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The Real Economic Lesson China Could Teach Us
Highlighting today’s summit between Chinese
President Hu Jintao and President Obama is China’s agreement to buy $45
billion of American exports. The President says this will create more
American jobs. That’s not exactly right. It will create more profits for
American companies but relatively few new jobs.
Nearly half of the deal is for two hundred Boeing aircraft whose parts come from all over the world. The rest involves agricultural commodities that don’t require much U.S. labor because American agribusiness is highly automated, and chemical and high-tech goods that are even less labor-intensive.
General Electric and other companies are signing up for deals with China involving energy and aviation manufacturing. But much of this will be done in China. GE’s joint venture with Aviation Industries of China, to develop new integrated avionics systems (which presumably will find their way into Boeing planes) will be based in Shanghai.
Here’s the real story. China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future. They’re intent on learning as much as they can from us and then going beyond us (as they already are in solar and electric-battery technologies). They’re pouring money into basic research and education at all levels. In the last 12 years they’ve built twenty universities, each designed to be the equivalent of MIT.
Their goal is to make China Number one in power and prestige, and in high-wage jobs.
The United States doesn’t have a national economic strategy. Instead, we have global corporations that happen to be headquartered here. Their goal is to maximize profits, wherever they can make the most money. They’ll make things in America for export to China when that’s most profitable; they’ll make it in China and give the Chinese their know-how when that’s the best way to boost the bottom line. They’ll utilize research and development wherever around the world it will deliver the biggest bang for the dollar.
Meanwhile, Republicans and deficit hawks are cutting publicly-supported R&D. And cash-starved states are cutting K-12 education, and slashing the budgets of their great public research universities, such as the one I teach at.
No contest.
And no hyped-up trade deals are going to change this fundamental imbalance.
Some say all we need to do is put our currencies in better balance. But even if the Chinese upped the value of the yuan and the US (courtesy of the Fed) reduced the value of the dollar – so everything they bought from us was cheaper and everything we bought from them, far more expensive – they’d still win. We’d have more jobs than now because our exports would be more attractive in world markets, but those jobs would summon fewer goods from around the world. In other words, we’d be poorer.
Let’s get real. We’re losing ground. The U.S. labor force is now smaller than it was before the Great Recession began and most American families are worse off. December’s unemployment rate dropped to 9.4 percent from 9.8 percent but almost half the improvement was due to 260,000 people dropping out of the labor force.
Average hourly wages grew by three cents in December; weekly wages, by $1.02. And almost all the gains in income occurred at the top. The major assets of rich Americans are financial – whose values have increased as corporate profits have grown. The major assets of the middle-class asset are their homes, whose values continue to drop.
The President now says the answer is to help American business. “We can’t succeed unless American businesses succeed,” he said recently. “And I’m going to do everything I can to promote their ability to grow and prosper.”
But the prosperity of America’s big businesses has become disconnected from the prosperity of most Americans.
Republicans say the answer is to reduce the size and scope of government. But without a government that’s focused on more and better jobs, we’re left with global corporations that don’t give a damn.
China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders.
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Show AllWhat it will take is an end to Capitalism and its rapacious profit-at-all-costs, and making provision for our basic human needs a right of citizenship.
Once the private-profit motive is killed off, and people begin to think in terms of profit *for all* rather than for the few, all kinds of cost-saving and life-enhancing opportunities are *guaranteed* to appear. It's not rocket science.
Meanwhile Obama continues to fullfill his promise to help business succeed with financial and monetary policy that encourages and enables business to invest abroad and speculate on commodities thereby exacerbating American workers' diminishing fortunes.
Yes, Mairead, unfettered capitalism appears to be the villain in the Shakespearean drama the whole planet is taking part in now. I think you have to understand why our for profit system is so addicting, even when the majority thinks it's taking us off a cliff. I think the current model of global capitalism has become a sort of predatory addiction. The addict will do what's needed to procure more and more of his drug, i.e. wealth. And he or she will become insatiable while ignoring their addiction's consequences, to themselves and the rest of the planet. It isn't rocket science but neither is a solution simple or easy. It requires shining some light on what drives greedy people. Nature, according to Darwin, supposedly weeds out imperfections in the species. Why then does the suicidal imperfection of greed seem to succeed so brilliantly under the religion of capitalism.
I think that fossil fuel powered global warming is gonna do some serious weeding. The problem with evolution is that it doesn't work on the individual, it works on the species. if we can't find a way to stop the destructive tribe among us, we go into the compost pile with them
.
Instead of doing years of study to figure out the mind set of the greedy creatures whose mental illness causes them to be addicted to unlimited wealth, we could just raise the tax rate as the income increases. We should tax any income over a billion dollars a year at confiscatory rates. We need to tax the vastly wealthy whose insatiable greed (for whatever mental reason) is causing the collapse of the middle class and removing any posibility of the poor to get out of poverty.
Tax the rich and end the wars and happy days will be here again. Well, we could add public finance of political campaigns to help our elected offcials to get over their greed.
That last part is a requirement, not an option. W/O public financing the tax rates will continue to regress beyond grotesque.
Also, the vast secret police state (CIA, DHS,TSA)must be dismantled, as they are on an outright collision course with democracy, which is looking pretty anemic round here in the good old US of A.
A lot of smart people that I know have left already. The ones still here are very tied in to the corporate and legal power structures (from the educated liberal side) and suppose that they are immune.
A dicey assumption at best.
America is facing one of the uglier periods in her history, and that's really saying something.
School
International School
China, while too far to walk, is still a piece of land on this tiny, unique planet in space...
economics, a word used in place of homicide to make people forget what life really is, and accept what they are told it is, neither has, nor wants, a solution for industrial damage...
what any and all industry has done to the living world thus far will only be exacerbated by China's aggressive manufacturing, as it would be if America tried the same...
willingly competing for economic justice is suicide...
After WWII Europe was broke and in ruins. We loaned them the money to buy stuff from us to rebuild. This helped to make the US the greatest financial and military power on Earth.
Now China is loaning us money to buy stuff from them. Can you see where this is going? Seems to me they were paying more attention to history than the US was.
To China, the name of the game is wealth and power. Anyone who knows anything about Chinese culture understands the drive of Chinese to become rich. Their favorite New Year's greeting is, in part, "Get rich!"--as a prayer for the next year's good fortune. The US should not imitate this foolishness. It leads only to environmental degradation, hopelessness, mistreatment of those less fortunate, and an arrogance the rest of the world finds offensive. Our goals should be to provide for the basic needs of every person, to help those most in need, to place our land and water in stewardship, and to make it possible for every person to enjoy life as he or she chooses. Let the Chinese live their regimented, often depressing lives--too often separated from those they most care about. We should have better dreams.
I fully agree
drosera: What a marvelous post, so full of wisdom.
Your thoughts are where the U.S. needs to be.Your revolutionary thinking is truly emerging in the world, but most of us do not see it as we are in the belly of the capitalistic beast.
Robert Reich and so many of our clueless leaders mistakenly envy China with their unlimited and unsustainable growth. It will only help to destroy the world. Our leaders don't get it. We have had our glory days., it's over. America needs to go in another direction. Capitalism will eventually destroy China irregardless of their national planning.
drosera
Reich is not saying that we should live the dreams of the Chinese. He is saying that China is the conomy that America is competing against, and if the former has an economic strategy to make China Number 1 in PER CAPITA prosperity as well as the best jobs in the world, but the US has become so dysfunctional in its governing structures as to have no coherent plan for economic revival of heavy industry,skills, education for high tech Research and Jobs, then the las of game theory dictate China winning this game in the near future.
He says that were America a basket case like a banana republic with no access to capital, then austerity may have some justification. But that is not the case. So the question is why the business oligrachy does not want to invest in infrastructure even at it's own plants and why does it prevent the Federal Gov. from investing in massive green projects. After all, if the Feds spend $100 billion on light rail, most of that money will end up in coffers of biz.
The only thing that remains as a coherent explanation for a lack of vision and planning in America, even in this particularly dangerous economic times when nearly 50 million (4 per family makes an average 20 million unemployed,adults (often husband and wife both)equal to 50 million at least suffering)are un or under employed is that the oligarchy wants to gut America's economy. Why? Even conspiracy theories don't make sense here. I will take the position then that Obama has absolutely NO CLUE as to how the economy works, neither does his inner circle of Axelrod,Geithner and others. They have certainly estabished themselves as first rate incomptents, along with the business lobbies.
Plus it is infuriating that after taking actions that are diametrically opposite to all informed opinion and expert advice from the most eminent economic thinkers and business people such as Warren Buffet, the clowns in Congress and the White House have the silly, smug grins on their faces without any utterance in explanation, but only smug, supercillious comments that "we know what we are doing". It seems that what they are doing is to ruin the economic strength of America for some nefarious purpose. The time has come for people and TV talk show hosts, as well as Reich and Scheer and others, to first take up simple, galvanising questions and go at it tooth and nail, bulldog fasshion to allow no escape route to the Obama spokespeople.
QUESTION: Why cannot the Federal Government finance alone, or in Federal, State and Public pension funds CONSORTIUM, about $200 to $400 billion of Light rail projects that would ease fossil fuel burning, improve the environment and provide a million or two million make work jobs with middle class pay?
Persist in this question to Axelrod, Goolsbie etc. in a furious and dogged why, why, why if they try to dodge and weave. Politeness should not trump the IMPERATIVE public need to know.
Same with the other questions.
drosera, being a day late, I was looking for a place to jump into this thread, and despite your mis-characterization of "the Chinese", which I'll assume to be pointed at the government, rather than the people/race, you have raised some points that made me decide to break in here.
First, I should explain to you personally that I worked many years for Dr. An Wang (founder of Wang Labs, inventor of core memory, etc.), who was not only the smartest and most visionary man I ever met, but also the most genuinely liberal in a humane and non-judgmental sense (for reasons that I won't go into). So the Chinese issue that you raised should be approached and discussed, as all such nationality issues only in the context of the forms of government that various nations may currently have, and not on the basis of any unique characteristics of people themselves as being special, different, or, God help us, 'exceptional'.
Continuing on the rational issue of what form of government, political-economic structure, power balance, or ultimate social goals various countries (as opposed to people) exhibit today, it is interesting to start with two comments that Reich makes:
"Here’s the real story. China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future."
"The United States doesn’t have a national economic strategy. Instead, we have global corporations that happen to be headquartered here. Their goal is to maximize profits" --- to which we might accurately add, without argument from Reich, "short term profits".
This morning I was watching "Democracy Now" on Free Speech TV, and essentially the entire show was on US China relations; the meeting of Obama and Hu, and economic issues. [I would highly recommend watching the entire video, available on their web site].
While the video of Obama was showing, and not listening much to what he said, I "for some reason" (as Vonnegut would say), was actually thinking of FDR --- perhaps because much has been written about comparisons with FDR, Obama "wanting to be pushed" like FDR, etc. --- and what struck me was an analogy. I always try to do "analogy thinking" (as George Lakoff calls it), because it's the only way to generate creative ideas, and the creative idea I had from this analogy, of Obama and FDR, was not the issue of how they differently handled their respective Great depression/recession, but rather how they handled their business elite wanting to deal with respective authoritarian economic competitors (Germany and China).
There is no question that in both cases, the 1930's and now, the corporate powers in the US enjoyed, and wanted to continue to expand their profitable business relations with the authoritarian powers of the Nazi fascist Empire and the Chinese communist business empire, since both situations, for different reasons, provided advantages in partnering with essentially dictatorial governments. The US based multinational corporations (and banks) strongly lobbied and pressured the US government to overlook the authoritarian oppression of Nazi Germany then and China now, and to focus on the economic advantages --- although most of the actual economic benefits of dealing with either repressive regime would accrue almost exclusively to a tiny minority of corporate elite power brokers. Likewise in both cases, of FDR and Obama, and of Nazi Germany and Communist China, the uglier aspects of such dealings had to be faced on a basis of the broader populace rather than elitist preferences.
FDR ultimately confronted and disciplined US based multi-national corporations, like Texaco, Esso, and many others, and banks, like Bush's BBH, had to be forced to put political loyalty and democratic government above their preferences for economic loyalty and authoritarian government --- a decision that Obama has so-far succeeded in finessing.
While the populations of both the US and Germany would have been better off if the political-economic structures of both their countries had been fully functional political and economic 'social democracies' in the modern since that all of Europe has now progressed to after the second World War of Empires, at that time (1930's/40's) overt empires still prevailed in much of the world, and the US itself was lucky to have maintained a level of political democracy under a strong FDR and after the economic/financial empire retrenched during the Great Depression and FDR's presidency.
One pessimistic prediction that could well flow from this analogy is that Obama, who, unlike FDR, did not stand-up to the economic/financial empire that caused the Great recession, might also not stand-up to a less chastened business empire that has already 'rolled him' once, if this increasingly overt corporate/financial/militarist Empire prefers to meld an authoritarian economic structure with a political structure along the same lines.
I have not yet seen any articles comparing Obama with FDR on this far more important second point, and 'hope' that Obama and the gutless/complicit, so-called liberal left will not parrot their old, "well we have to help him by pushing him" to avoid overt authoritarianism also.
But on a more positive note, Reich's suggestion that a "national economic strategy" needs to be promulgated that will serve all the people, might well be developed in a new an truly innovative way, which does not fall victim to the old centralist mode of 'picking winners', but also in a way that insures that democracy in both the political and economic spheres can out-perform authoritarianism in either.
Right now, the economic policy of an authoritarian Chinese government can, at best, focus on innovations that have been envisioned in US businesses that allow a level of 'democratic-thinking' in the business sphere, but an entirely new way of thinking about economic progress that avoids negative effects, and doesn't 'pick losers' in a combined political-economic democracy could be the real winner for the US in this international cooperation to compete.
Alan MacDonald
Sanford, Maine
"Democracy over Empire" party headquarters
Not to step on your overall point, but Wang didn't invent core memory. He's given credit for being the *co-inventor* of the "pulse transfer controlling device", which he chose to patent in his own name alone, referring to it in the application as "my invention", while the other co-inventor, a childhood friend, was ill (not a nice thing to do, in my book).
The Reich is right. Funny that it is seen as unpatriotic to criticize corporatism when corporations are true to profit but not countries, bereft as they are of loyalty to any one nation.
As the Rich said, corporations just happen to be in this country. For now.
A better alternative would be a parliamentary system of government resting firmly on a solid foundation of socialism. One need only look to Scandanavia for the healthiet model in the world, where they have shown that "more is not better," equality and justice for all is.
"In the last 12 years they’ve built twenty universities, each designed to be the equivalent of MIT."
Oligarchs don't want educated Americans that will rise up against them like the Chinese did.
I keep hearing about all of these people dropping out of the labor force, and it sounds like a great idea. I'm getting too old for this hard physical labor and want to drop out too. Is it some special government program and how much will I get paid? I can't wait,
They aren't dropping out. Their jobs have been eliminated. You, like most Americans, do not understand the dynamics of the present economy. A hell of a lot of wealth is being created without humans being employed at all--have you heard of automation? You believe that those who don't work depend upon those who do, but that is not so. Corporations produce goods--some labor is required, but much is done by machines. The wealth created now goes to the CEOs and the high flyers--not to mention shareholders. What has to be done is to share the wealth fairly--more needs to go to workers, either by reduced working hours or increases in salaries. Companies and banks are making that kind of money, enough to shorten the working hours of those who must do hard physical labor, without bankrupting anybody. You are stuck in the mode of thinking that imagines companies make money and workers should be satisfied with the crumbs off the table. I would say the workers deserve the lion's share of the wealth created--because, without them, there would be no wealth in the first place.
drosera: Again, an excellent post.
Professor Robert Reich did an excellent job in simple English of the coming of China. I have been to China several times over the years since the late eighties. Being an engineer, in the eighties we were using HSS (high speed steel), tungsten, Titanium and Cobalt alloys cutting tools or carbide inserts whenever possible in our manufacturing. I was stunned on my early visits to lathe manufacturers in Shenyang NE China, Nanjing and Shanghai. They were still using carbon steel for all their cutting tools including drill bits. Since than they are the only third nation on earth putting a man in space and testing stealth fighters.
Dr. Reich is wrong, he should have said both Democrats and Republicans don't give a damn. Dr. Reich should also tell us, what can the US do to correct the imbalance. Regarding the solar panel when Hillary and Obama promised to create more jobs in these areas, I laughed, FOOLS, it will never happen. China will flood the market with cheap solar panels and the Latino will do the installations. I believe China started a solar panel plant in AZ and Evergreen Solar close its main plant in the US and move to China.
Learning Chinese eventually becoming a requirement in U.S. schools?
http://www.npr.org/2011/01/19/133031008/american-interest-in-learning-chinese-skyrockets
Not a requirement, but a plus. When we were in the Midwest, the school districts have a language center where Chinese, Japanese, Arabic and Russian were taught.
For those unemployed near retirement or retired with engineering, metal fabrication/turning skill, this may be your only hope of getting full employment. Further, if you have patient and competent in English (not like me), you too may be able find a job as teacher or English tutor. They need English teachers, and many of the students went overseas to Canada, Australia, UK, Singapore and the US to study English.
In order to work along with China, without becoming a full blown Plantation system, a nation of US coolies, we have to study their weak points (we already know ours is greed & being ruled by a banksterocracy): 1. lack of fertile land to feed so many people; 2. the oldest soil in the world; 3. a historic tradition of famines which brought about several dynastic changes including the Moghul invasion & communism; 4. the fact that the PC ruling party does not want to have a large Chinese middle class and cannot afford to have one, on risk of losing their power; 5. their economic growth is in direct relation to their need to keep the majority of the country as dirt-poor farmers, incomunicated and scattered within the enormous Chinese territory.
Brother you are dead wrong and out of touch with the world. You are thinking many decade old Colonial's era. It's long over. If you are in Shanghai today, you wouldn't believe what going on. They will size you up at the way you dress and your ability to pay.
Hilarious! The thugocracy in Washing-town is drumming up business for its "strategeric" godzilla monsters: monopoly aircraft, the most unsustainable mode of transport, and petro-franken-food, the destructor of body, mind, soul, soil air and water, all behind the iron curtain and under the steely grip of ... DAS KAPITAL!!!
In other words should we continue the pursuit of profit above all else or should we pursue what is best for human well-being?
"Their goal is to make China Number one in power and prestige, and in high-wage jobs."
We see that as the same goal of most USan elites, with their motive naturally to be imperial kings and queens.
To get there, they manipulated, exploited and enslaved the USan people on a massive scale.
And just look at the most unhappy nation in the world today!! Wee!
There isn't a lot of difference between USan elites and Chinese elites, as you can see from the observations of the article author. He isn't the first to recognize the Chinese elite infatuation with USan elite "accomplishments".
The Chinese people have been conditioned like their pavlov dog peers in the USA. Chinese greed there is torched with the elite flamethrower and burning a bright white, like in the "good ol USA".
Following the USan model, as the rest of the world shudders in horror.
Fantastic influence, Brownie! Race to the "top" of the kaka mountain!! You got competition! Rah rah!!
Instead of running the rat race, we on the far left recognize that less is better. We don't need to compete or win the kaka race. We want to minimize the destruction of ecosystems and societies. We have the rock-solid policy platform. Nothing else like it. We are free from responsibility for the plunder of the earth.
"China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders."
The berkeley professor is about a decade behind the times. He doesn't get that China and the USA are simple at two different points on the same path toward self-destruction.
China is today where the USA was in 1950. At that point it has to make the peons happy so to fuel the juggernaut that the elites may later exploit to death. We didn't need the elites jobz then, like the Chinese don't need jobz now.
In all points in time, all people need SELF-DETERMINATION, so to remain free from the shackles of the elite agenda. When is the berkeley professor going to get a clue? Probably never because he "benefits" from the plunderous/destructive status quo.
rtdrury: Wow, great post. Another revolutionary thinker who appreciates how capitalism is destroying the world.
"Corporate Protopop" by Cop Shoot Cop
You're a demanding consumer,
And you demand instant gratification.
Your needs are our main concern.
Let's be honest,
As consumers we all have needs and desires.
Trouble is, we supress them
In nature, as in the business world,
Now there are winners and there are losers.
But does the predator pity the prey?
I don't think so.
It's not just unnatural, it's plain unhealthy.
Nurture your desires.
Cultivate your desires.
Let them grow and flower into the blossom that is greed.
You see, you are needed.
Your greed provides this country
With the fertile financial soil in which the roots of exploitation
Can spread, live, grow and flourish.
This in turn furnishes you,
The consumer, the standard of living you've come to expect.
The products you buy, the programs you watch, the car you drive, your job.
These are the things that define you as an individual.
Without them you have no identity, no purpose, no reason to exist.
Greed.
Hatred.
They're not just good ideas,
They're the precepts this country was founded on.
They will keep you right where you are.
And we'd like to keep it that way
Robert Reich is not only stupid but also dangerous. Our fifth of world population is consuming a quarter of the world's fossil feul supplies. Some of you have pointed out earlier, China has nothing to teach us because they learned everything about capitalist economics from us. The Chinese is at a point where we were in the 50's and is using the method we used back then. There is not a chance in hell that we can go back to our old 50's ways, the way the Chinese is doing now, and THEN increase our consumption of fossil feul to half of world's supply.
It is not just our capitalists chasing after maximum profit that is the trouble. It is our whole way of life that should be changed. Let me use a simply example to illustrate my point. Let's say we want to bring back the garment manufacturing industry to USA. We need to pay a "living wage" to our workers and it would have to be ten or twenty times higher than wages paid to comparable workers in China because of our higher standard of living. It follows therefore that each piece of garment would cost our consumers at least ten or twenty times what we now pay for imported Chinese manufactured garments. Then it would mean that we would be able to afford ten to fifteen pieces of garments in our wardrobe instead of the forty or fifty pieces which is quite common among us Americans (this figures include those practically new ones we constantly throw away). Yes, we would have employment for garment workers in USA, but are we willing to wear a T-shirt until it is discolored and torn?? That is the "to be or not to be question" that we must all answer. If the answer is to change our way of life to one of a sane consumer we would have a revolution. If not this is what is going to happen even with more Robert Reich thumping their chests or tearing their hair out
EACH member of the Chinese capitalist and upper classes will on average be a quarter as rich as our own within the next thirty odd years. But because of their huge numbers they may soon oustrip our own capitalists and upper classes in their command of total aggregate wealth. Their l.3 billion citizens would have just enough food to eat and seven to eight pieces of garments each. But our elite cannot survive as our elite unless they do something about this. Apart from keeping a tight lid on our own bubbling cauldron of discontent (facism) they had to go out there and beat the Chinese in a fierce competition for natural resources.
The Chinese elite can see this coming and they are building up their military to counter such a push from us. As both us and the Chinese are following the capitalist model to its logical conclusion a war between us would be inevitable. At present our military is several time more powerful and destructive than theirs. The likely choice is that our elite would decide a pre-emptive strike against them is better than a cure later. People like Robert Reich, with their cockeyed view of our economic problems would help to push us along the road to a final conflagration of unimaginable proportion. Attention, elite. Give us changes we "can believe in" !!!
Good !! School and
International School
In the context of world cultures and societies, we Americans are mere 200+ year old babes in the woods.
Around 5,000 BC, i.e., long before us and the current Chinese economic strategies, the Chinese were erecting thousands of miles of a Great Wall without the benefit of mechanized equipment. The Chinese also invented the insurance business and gunpowder. Christopher Columbus used Chinese explorations to find a new world which he thought would be China, but turned out to be North America. The Chinese are such an ancient people that they used to have knives and forks. Chopsticks were invented by the Chinese after their knives and forks. No more slicing or cutting at the dining table.
Back in the '40's, Dr. W. Edwards Deming tried to help American car CEO's understand that manufacturing methods could be improved to produce quality products more efficiently. No luck. Instead, six decades later, weary taxpayers were told--not asked--to pay for longstanding managerial incompetence in Detroit which, among its many other failures, didn't listen to Deming or learn anything from him.
The Japanese listened to Deming, applied his ideas and understanding to manufacturing.
"A number of Japanese manufacturers applied [Deming's] techniques widely and experienced theretofore unheard-of levels of quality and productivity. The improved quality combined with the lowered cost created new international demand for Japanese products." [from Wikipedia]
Japan has established a Deming prize which honors Dr. Deming as a major contributor to Japan’s industrial rebirth and worldwide success.
Years ago, Ross Perot tried to communicate with us about a "giant sucking sound" of jobs leaving this country. We didn't listen or learn--and probably wish we had.
There are endless advantages to learning and remaining teachable. There are even more advantages to real understanding and wisdom.
The know-it-all is a fool.
Around 5,000 BC, i.e., long before us and the current Chinese economic strategies, the Chinese were erecting thousands of miles of a Great Wall without the benefit of mechanized equipment.
----------------------------
You have an extra zero - it was 500 BCE, not 5000.
****************The prevailing asymmetric dollar-based system is essentially unstable. It leads to a self-multiplying expansion of US external deficits because dollars acquired by the rest of the world are placed in US banks as reserve assets of foreign central banks. These deposits in turn serve as a basis for further money creation by US banks (as they lend it out), more demand and more external deficits.
Savings from foreign surplus countries enabled US domestic credit to expand at 12% in the years leading to the financial crisis of 2007 and contributed to almost runaway securitization of mortgages, housing boom, and further widening the US current account deficit.
Ironically, in our opinion, the dollar-based system has hurt the industrial structure of the US because the US feels less pressure to expand its exports to finance its imports, it can just print more dollars. Because the dollar is the world's pre-eminent reserve currency, US money expansion and near-zero interest rates have an immediate impact on commodity price inflation, most noticeably energy and food.
Fed expansionary policies also serve as a tax on the world economy in form of seignorage (as printing dollars costs little but foreigners have to give something of value to accumulate our dollars) for using the dollar as a settlement and a reserve currency. The amount of resources drawn from other countries is approximated by the perennial and growing US external deficits.The money creation amounts to a redistribution of real wealth from poor consumers in Bangladesh and Mauritania to banks, hedge funds, and financial market speculators and traders in New York, Hong Kong, Singapore and in other trading centers.
......... Hu nor Sarkozy would have to beg Obama to restrain dollar liquidity; it should be a system where the US should face the same balance of payments constraints as Burundi, instead of Burundi transferring real resources to the US.
*****************************************
We are stealing the rest of the world blind. Why should our government and Wall Street be interested in changing this system....even now?
So Robert, what's your solution? Maybe capitalism just doesn't work and cannot be made to work in the interests of all the people? Ever think of that?
"China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders."
And who are those shareholders? They consist to a large degree of union and corporate pension funds, mutual funds aggregating the holdings of millions of individual shareholders, university and charitable foundations.
How many socialist or communist societies in history have survived? China is succeeding largely because it is embracing capitalism. Businessmen in China who succeed are becoming very, very wealthy. Wealth is more concentrated in the few in China than in the United States.
"Businessmen in China who succeed are becoming very, very wealthy. Wealth is more concentrated in the few in China than in the United States."
I would like to see some statistics on this.
As far as socialism goes, I would prefer to see beautiful women in the commercials I hate, than bearded old men on billboards. That said, socialism and capitalism don't work because they are a form of representative government that usually starts out looking out for the welfare of their country and end up looking out for the welfare of the "representatives" who run it. The system of government in the end has little to do with the welfare of the people.
I think any system of government can survive and prosper when all the people run it instead, something much easier to accomplish with today's technology. This has been proven in a very non-technological way by the Swiss for over 170 years of no wars, no boom and bust, no WOD, few immigration problems, the best schools and healthcare for all, a healthy environment and more, all despite having few natural resources:
http://direct-democracy.geschichte-schweiz.ch/
Our challenge is not to look for reasons why it can't work in America, but to look for ways to make it work here: http://ni4d.us/
Re statistics on the distribution of wealth in China versus in the United States:
"China's wealth concentration has by far exceeded that of the US with 1 percent of the wealthiest Chinese families being accountable for 41.4 percent of the country's entire wealth. China is also one of the countries with the largest income disparity in the world, the latest report from the World Bank stated.
"In the US, the wealthiest 5 percent people hold 60 percent of the wealth of the country, but the middle-class families enjoy the largest part of the incomes."
http://business.globaltimes.cn/china-economy/2010-06/540373.html
Doesn't wealth concentration in China poll higher due to their vast majority being poor and their middle class being small?