Then, as you may have heard, the Japanese economy went kablooey.
The Japan example not only demonstrates that smart people can be wrong and that the elite chattering classes are prone to groupthink, but it helps illuminate why they are so prone to this sort of thing.
For more than a century, countless American intellectuals and business leaders have looked enviously at how foreign countries "planned" and "managed" their economies. Woodrow Wilson and the Progressives drooled over Otto von Bismarck, and today every self-proclaimed "global strategist" gazes at China's managed capitalism like a kid with his nose pressed against a candy-store window.
Of course, China has made enormous progress since it decided that markets are a more desirable means of improving the lot of its citizens than organized mass murder. But China's fans still have an enormous blind spot.
Ask yourself this: Why are we in this financial crisis?
Any short list of reasons would include a lack of transparency in markets and regulatory rule-making; collusion between business and government; the politicization of lending practices (including the socialization of risk and the privatization of profit through giant governmental entities like Fannie Mae); and, of course, simple greed.
Does anyone honestly think China doesn't have these problems 10 times over? It has no free press, no democratic accountability and no truly independent regulators.
After every Chinese earthquake, we discover that safety inspectors couldn't be trusted to oversee the construction of schools and hospitals. And we're supposed to believe that China's corrupt model produces toxic baby formula but spic-and-span finances?
There's an honest debate about how much blame institutions like Fannie Mae and laws like the Community Reinvestment Act deserve for the financial crisis, but few honest observers dispute that they played some kind of deleterious role. Well, China's entire economy is one big Fannie Mae, its laws one big Community Reinvestment Act.
I'm willing to bet that the bill for that comes due long, long, long before China catches up with the United States of America.