For 110 years America has reigned as the world's number one manufacturing nation. Next year, China is expected to wrest that title from the United States.
Last year, the U.S. manufactured $1.7 trillion worth of goods; China fell second at $1.6 trillion. Next year, China is expected to edge out America with production worth $1.87 trillion.
America will be Number 2. And unlike the Dutch at the world cup, America is losing the crown it held for a century, not seeking a first-time anointment.
It doesn't have to be this way. China's manufacturing sector is using the equivalent of steroids to attain the title. It deliberately devalues its currency, an outlawed practice on international markets. Devaluation means China's exports are artificially cheap in the U.S. and American exports to China are falsely expensive. It's no puny sum either. The discount for Chinese products sold in America is as much as 40 percent. - 40 cents on the dollar.
Allowing China to devalue its currency devalues American workers and businesses. Chinese currency manipulation is driving American manufacturers out of business and America workers into unemployment. For 110 years, American factories and workers have proved they can compete and win against all comers in the world. They can continue to do that if Congress places tariffs on Chinese exports to the U.S. or taxes them to compensate for the 40 percent price break the Chinese government arranges for its manufacturers.
Inaction means the U.S. government disrespects American workers and manufacturing in a way that the Chinese government does not. China deliberately manipulated its currency value to protect and preserve Chinese manufacturing jobs as the worldwide recession deepened in 2008.
Beginning in 2005, China had begun to allow the value of its currency to float up against the dollar on international currency markets. It rose about 7 percent a year, for a total of about 20 percent until 2008. Then, as the effects of the worst recession since the Great Depression hit China and tens of thousands of Chinese factory workers lost their jobs, China froze its currency's value at 6.83 Yuan per dollar. At the same time, China continued to print Yuan for the sole purpose of buying dollars. In 2009, China bought about $450 billion-worth of dollars. This practice artificially raises the value of dollars and suppresses the value of Yuan.
Now China's economy is booming again. Its exports in May increased by nearly 50 percent over a year earlier. Meantime, the American economy is stalled. The U.S. manufacturing sector has lost 2.1 million jobs - 16 percent of its total, since the recession began in December of 2007. Earlier this year, President Obama set a goal of doubling U.S. exports in five years, a feat that would pump up U.S. manufacturing and U.S. manufacturing jobs. But that goal will be impossible to reach if Congress doesn't intervene to offset Chinese currency manipulation with tariffs.
In June, China announced that it would begin to permit the value of its currency to rise again. But since then, the value has floated up less than one percent -- a trifling amount when it's undervalued by 40 percent.
China injures its own workers with its currency manipulation as well. Undervaluing the Yuan suppresses their purchasing power. And it contributes to inflation in China, which further reduces workers' buying power.
But it sustains Chinese manufacturing. It's a predatory economic practice. China is feeding its economy by killing and devouring American manufacturing jobs.
Last week, in a long awaited report, the U.S. Treasury Department labeled China's currency as undervalued. That's fine, but it won't save the U.S. from losing its title as world's greatest manufacturer.
Diplomacy has failed to preserve American manufacturing and American jobs. China did what it felt was necessary to shelter its factories. Congress must flex some muscle to defend American manufacturers.
Legislation has been introduced in Congress that would impose tariffs on Chinese imports to offset the effect of the currency manipulation. It wouldn't give American industry an unfair advantage; it would just take the steroids away from Chinese manufacturers.
The bills in both the House and Senate have bi-partisan support. This isn't a liberal or conservative issue. This is a jobs bill that won't raise the deficit.
Reps. Tim Ryan, D-Ohio, and Tim Murphy, R-Pa, co-sponsored the Currency Reform for Fair Trade Act, and Sens. Charles E. Schumer, D-NY, Debbie Stabenow, D-Mich., and Lindsey Graham, R-SC, sponsored the Currency Exchange Rate Oversight Reform Act.
Today is National Currency Manipulation Call-In Day. Tell your Senators and Congressman to stop the devaluation of U.S. manufacturing and U.S. workers. Tell them to pass these bills immediately or attach them to other legislation that will pass immediately. Sign this petition.
Tell them America is no Number 2.
Follow Leo W. Gerard on Twitter: www.twitter.com/uswblogger
Oh, puh-leeze. Less hysteria and a lot more objectivity is much needed here.
China is a sovereing country and can do with its currency whatever they think will help their economy. They do not owe the US a thing.
That this was going to happen was clear from the start. The US top corporate echelons who have profited VERY handsomely from the unencumbered outsourcing expected a free ride forever? China has a huge and supremely well-educated young and vibrant cadres of workers. Why would they want to trust US corporate officers who betrayed their own people and devastated their economy, to make a millions.
The Chinese are very big on loyalty. Seeing this sell-out of the American workers and betrayal of their own country, the Chinese have zero confidence that those same people would not sell them out to yet another up-and-coming economy.
Rather than cry into the checkbooks, it's time that the US took a very hard look at its own horrifically abusive practices, those recent and much older, and acknowledge the old adage: "What goes around...", then roll up their sleeves and restart our own economy before it's too late.
With the old, 20th century manufacturing gone, the US has the historically unique chance to build a super modern industrial infrastucture for the 21st century. It has to begin now. In 10 years it may be too late.
http://therightissowrong.blogspot.com/2010/07/race-to-bottom.html
Makes me freakin' sick. (Guess I'm just having a bad night tonight...)
Well that's a racist comment. Maybe one that you didn't intend to make, but racist nonetheless when you paint a stereotype on a wide range of people. It's like saying all Blacks are lazy. We know that is not true for blacks, so why is it ok to say Chinese cheat at everything? That's not condone right?
As of currency devalation or intellectual theft, I would ask so what? Isn't the US currency the world currency and comes along with its perks? Didn't the US commit intellectual theft from Britain a hundred years ago as Americans copied plans for certain engine designs and other manufactoring know how?
As for the gymnast comment, so? I don't understand how it is unfair for the rest of the world for sending a 10 year old the Olympics. Does the 10 year old have an advantage or a disadvantage? I rather think she had a disadvantage for being 5 years younger. The rule was put in place to protect children from exploitation, which in that you can argue about. But did she win fairly with a handicap? You bet she did.
As for the hundreds of millions of their population working for slave wages, you have to take into account of the price of their living standard. They can work for those wages because things are much cheaper there. Many Chinese would say how expensive everything is in the West. So you can't say it's a slave wage.
The abusers are us. Corporate America outsourced b/c they could take advantage of making personal fortunes on slave wages and horrific working conditions elsewhere, while simultaneously creating an economic disaster at home.
Meanwhile, back on the Wall Street ranch, Goldman Sucks is allowed to fleece with almost total impunity, banks don't want to make loans, corporations decimate their workforce and threaten the remaining slaves to work 12-hour days on salaries progressively curtailed since Reagan's days.
Until a decade ago the US was the undisputed economic potentate. Those days are irrevocably over. If the US does not get busy now, we will be relegated to the ranks of pariah states very soon by the full-steam-ahead economies of China, India, Brazil and a few others.
Name-calling, race-baiting and abusive labor practices at home will not repair the crumbling bridges, improve our dismal scholastic "achievements", etc. No disposable income = no buyers = dead economy.
Growing unemployment = fast shrinking taxbase that funds everything in this country. The top 1% need to be reminded whose sweat and taxes grease the wheels of Lady Liberty's chariot.
cost of war: http://costofwar.com/
cost of TARP: http://www.digitaljournal.com/article/276285
national debt: http://www.usdebtclock.org/
unemployment: http://www.theatlantic.com/business/archive/2010/07/the-scariest-unemployment-graph-ive-seen-yet/60086/
No kosher.
If only 10% of that $14 Trillion went to Main Street and American infrastructure instead (you can't offshore infrastructure jobs), demand for American steel would have doubled or tripled overnite, and you guys'd have to hire the immigrants just to deliver on time. Look at the China example - almost ALL of the several hundred billions went into loans for businesses (and NOT to the bankers) and for funding infrastructure. National growth stayed at close to double digit as a result.
If you wanna blame, blame the corrupt Beltway pols, whom the steel workers had to pay to play now for many decades.
What do you call America's massive, trillion dollar deficits? Is that not deliberate? Do they not devalue the American currency? You see American manufacturing helped by that? Why is it OK for America to do but not China? Do as I say, not as I do? What is good must be universal.
We effectively devalued OUR currency in order to keep our entire civilization from going down the drain (and not to mention the entire global economy with it). THEY devalue their currency in order to cheat in international trade.
Just a sliiiiiiiiiiiiight difference in motivation, reason and intent, wouldncha say?
Or is it that you would have WANTED our entire economy to disintegrate and us be in the Second Great Depression, just in order so that no one like YOU could accuse us of doing "the same thing" that the Chinese do?
Think things through.
What is good must be universal. You want an even playing field, you want fair, do not load the dice.
Thirdly, and perhaps most seriously, is that the Chinese would either significantly reduce their holdings of US dollars or stop increasing their holdings. If the Yuan was floated it would become another international reserve currency, as third countries would hold more of their reserves in it, particularly if it starts to price contract in it. All of these would result in the US having to pay significantly higher interest rates to borrow to fund deficits.
Secondly, let China try to reduce its holdings of U.S. dollars. Good luck with that. Who's going to buy them?
Vote all Globalists and Corporate Puppets out of office !!
Buy only American made and grown products. If we don't make it we don't need it until we can make it. Try to buy from American Only Companies and not from Multinational Corporations.
We are now a second tier country and fast slipping into third world status. This is OK with the globalists and corporatists. Probably their goal.
We also need to bring our world-wide military/police force home. We need a massive investment in our infrastructure to support future economic activity. We are becoming less and less competitive.
We need to toss Obama and all the other globalists out of office and restore our national self interest if we are to survive.
Obama is just another version of Bush and Clinton. All three have global interests in mind instead of the interests of these United States of America.
Right now, we have 10% unemployment, officially. Unofficial estimates go to something like 16-17%. Still, not a crisis. Most people eat regularly, and can find some kind of part-time work, at least. There's some that have been out of a job for some time, but as they say, try, try again, if you're persistent in your desire to find employment, you'll find something. It's a matter of matching up your skills with an identifiable need. Also consider starting your own business. Even in our high-tech, all-digital society, someone still needs to be able to wrap their digits around the tools that actually do real work, which is what everyone else is apparently too busy measuring to actually accomplish. And, that's exactly what they do, overseas, the dirty work. That's where they have the factories that the NIMBY's chased out of this country. That's where they make the goods that are then shipped to the US and countless other countries. China became the workshop to the world, so you wouldn't have to stare at smokestacks. But, it all has a price, and we owe trillions overseas, now. How will we ever pay it off?
Second, the Labor Department estimates that there are five unemployed people for every job opening. So you think if they just tried a little harder, all five could fit into that opening?
And, finally, you think NIMBY's chased manufacturing overseas? That's naive. Factories were lured overseas by subsidies given them by foreign governments and by tax breaks given by the U.S.
Nations set their own rules, not global capitalism and the IMF.
If we don't like it, don't trade with China.
But we can't do that, because businesses act on their own interests, not that of the nation.
Including Walmart: it imports all those Chinese products for its profit; doesn't care about us.
Maybe we should be more like China, have an economic policy based on national interest.
Instead of Milton Friedman's "let the market and corporations decide everything".
China eats our lunch, Goldman and company give us an economic meltdown.
Tell me again: what's so great about unregulated capitalism?