Economic Growth is a Battle for Talent. China is Losing.

Talent can walk, and it is walking away from China...

Last week we all had the chance to watch Janet Yellen on a visit to Beijing try to convince the Chinese that the US and West have something to offer them in terms of helping with China’s economic recovery.

It was a waste of time, and while I am sure the CCP appreciated Yellen’s triple bow, there is no substatantive help for China’s economic recovery that Yellen, President Macron, the US, or any power in the West can truly offer the Chinese economy.

Generals are often accused of fighting a new war with tactics from the last war. Economists and economic policy makers will earn the same rap as they seek to use old tools of monetary policy, regulatory twists, and trade to stimulate economic growth. It’s an outdated tool kit for a new economic problem. The problem of talent.

The prime driver of economic growth is rapidly becoming the ability of a nation to attract, develop, and retain talent. Cheap energy is great, but being a location where computer scientists and engineers want to live and work is better. Even farming has become a competition for talent. With plenty of farmland available in Europe, including Russia and Ukraine, the battle isn’t for land it’s for the farmers who are leaving for better, safer, opportunities in Canada and the US.

The CCP’s problem is talent, or lack of it. China’s economic future keeps walking out of the country or is refusing to walk in. Worse yet, talent is neither being given the opportunities to develop as the education system remains stunted, and economic advancement in China is directed not by the labors of a person, but by the direction of the state.

That's the thing about talented people, they like to be able to decide and direct their own future, as well as reap the rewards from their efforts. Talent is not controlled in a modern economy, it is groomed and loved. A succedssful nation has leaders praising and promoting it’s workers. Call me a skeptic, but I don’t think Xi looks at employee-dictator relationship that way.

Whether factory workers in China risking the Darian Gap in Panama to find a better life outside of China, or Indian and Russian computer scientists seeking a future for their family in the West, what's driving economic growth now and in the coming years will be a nations ability to attract and retain talent. The nations with bright economic prospects are the nations that see immigrants as valued, vocational and quality education as a must, and seek to create societies where people want to live. AI will not be developed with a boot on the neck of companies and employee’s.

It’s a fools bet that people, even unfree one’s, will choose to remain in a repressive nation when the West seeks, and pays, for their talents. Yellen and her Chinese counterparts are fighting old economic problems. The winner of the new economic order are the nations that understand, “the workers control the means of production, and they control those means any damn where they please”. (that’s Simon not Marx)…