Colbert jokes about the short work weeks and two-months vacations in France. Piketty's reply: "in Europe, many people believe the purpose of civilization is to work less, have more vacation, take care of your friends and family. But you can make a different choice and that's fine". France is still the 6th economic power.

There's so much biased and simplistic thinking here that it's hard to respond without writing a whole essay. But the note about China being more individualistic is just laughable considering the Communist Party's forceful manipulation of their economy. In fact, it is the US's strong individualism religion that will prevent any coordinated response to our decline, such as increased public spending on R&D.

> “It’s so stupid that these people play the startup lottery. What idiots. They should just consult.” or “Startups need to stop glorifying young workers that can work all day and night”

No-one quite says that working hard is stupid (well, except the few misguided ones we should all ignore anyway). What people go tsk, tsk, tsk at is working really hard and giving up responsibilities at home, not being with you family, even forgoing the biological imperative to reproduce (or delaying it -- usually not a good idea, again biologically speaking), giving up your mental/physical health for a dream that is realistically very remote, etc.

The other big thing is, alas, it is a lottery. We guide our nephews toward a different direction that has a greater promise of economic security: be a neurosurgeon (and well, even if they don't become neurosurgeons, we hope they'll become at least primary care doctors :)). I mean, What is YC's acceptance rate at this point? Like 10%? And I bet the people applying are more able than other hopeful entrepreneurs who don't happen to apply to YC, so the success rate for the average entrepreneur is pretty bad.

There are a lot of great issues discussed here, and I'm going to say that most of it is valid and on point.

After living and working in SF, I moved to china 6 months ago and have come to understand that Chinese compared to US simply have hugely divergent values. And they work hard. From a very young age, they are conditioned to do so; and with 1.4 Billion people competing, there's no other option.

The US is still, and should continue to remain the focal point of innovation. I find China to be so far behind in this area, I don't think there is any hope of catching anytime soon.

I say this because, much of the money in China is grounded in old and dying business principles. The new generation, those in the country's "top" business schools, are being taught dated ideas which don't promote innovation at all.

I do agree though, China will continue to grow and the West will find a way to coexist. But I'm still not trading my USD for RMB just yet.

Edit: typos

Some perspective:

How the US dollar became so important: http://www.npr.org/blogs/money/2014/07/16/331743569/episode-...

US GDP per capita vs China's GDP: http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&m...

In a nutshell, the cost of an iPhone is ~5% of China's GPD per capita, but will continue to shrink as they grow.

From my perspective, Sam's essays have really been improving in quality.

Some of his early ones felt like they were searching for a voice and/or trying to force the essay before it was fully incubated.

This one feels like a breakthrough. Well written, interesting premise, explores the topic in a meandering but targeted way.

> Even if there weren’t a competitor in the picture, countries historically don’t do well with declining growth, and so it’s in our interest to try to continue to keep growth up. It’s our standard advice to startups, and it works for organizations at all levels. Things are either growing or dying.

Actually it's time to rethink this "wisdom" that was introduced by our grandparents. There is no such thing as infinite growth and only by seeing this, the West (actually I don't care about the USA so much, as I'm from Europe) is going to prosper. Because in no-growth there lies a different kind of growth and a lot of opportunities for those who can think out of the box.

Right now growth is measured in money, but maybe one day it's going to be trust or influence.

The most critical question, speaking as a hopeful US citizen, is whether or not it’s possible for one country to remain as powerful as another with four times as many people.

This seems to be an extraordinarily naive point. India (pop 1.2B) and Canada (pop 35M) have similar strength economies and similar geopolitical strength outside their immediate vicinities, for example.

These kinds of analyses always seem to forget the immense land wealth that the US has - agricultural, mineral, water, temperate zone, so on and so forth. China has it as well, but many other big-pop nations don't. And when all big economies become service economies, the land wealth is still a differentiator. It's not to say it's the only factor, but it's far too frequently overlooked.

> The other stark contrast is how much harder people in China seem to work than people here, and how working hard is considered a good thing, not a bad thing.

If continued growth is dependent on working harder (more hours), I'm completely fine with being over passed. If you have to give up more of your life to "grow" you have less time to enjoy the fruits of your labor. While America's growth is enviable, our work-life balance is not and many people outside the US think our labor and vacation policies are a joke.

I don't think the solution to growth is working harder or changing our attitude towards hard work, we're already at the top (excluding China) – it's about working smarter and with better legislation to support risk takers.

I think it's important to make a distinction between working hard for work's sake and working hard because you really believe in what you're doing. The concept of hard work that most people who frown upon it in the US have is likely the former and I would tend to agree with them. Mindlessly doing menial tasks but putting in "18 hour days" is not something to be admired.

That being said, a culture that encourages people to dedicate a lot of time to a company, a cause, or an idea if they like it or believe in it is certainly worth fostering. If this is the kind of hard work that Sam talks about as being looked down upon in the US, then that is indeed troubling and we should try to correct that perception.

The knee jerk for me, is the absence of regulatory control of industry standards that make US based companies grow for the benefit of the US economy. As far as being 2nd to China on overall economic power, that's just find in my book. We aren't racing for space here. It's the ethical challenges that present themselves by OTHER countries that provide hot beds for US business. I can just lean back on the banana republics of Latin America, as an example of economic explosion on the backs of others through brutality and instability of regional nations partners. From observation, if I'm not wrong, China has done exactly this to advance it's own economy via Africa endeavors. Am I wrong?

the US's government is finally becoming too burdensome to do business under. The taxation of American business is one of the larger handicaps they operate under.

however the biggest issue facing the US is this message that excelling isn't to aspired too, acceptance of who you are and who someone else is is all that matters. It is a self defeating mindset. Don't worry if you fail, you had no choice, you just can't do better. Here let us take care of you....

With regards to China, what percentage of their population is experiencing this boon? I was always under the impression (don't know the truth) that quite a bit of their population really doesn't matter to their economic output.

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The question comes down to how you evaluate things. Are the growth rate and money the only measures here?

God doesn't favorite China. Looking at its past 100 years, huge political unrest and communism experiments kept the country so behind the rest of world.

The technology, free market reform and globalization help China quickly escape from its historical baggage and catch up with developed world. The question is what value would win out at the end now everyone has equal footing.

Culture, political system and work ethic are the deterministic factors going forward. Would you prefer a world looking more like America or China?

I know at least one metric where China won't beat the US in while: GDP per capita

>It’s almost unthinkable for most people born in the US in the last 70 or so years for the US not to be the world’s superpower. But on current trajectories, we’re about to find out what that looks like.

Things would have to go so horribly wrong as to make being a superpower irrelevant for the US to lose its superpower status. It's undeniable that in the future the US might have to share this status with China but I don't see this happening in the following years.

Quite frankly China's rise is overrated!

"A remarkable number of the major technological developments—far in excess of our share of the world’s population—have come from the US in the last century."

For the most part those technological developments were due to the import (or plundering, if you're judging it as a non-American nationalist) of minds and entrepreneurial resource from elsewhere, and less because America actually forged its own bright people. That kind of affair was the easiest thing to do when America was the only place reasonably safe and developed (after WW2). Things change.

Right there in the first paragraph (emphasis added):

> The most important story of 2014 that most people ignored was the Chinese economy overtaking the US economy. (This is using the purchasing power parity metric, which incorporates differences in the price of goods, but the Chinese economy will overtake on other metrics soon enough.)

"Other metrics" does not include GDP per capita. That seems to me something you might not want to overlook when comparing the US and China.

It seems to be a fundamental assumption of most economy pieces out there that growth is good, stagnation is bad, and we should strive for ever more growth.

But how much growth can we actual sustain with the limited resources we have on earth? When is it time to stop?

Are there better things to optimize for? Happiness, maybe? Peace? Does growth make people happy and countries peaceful? Maybe we could achieve something good by re-distributing wealth, instead of trying to create and more and more.

"whether or not it’s possible for one country to remain as powerful as another with four times as many people"

I don't understand why one country whether it's the US, china or otherwise has to dominate the world.Assuming that shitty tradeoffs are made to get there, I wish there was a world country of some sort that dominated in the near future. Otherwise it seems to me like there are going to be many sony like episodes that just do more harm than good.

The following quote says a lot more about Sam Altman, the people he hangs out with, and his lack of exposure to mainstream media and political discourse than it says about objective reality:

As a related sidenote, “exceptionalism” in the US has become almost a bad word—it’s bad to talk about an individual being exceptionally good, and certainly bad to talk about the country as a whole being exceptional.

I'm surprised that he didn't talk about the last decade of US science funding. The US has radically cut back on research support. In theory, it shouldn't matter where the science happens. Publication means anyone can read it. In practice, the country that hots the training and tech transfer sees a lot more from scientific progress then anyone else.

GDP.... There's many big problems in China, like over dependence on Real Estate industry; environmental pollution; food safety; the aging of the population; And statistical data from China's official statistics office, most Chinese know that China cooks its numbers on inflation and GDP growth.

What I hope for is not US coexisting with China, EU or any other state. I hope that more freedom-leaning countries open up to immigration and blur or erase the concept of being a citizen. In fact I hope everyone sees the current status quo as immoral rather than just not optimal. NWO ftw

PPP adjusting GDP to compare economies makes zero sense. The rest of the article, fine. But when you're comparing countries internationally, why on earth would you compare their internal broad average purchasing power (heavily weighted by China's outsized GINI)?

"US policy often encourages investment and job growth outside the US... and then hold/reinvest those profits offshore rather than pay high taxes repatriating their funds."

That's the most important part of the article. It's what made China rise in the first place.

The chinese build factories where they make pretty much everything for the global market. The americans build free time-oriented startups, such as image sharing, social news aggregation and messaging. And advertising, gotta keep those leisure sites funded.

I'm not entirely convinced on the US leading in innovation, particularly per head of population. The UK (as just one example) is surely way ahead by that measure and yet has come a long way from the global top spot.

The China mentioned in the article is not China, actually it is the China belong to Communist Party of China. It will be the enemy and virus of the world until Communist Party of China step down.

I think the arguments that it matters to be #1 are extremely weak. Besides having the USD as the world's reserve currency, is there any other good reason?

I wish I was a high-profile VC. Then I too would be writing essays exhorting people to take on high amounts of risk and to spend their 20s and 30s grinding through 60 hour workweeks, so I could grow my portfolio. Because, we're losing to China!

Honestly, it has never been clear to me why "growth" was the metric that we, as a society, have been optimizing for. Who stands to benefit? You? The middle class? Everyone? Or... wealthy investors and a few lucky founders?

Why not focus on, say, average income per citizen (adjusted for purchasing power)? Or even more radical, why not stop using money as a proxy for wealth, and start optimizing for average citizen well-being? Is China beating us on that point?

Or why not see further and optimize for the growth of our scientific knowledge and our technological capabilities?

Economic growth is generally praised because it is a weak proxy for things such as the wealth of a society (assumed to be well distributed) and its technological progress. So why not directly aim for these core goals?

Is it coincidence that this article on china appeared on the same day as Chinese president's visit to America is announced in news media?

China has 3 times the population of the US. As soon as they started growing a middle class, it was inevitable that this would happen.

Historically, all superpowers collapsed, so maybe there is a point where you cannot grow more with current system?

China Slowdown - www.economist.com/blogs/freeexchange/2015/01/chinas-slowdown

I disagree with literally everything said in this article.

Virtually every point the author makes is based on false assumptions, inaccurate information, a misunderstanding or other fallacies.

I really, really didn't want to break it down point by point, and I still don't, but I'm going to tackle the most obvious ones. Keep in mind I don't get them all, there are more than what I list here. I've included sources for some of my claims at the bottom:

- "US growth has stagnated while Chinese growth has continued to do pretty well"

Sure, if you account for the fact that it's not organic growth. Their growth is meticulously planned and executed. They have entire ghost cities which still remain vacant. Approximately 64 million apartments and houses in China are empty and have never been lived in before. There was just an article on Forbes on how they're now starting to fall into disrepair.

China's growth isn't like any other countries' growth and shouldn't be compared as such. Their growth is hollow and empty. They're literally reporting what they want to attract investors and say "See how well we're doing?" That's not fortitude, it's something else.

- "there countries have surpassed our education system"

Public education or higher education? There's a huge difference. You can't lump them together, it's misleading to the point of being inaccurate. In terms of higher education, nobody beats the US. They house 7 of the top 10 ranked universities in the world. The UK has the other 3.

- "The historical track record of the largest economy being overtaken by another is not good."

Irrelevant. Prior examples are absolutely no comparison to the global economy of today. Back then, the "global" economy was non-existent. There were also no nukes, no internet and there wasn't a singular sole superpower. We're now in uncharted territory.

- "The US gets huge advantages from being the world’s largest economy"

It also has its own drawbacks which you don't even touch on. And it also became the largest economy in the world for a reason, because people trust the U.S and its dollar. People invest in the U.S because they see that the country, economy and currency has value and fortitude. Even during the last recession, the damage was minimal despite ignorant people predicting the dollar would vanish after the U.S economy crashes. The only way that would happen is if the country itself vanished, due to war or a large asteroid destroying the continent. Plenty of rich and powerful (non-American) people/entities/corporations have a vested interest in a stable global market. If only because it makes them more money. In the end, that's all that matters. Stability is almost always good for business. That's why the U.S dollar will never "crash and burn". Because the only person who wants it to are your prototypical libertarian anarchists still living with their mothers.

- "The current business model of the US requires the dollar to be the world reserve currency, though the Chinese currency is rapidly becoming a viable alternative. "

Any country that either manipulates or artificially keeps its currency low to help itself (As China does to keep its export market competitive) to the extent China does, will never hold the title of world's reserve currency. The biggest and most obvious issue is one of corruption and trust. Can you really trust China to act fairly with your billions/trillions? To not artificially screw with their currency and/or banks to benefit themselves? Of course not, China only cares about China. No major player is going to unpeg their currency from the dollar to go to a currency with less stability and more corruption. It's simply a lesser of two evils situation and the U.S has proven to be the go-to currency for years, weathering even the worst storms.

- "At some point, China will relax its currency controls, allowing trade and offshore investment to grow rapidly."

And causing their own economy to tank as their export market completely dries up as India or other southeast Asian countries pick up the slack. Adding to that is their populace demanding higher wages. They see what's out there, they too, want the latest Ipad. You can't have borderline slave labor forever. At some point, you have to advance and evolve. And when the export market dries up, so will the jobs. When the jobs dry up, well, you know what happens...

- "whether or not it’s possible for one country to remain as powerful as another with four times as many people."

Using your logic, you shouldn't be talking about China, but instead India. They're set to overtake China. China is also going to experience what's known as the China Crunch sometime around 2030 (due to their 1 child policy).

- "The US should try very hard to find a way to grow faster."

Growing for the sake of growing is dumb. You're spending resources, time and energy on something that really, ultimately doesn't mean anything. We're not playing a game and there's no final score when the game ends. We should instead focus on bettering ourselves as a nation. If that means we grow as a side-effect, so be it. If it means we shrink, then that's ok too.

I think my father said it best, stop worrying about what everyone else is doing and worry about yourself.

http://www.cbsnews.com/videos/nobodys-home-the-ghost-cities-...

http://www.theguardian.com/news/datablog/2013/oct/02/world-t...

http://money.cnn.com/2015/01/21/news/economy/india-china-fas...

Something overlooked at is that products bought in China are often fraudulent and cheaply made versuses made in Europe and citizens in China and abroad know it.

Citizens in China will travel to Paris to buy a handbag instead of a cheaply made knockoff in Singapore.

>The secret to this is not genetics or something in our drinking water. We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work [2], and radical thinking, and minimizes impediments to doing new things. Unfortunately we’ve moved somewhat away from this. Our best hope, by far, is to find a way to return to it quickly. Although the changes required to become more competitive will likely be painful, and probably even produce a short-term economic headwind, they are critical to do.

On a high level I agree with this. The question is what's happened to cause growth to slow? The answer to this provides a prescription for what to do, but it's also a highly contentious and political question.

Here's a few suggestions, which will appeal to people of various political views. They're all true and all false to some degree.

1) Regulation has crept in to stifle innovation. It costs billions to test a new drug, so only a few firms can do it, and those firms will try to be really careful before spending any money. There's loads of rules no matter what sector of the economy you look at. Tax is a whole can of worms inside of this rubric. We want to have public services, but we also want people to have incentive to work.

2) Near-monopolies have taken over the economy. (You can tie this to regulation, of course.) You can work for one, or buy services from one, but they're so powerful few people would want to compete. As technology still inches ahead, a new one is up for grabs now and again (Operating System, Search, Social Network...) but this isn't all that great either. What happens to all those entrepreneurs and employees who aren't working for the next big ticket? What if the economy had real competition, with lots of little companies providing similar services?

3) Capital can move to where it makes the highest return. Labor can't. I wouldn't mind moving to the US, where I have lots of family, and there's work in both the fields I'm interested in (finance and startups). But I can't get a visa, apparently (been told not to bother). Plenty of people currently in the US can't really leave, even if their industries are leaving.

4) Perhaps China is just doing a Solow. They're behind, so their growth rate is higher. When they get closer (per capita) perhaps they will hit a wall like Japan. Not long ago everyone was lauding the Japanese model, now we think lifetime employment in large corporations is part of the problem. The danger of this explanation is it doesn't really spur on a lot of introspection.

Anyway, that's a bit disorganised, apologies for that. But those are just some things to think about in the debate.

I continued to be impressed with Sam's clarity. Keep it up!

Sidenote: interesting to see that YC has a BBerg terminal (and careful with the RMB claim in the near-term)

A bit off topic, it looks like Sam Altman is ramping up his blogging activity due to YC's S15 open sign-ups.

Totally sanitizes the role of military power and research in explaining why the U.S. is economically dominant. This is like looking at the British Empire and saying it happened because Britain had some smart, hardworking entrepreneurs.

Countries like China are emerging in part because they have strong governments that just take money from the public and put it into industry. It's more more direct than having to come up with some military justification for it like we do in the U.S., like we have to invent lasers to shoot down Russian missiles, and then maybe later we can find some health care applications. It's quite inefficient. But figuring out a more efficient way runs directly counter to the self-congratulatory mythology of the Silicon Valley private sector.

Sam pins it all on "an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things." This is a very rose-colored, sanitized view of American power.

There's also the little matter of winning WWII while our chief competitors had their economies wrecked, then using that hegemony to maintain effective control of the primary energy reserves of the world, keeping major military competitors in check and keeping Third World nations from breaking out of their subservient role through massive applications of violence and political intervention.

Turning to Silicon Valley, our meritocracy of innovation, Sam completely omits the massive sustained and critical military subsidy of Silicon Valley and the startup sector via government research and procurement to the tune of many billions per year, which has been the genesis of everything from the Internet to GPS to Siri.[1] This is to be expected coming from the private sector which loves to congratulate itself and claim it's all because of smart, hardworking entrepreneurs -- and therefore entitled to the full profits of the commercialization of government-funded research.

But if we are to rethink how to keep America economically dominant, it should start with a sober and clear understanding that it has always come from massive state intervention in the economy, starting with the very nurturing, protectionist policies we forbid the Third World from adopting, and continuing today with high-tech taxpayer-funded research via agencies such as DARPA and government procurement of early-stage products.

"It's-all-because-of-smart-innovators-in-the-private-sector" is a tenant that investors must hold to justify taking all the profits without returning the lion's share to taxpayers -- and more generally to justify funneling taxpayer money to industry without taxpayer control of industry. That is the function that the military-industrial system has served for the past century or so: public investment without public control. Because if the public did more directory control funds we'd probably steer a bit more towards education, health, public welfare, etc.

Let's have more real talk about how our system works.

[1] https://www.americanprogress.org/issues/technology/report/20...

A few things missing here, posed as a question:

Why should we want the US to be the largest (or one of the largest) economies in the world and/or maintain its position as a global superpower?

Maybe I’m missing something , but I didn’t see SA give a good and/or specific reason here (he makes some arguments about not wanting to decline, which I think makes sense but that would be true for really any economic organization...).

Of course I think there are a number of good reasons why it is good for the US to be the largest economy in the world, and for brevity I’d probably put them into two basic buckets:

A. some self-interested reasons: I’d rather be part of a nation-state that has more control over the global political economy than less control so that it is easier for me to have control over my own economic situation, I’d rather be part of a nation-state that is prosperous and can maintain that prosperity so that it is easier for me to maintain my own prosperity.

B. some (allegedly) selfless reasons: I’d like the global superpower to at least maintain some semblance of respect for / commitment to human rights, rule of law, democracy, freedom of speech/religion, a market economy and all that good old american pie stuff (I’m being snarky but I really do value those things) - don’t get me wrong, I understand there’s a lot of hypocrisy/inconsistency with how the USA actually operates, but this is the “USA-is-not-the-best-but-better-than-the-alternatives” argument, which I really do believe.

There’s a good argument that all the “human rights / rule of law / freedom of speech” stuff is just constructed-BS and that its worth trading off for high levels of growth (I’m Korean, and many Koreans see the military dictatorship after the Korean war as net positive since it allowed Korea to grow rapidly, in spite of major human rights abuses etc. which I don’t entirely disagree with), but I guess at the end of the day I’m old-fashioned enough to say that I value those things in and of themselves and that I wish them upon pretty much everyone that exists or has existed or will exist.

That all being said, my Chinese counterpart (or really anyone from any other country) can pretty much say the same thing as (A) and I can’t really give them a good reason to say that for some reason I (and the USA) deserve this position more than she and China (or anyone else and any other country in the world) does.

Therefore, when I say that I think it’s good for the USA to be the most powerful nation I have to (1) admit that it’s at least partially (if not more) motivated by A than B, in which case my position is not really any more valid than my Chinese counterparts and (2) hope it’s at least partially motivated by B, because then it’s actually a position that I believe(hope?) will actually benefit everyone involved. This is of course all predicated on my moral beliefs that don’t allow me to say that my self-interest is always paramount, which I know many people just disagree with flat-out, which is fair - I pretty much am the same way, though I really do try (and most fail) to be another way, for reasons something like this: http://moreintelligentlife.com/story/david-foster-wallace-in...

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Clearly sama is preparing for a career in politics, because this is the standard canard of politicians everywhere. If we don't work harder, more efficiently, we'll be overtaken by country X, and be destitute.

It's a well known economic axiom, that long-term economic health of a country is directly proportional to productivity. It is not in any way true that its affected by the productivity of another country. Both countries can prosper, there's no zero-sum game here.

I'm sorry but I couldn't get past the first paragraph. It's common misconception that people claim China's economy has overtaken US, it's really a clickbait for media outlets last year.

Yes, using a calculation called "purchasing power parity," it looks as if China has passed America. But that calculation is a statistically manufactured one, which supposedly makes up for different costs of living in the two countries. In short, it doesn't measure anything that's real, but a concept that some economists — and certainly not all — believe is important. It's a phony comparison using a made-up number. So what do the numbers show when you compare real apples to real apples? Real U.S. GDP this year will be about $16.27 trillion, adjusted for inflation, according to data from the U.S. government, World Bank and IMF. China? It will be less than half that, about $8.06 trillion. Not only has China not passed the U.S., but it's quite possible it never will. China's population growth is heading for a dramatic Japan-style collapse, which will slash economic growth dramatically in coming years. Growth has already slowed from 10% a year in the 1990s and 2000s to 7% — and it's likely to fall further from there. That's not all. The real measure of a nation's standard of living, productivity and, ultimately, the size of its economy is GDP per capita. What does that tell us about the difference between the U.S. and China? This year, America will have per person output of $50,979 in real terms, China $5,947. So the average American is nine times more productive than the average Chinese. So don't panic. The U.S. isn't No. 2, except in certain IMF statisticians' minds. Nor will it be soon. This is from a credible research article.

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I wish Sam Altman wouldn't talk so authoritatively in his essays. He comes off as an obnoxious, arrogant ass.

He sold Loopt and won PG's praise, but it doesn't follow that he has definitive answers the topics he writes about.

The simpler explanation is that he won PG's praise because he is a master imitator. He writes very much like PG, and I think PG saw a lot of himself in Sam, so he promoted him to YC president or whatever he is.