Inevitably and regrettably, China has landed in the middle of the American presidential campaign. Both candidates are now laying claim to credentials as the ultimate guardian against the supposed job-killing, prosperity-destroying juggernaut across the Pacific.
This is inevitable because China's rise and its implications for global commerce are never far from any conversation about lost American jobs and diminishing middle-class opportunities. It is regrettable, because -- as both candidates know well -- "getting tough on China," as the tiresome mantra goes, will accomplish little if anything in terms of restoring vigor to a chronically weak American economy.
Rather, by indulging in political theatrics that cast China as the evil empire, the candidates are distracting us from the much more fruitful pursuit of figuring out what we can we do here at home, using our considerable know-how, resources and entrepreneurial savvy, to make American companies both more competitive and more prodigious sources of quality paychecks.
The causes of the American economic crisis are complex. Near-religious ardor for unsupervised markets allowed "financial innovation" -- a euphemism for shenanigans -- to eclipse productive innovation. The decline of union power, the shift of production to lower-wage countries and the rise of automation combined to sow unemployment, particularly in manufacturing, while denying workers their share of the spoils from rising productivity. Tax cuts for the wealthy have exacerbated inequality, which has diluted spending power for millions of households.
But the solution to our troubles is clear enough: We need to generate tens of millions of quality jobs so ordinary people can again earn enough to support their families. The means of going about this lie not in some World Trade Organization hearing room in Geneva, where justice moves at a glacial pace, or across a table with a porcelain vase in Beijing, where visiting American diplomats negotiate mostly worthless communiqués.
The solution does not reside in Washington, where blustering congressmen make hollow threats about trade wars while raking in campaign contributions from the primary beneficiaries of cheap Chinese labor and an undervalued Chinese currency -- the major American brands that have come to depend upon China as their factory floor.
The answer lies here at home, in our laboratories at major research universities, where our finest brains pursue ideas that can germinate thriving new industries; at our community colleges, where laid-off manufacturing workers can be trained for jobs in these new pursuits; and inside our private sector companies, where entrepreneurs can adapt to the global economy by producing intrinsically useful goods and services.
The key to the deal is getting these components to work together, rather than engaging in the politics of division and pinning the blame for our problems on some distant, hard-to-influence force. The 'Blame China' conversation is a time-wasting, attention-diverting sideshow, not unlike the discussion of illegal immigration as a supposed threat to American prosperity. Both present handy props for opportunistic politicians eager to use externalities to explain away their own failure to reckon with our problems.
Let's be clear: China's trade and labor practices do frequently collide with international norms and undercut commitments that Beijing has made through the World Trade Organization. China does indeed subsidize favored companies, not least by funneling cheap capital and natural resources to state-owned enterprises that dominate strategic industries such as steel, automobiles and electronics. China systematically exploits its working people by banning trade unions and by sheltering employers from enforcement when they routinely violate minimum wage laws.
If China is genuinely breaking international trade commitments in its production of auto parts, as the Obama administration alleged last week in fresh WTO cases, filing such complaints is a legitimate means of seeking redress. Ditto, the cases filed in other industries, not least in the manufacturing of gear for renewable energy production, a key emerging pursuit.
But anyone who suggests that these sorts of actions are going to fix what ails America is either naïve or disingenuous. If we were to magically remove China from the global economy, laid-off textile workers in the Carolinas would not suddenly get new jobs again making cotton T-shirts (though we might significantly hurt sales of American cotton, a highly subsidized commodity, which now gets purchased in great quantities by yarn factories in China). We would not suddenly resume building personal computers in California. (Though we might severely disrupt a global supply chain that has made a lot of people very wealthy in Silicon Valley, which in turn has fueled a consumer boom that's also enriched vintners, contractors, landscape architects, art dealers, lawyers, insurance salesman and, for that matter, taco stands, dry cleaners and every other part of the economy.)
These traditional pursuits would simply get dispersed, shifting from China to Vietnam, or Mexico or Turkey -- a shift that is already happening as Chinese wages climb.
We have serious economic challenges in America. The hollowing-out of manufacturing communities should be high on the list of challenges that need attention. We need training programs for laid-off workers and targeted investment with government support in promising new areas. But pretending that something meaningful can be done by pointing at China in order to return significant jobs to the Rust Belt is of little help.
Far too little attention gets devoted to a bigger challenge than China: automation. Despite the tendency to write obituaries for the American factory, the United States by most measures still ranks as the world's second-largest manufacturing power, behind only China, having produced $1.86 trillion dollars worth of goods in 2010. The problem is that this production doesn't employ nearly as many people as it once did. But this is not just an American problem, it's a global reality. Indeed, China itself has lost millions of textile jobs in recent decades amid consolidation and modernization.
When the election is over, the global economy will still be here with its opportunities and its pitfalls, requiring more sophisticated action than simply looking across the Pacific and promising to get tough with those cheaters who supposedly stole our prosperity.
Follow Peter S. Goodman on Twitter: www.twitter.com/petersgoodman
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| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
I could go on, Mr. Goodman, but see no point. You missed the boat. One lifesaver for your specious reasoning should be plenty.
And, China engages in a number of unfair trade practices to maintain surplus in trade. Obama talked on and on about it in 2007 and 2008, but barely made a scratch on the problem once elected. Romney is much more aggressive on the subject and I think he will take some meaningful actions (tackling currency manipulation, eg) in short order once and if elected.
GE needed $60 billion at the FED discount window and GM was bailed and both have the same off-shoring drug habit so who can say it's working? The author sympathizes with my crowd but would rather we capitulate to the Tom Friedman band of elitists forgetting that going forward means we have to understand our economic history and right previous wrongs..albeit gradually; if anything we should consider tariffing the trans-nationals and declaring them non-US corporations as soon as they off-shore one single job---Andy Grove of Intel supports this (sic).
Been doing this 30 years-know more than a lot about this subject.
Trade with China is the prime suspect for many obvious reasons. Workers in China are slaves to a communist dictatorship is a key reason. Workers with no rights are slaves to corporate power. Its very simple. And trade with communist validates communism. Do you believe communism is a valid economic system?
The Romney campaign told TPM Monday that Gillespie’s “no comment” would be its final word on whether Bain acquired the factory.
http://2012.talkingpointsmemo.com/2012/09/romney-camp-silent-on-whether-bain-purchased-brutal-chinese-factory.php
These borrowed US dollars will probably be spent on imported foreign manufactured earth-moving machinery, imported materials (Steel, Cement, Equipment, Pipe and Wire), illegal alien labor, outsourced engineering, outsourced CAD drafting, etc., and the US workers will still be mostly unemployed.
Maybe any Economic Stimulus Federal Government Deficit Spending should also prohibit any imported products (even if we no longer manufacture those products) from being purchased with any of these funds, and also prohibit all outsourcing of the Labor Required.
Does China steal our prosperity simply by offering its services? Does Bain when it moves a plant to China? It's complicated, but it is certainly true that US companies bypass US environmental and worker protection laws by utilizing cheaper labor in countries that don't honor them. Do we need or want to China-ize the US to compete? Something's wrong with this picture.
"The answer lies here at home, in our laboratories at major research universities, where our finest brains pursue ideas that can germinate thriving new industries; at our community colleges, where laid-off manufacturing workers can be trained for jobs in these new pursuits..."
Designed in America, made at Foxconn. How many will this help?. I have read that even some radiologists (MDs) are being replaced by digital outsourcing to other countries.
"the United States by most measures still ranks as the world's second-largest manufacturing power, behind only China..."
Not long ago we were the first by a large measure; and the trend is in the wrong direction. Moreover, we have transferred tons of (developed by US universities) technology, officially and unofficially, to China, rapidly creating a formidable competitor in the future.
In the video attorneys explain how they assist employers in running classified ads with the goal of NOT finding any qualified applicants, and how they disqualify even the most qualified Americans in order to secure green cards for H-1b workers.
"Our goal is clearly NOT to find a qualified U.S. worker ... our objective is to get this person a green card ... so certainly we are not going to try to find a place where applicants would be most numerous. "
This is what Politicians and companies really mean by a shortage of skilled U.S. workers.
http://www.youtube.com/watch?v=NPQtpnJPSZI
We haven't built enough schools over the past 30 years to accommodate all the citizens that would need the education to pursue jobs!
the bottom and the middle pay for it with stagnant wages, lost jobs, inferiror quality goods, potentially unsafe goods, decreased consumer choices and so on
The majority of shoes and garments have not been made in the US for over a decade or more. One wonders where you get your data from or are you just ass-uming it? Where do you find the data required to make a shoe here vs overseas then comparing sell prices and factoring inflation? Over the last 5 years Nike has stayed somewhat steady in gross profit at %8.5. Thats a pretty typical profit margin. Kitchen aiad and Whirlpool profits are down the last ten years-and they mfg lots overseas and Mexico.
Explain that-
Use this link to see how much less things cost today than yesterday.
http://money.usnews.com/money/blogs/flowchart/2010/06/22/14-things-that-are-getting-cheaper
And as long as China has invested to heavily into the American dollar, they are at odds with helping destroy it on for their own sake because once their economy is considered above that of the US, no one will ever want to do business with them again because it's too expensive. This is why no other country opens factories in the US. And before it's alleged it's because workers here are paid to much, take a moment to consider that's its really that big money just wants to widen the profit gap rather than pay their workers.
Theatrics aside, China sure appears like a somewhat evil empire to me. Add to that hypo-ethical corporations happy to shift jobs overseas to decrease costs *and* avoid tax liability and our approach to China seems ripe for political discussion.
Our approach to 'free trade,' and China specifically, needs a 180-degree turn. China's dumping of cheap tires and wind turbines is the tip of the proverbial iceburg.
Hamilton believed it was necessary to impose tariffs on all imported goods for two reasons. First, we needed to fund our new republic and, second, to develop new domestic industries by giving them the protection of tariffs, which at the time ranged between 5 and 10 percent.
We can do as our founders did and impose tariffs to equalize the labor expense in an imported manufactured product. This would make the large corporations indifferent to where a product is manufactured and would most likely favor the U.S., since international transportation would be avoided. Most other industrialized nations do this through some form of value-added tax.
With this policy, jobs would return to America. Unfortunately, we continue down the path of free-trade expansion with 14 agreements in force and 12 more being negotiated. All of these agreements are driven by special interest and not the interest of American workers or our nation.
Free trade, without question, is the largest reason for the closing of 60,000 factories and the elimination of millions of manufacturing jobs in the U.S. since 1980.
We’ve grown to believe that the economic issues facing our nation are “complicated,” “global in nature” and almost “impossible” to solve. This is untrue.
Special interests have kept us from formulating solutions, just as they fought Franklin D. Roosevelt as he tried to enact programs to move us out of the Depression. In 2011, there were 12,651 registered lobbyists harassing our Congress by spending $3.3 billion to get their way.
http://www.postcrescent.com/article/20120902/APC06/309020093/Mike-Muoio-column-s-time-change-nation-s-economic-path