Maximize Absolute Rate of Growth, Not Relative Rate

The April 14-20 issue of The Economist had a good, brief editorial "Come in Number One, Your Time is Up" (subscription required, but also available here). It discusses the various ways that America is being pushed off its economic pedastal, whether by some European countries, China, or whoever. The last two paragraphs, subtitled "A Winnner in Second Place", are worth quoting:

There will be plenty of hand-wringing in the years ahead. But does being the biggest economy matter? It helps to ensure military superiority; it gives a country more say in fixing international rules; and as the issuer of the main reserve currency, America can borrow more cheaply. But being number one cannot be an end in itself. The goal of policy should be to maximise a country's absolute rate of growth, not its relative rate.

Losing top place in the economic league is different from being beaten in sport, where for every winner there is a loser. Economic competition is not a zero-sum game. China's economy will overtake America's not because the United States is in terminal decline, but because China is catching up. And faster growth in China and other emerging economies will benefit America's economy, not harm it. If an obsession with remaining number one foolishly caused America to adopt protectionist policies, that would reduce America's growth as much as China's. It is better to be number two in a fast-growing world than number one in a stagnant one.