WorldCity Business Magazine

Mythbusters

by Ian McCluskey

The media needs to challenge the conventional wisdom of China.

There was a time when “the Earth is flat” was conventional wisdom. More recently, the conventional wisdom was that smoking was not particularly harmful. And today one of the prevailing conventional wisdoms is that all manufacturing jobs are headed, sooner or later, to Asia.

That notion, like the two before it, is nonsense.

There is no denying that China has become an economic powerhouse and that billions of dollars have been invested in new Chinese factories in recent years. According to the latest statistics compiled by the United Nations Industrial Development Organization (UNIDO), China’s share of worldwide manufacturing output nearly doubled to 6.9 percent from 3.5 percent in the decade from 1993 to 2003.

But, almost everyone has lost sight of something important: During the same 10-year period, two other countries (the only two among the G8 economies) also increased their share of global manufacturing output.

They are Canada and the United States.

Canada’s share jumped to 1.9 percent from 1.7 percent, while the United States saw its leading share rise to 23.3 percent from 21.3 percent.

Together, Canada and the United States account for 25.3 percent of all manufacturing around the globe, more than 3.5 times that of China. As The Economist recently pointed out in an article titled “The problem with Made in China”: “Most things nowadays might seem to be made in China, but North America remains the true workshop of the world.”

Three cheers for The Economist. It’s a shame that more media do not use their privileged access to information to challenge conventional wisdom and, instead, are swept up and carried away by it.

John Kenneth Galbraith, one of the most articulate and insightful economists of our time, coined the term conventional wisdom. What it means is lazy thinking. And lazy thinking, while it might fuel entertaining cable TVtalk shows, leads to bad decisions. Witness Iraq. Five years ago, the conventional wisdom was that Saddam Hussein possessed weapons of mass destruction and posed an imminent threat.

Mainstream media did not aggressively question that idea.

We should do a better job of challenging the myths of Chinese economic domination, the menace of outsourcing and the failure of free trade.

Contact:imccluskey@worldcityweb.com