October 05, 2013
That’s what he told readers in an NYT column today. Paulson wrote:
“China’s economic output expanded nearly six-fold between 2002 and 2012, from $1.5 trillion to $8.3 trillion.”
It appears that Paulson took China’s GDP in nominal dollars. This distorts its actual growth both because more inflation in the United States would imply more rapid growth in China by this measure and also because much of the rise was simply an increase in the value of the yuan against the dollar.
The more standard measure would be inflation adjusted growth measured in China’s currency. This still comes to an extraordinary 10.7 percent annual rate, but that’s hugely different from the 18.7 percent rate implied by Paulson’s numbers.
This raises two disturbing questions. Is Paulson really that ignorant of both China’s economy and world growth data more generally? No one who has been through an intro econ class should ever mistake real and nominal growth like this. By Paulson’s measure, countries throughout the world experienced enormous growth in the 1970s because of inflation in the United States. This confusion is kind of scary for a person who both ran the country largest investment bank (Goldman Sachs) and was Treasury Secretary as the bursting of the housing bubble gave the country the worst downturn since the Great Depression.
The other question is whether the NYT suspends its fact-checking for prominent people like Henry Paulson. I have written columns for the NYT. I was asked to document every specific claim in my piece. That is appropriate and good journalistic practice for a newspaper that wants to ensure that the arguments it presents on its opinion page are based in reality. It is hard to believe that any fact-checker would have accepted Paulson’s claims about the size of China’s economy increasing six-fold from 2002-2012.
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