Looking ahead to the panics of the next decade

China Is Both Making and Eating Our Lunch

Few things engender flop sweat faster among upper-class Americans than the idea that a lesser nation is on the fast track to economic domination. In the late 1980s, it was self-evident to those in the know that Japan’s government-subsidized, super-hierarchical and tightly integrated mega-corporations were intrinsically superior to their American counterparts. A raft of best sellers like “Rising Sun” and movies such as “Gung Ho!” bid sayonara to the American Way. The fear collapsed in the ’90s along with the Japanese economy, which has yet to pull out of a “lost decade” that’s lasted nearly 20 years.

Look for a repeat of the same story, this time with China in the lead role. By keeping their currency low—they have pegged it to the dollar, after all—the Chinese have thrown “hundreds of thousands and maybe even more Americans…out of work,” says Sen. Charles Schumer, who has called for a trade war. After a couple more quarters of weak or nonexistent growth, get ready for calls to banish dissent and individualism in business that will last right up to the moment that the Chinese government makes the wrong call. Which, if history is any guide, is already in the pipeline.