Better late than never, I guess. At the New York Times Farhad Manjoo laments:
The People’s Republic of China is the largest, most powerful and arguably most brutal totalitarian state in the world. It denies basic human rights to all of its nearly 1.4 billion citizens. There is no freedom of speech, thought, assembly, religion, movement or any semblance of political liberty in China. Under Xi Jinping, “president for life,†the Communist Party of China has built the most technologically sophisticated repression machine the world has ever seen. In Xinjiang, in Western China, the government is using technology to mount a cultural genocide against the Muslim Uighur minority that is even more total than the one it carried out in Tibet. Human rights experts say that more than a million people are being held in detention camps in Xinjiang, two million more are in forced “re-education,†and everyone else is invasively surveilled via ubiquitous cameras, artificial intelligence and other high-tech means.
None of this is a secret. Under Xi, China has grown markedly more Orwellian; not only is it stamping its heel more firmly on its own citizens, but it is also exporting its digital shackles to authoritarians the world over. Yet unlike the way we once talked about pariah nations — say East Germany or North Korea or apartheid South Africa — American and European lawmakers, Western media and the world’s largest corporations rarely treat China as what it plainly is: a growing and existential threat to human freedom across the world.
Why do we give China a pass? In a word: capitalism. Because for 40 years, the West’s relationship with China has been governed by a strategic error the dimensions of which are only now coming into horrific view.
He’s missing one word in that: crony. Free markets have nothing whatever to do with the disaster that China has been to the American economy. We do not now have free trade with China and have never had free trade with China. We have had managed trade and that has nothing to do with free markets and everything to do with crony capitalism.
There is also nothing in his piece that wasn’t apparent 10, 20, 30, or 40 years ago. Only wishful thinking has allowed the policy with China that we have followed for the last 40 years. It’s time for a little hard-nosed reality.
The reality is that manufacturing should and may return to the United States but the manufacturing jobs “lost” over the last 40 years are gone for good. If we’re going to continue to manage trade, it should be managed in a way that benefits most Americans rather than just a relative few.
“He’s missing one word in that: crony. ”
You are technically correct, but crony capitalism is the norm in the US, so when Americans talk capitalism they are really talking crony capitalism. The (crony) capitalists saw the opportunity to make lots of money for themselves in China so they went. China didnt have to drag anyone over there against their will.
Steve
Unfortunately, there is no will in Congress to force corporations to repatriate their factories. Merely transferring the factory orders from Chinese manufacturers to other foreign manufacturers does not reduce our trade deficits, not does it help our workers. Moreover, our loss of industrial capacity means that we are in the same position v.v. China as Japan was v.v. us in 1940. We are not competitive in any conventional war, and we would have to escalate to nuclear war very quickly.
I expect the current situation to continue until we are irrelevant in the Far East.
The agony of the Houston Rockets is an inevitable and welcome development.
I can only hope America takes South Park’s lead and puts China on notice, they’re not the boss of us.
“You are technically correct, but crony capitalism is the norm in the US, so when Americans talk capitalism they are really talking crony capitalism.”
Which is facilitated by government primarily through regulation and pay for play influence. Let me guess. What’s the solution? Of course, more government. Of course.
“The (crony) capitalists saw the opportunity to make lots of money for themselves in China so they went. China didnt have to drag anyone over there against their will.”
Alternatively, knowing that consumers will buy on price, despite their claims to the contrary, a business moved or potentially risked insolvency. I doubt Apple worried about insolvency. I know for a fact that common widget makers feared insolvency.
This is why only fools listen to doctors and dentists on business matters. Its axiomatic in my business.
Its a fascinating, and instructive, phenomenon. Left leaning persons who piously professed for decades to be concerned about the working man, suddenly can talk about nothing but the consumer, and the worker be damned. Why? Trump, and his trade stance, of course. Sick.
Dave has been consistent. I have lived it, always pointing out the difficult tradeoff of worker, consumer and capital interests. Some are just shills; some victims of TDS.
“Which is facilitated by government primarily through regulation and pay for play influence.”
IOW, wealthy people “pay” the government to make rules that favor the wealthy. Your solution is to put the wealthy directly into office and to continue cutting the taxes of the very wealthy. Wonder where that goes?
“Alternatively, knowing that consumers will buy on price, despite their claims to the contrary, a business moved or potentially risked insolvency. I doubt Apple worried about insolvency. I know for a fact that common widget makers feared insolvency”
So you are saying that we cannot bring those jobs back to the US since we cant make stuff as cheaply? And you are a Trump supporter? What happened to that Drew who claimed we could bring em back and still make a profit? Oops, forgot, Trump is president now.
“to be concerned about the working man, suddenly can talk about nothing but the consumer, and the worker be damned.”
The worker and the consumer are different people? That U of Chicago education gave you some mighty fine book learning. But we are talking politics here, so we have the GOP, especially Trump, that doesn’t really care about the worker or consumer, just the wealthy. Then we have the Democrats who sometimes selectively care about the consumer or working man, but also cater to the wealthy. Not much of a choice, but we know where we have been and where we will go with the GOP and it only benefits one group.
Steve
I thought this under covered story intersects nicely with the comments above
https://www.google.com/amp/s/amp.cnn.com/cnn/2019/10/01/politics/cbp-trade-forced-labor/index.html
Did you know that in 2015, the law was changed so customs can seize and ban imports of any goods where “reasonably†information exists it was made by forced labor? And the information can be gathered and reported by 3rd parties to customs.
If a manufacturer is in a country for low labor costs — what are the chances the workers could be reasonably accused of forced labor?
What would be the cost to verify every part of foreign supply chain has no forced labor?
I suspect this can change the incentives of manufacturers in the medium (5 to 10 year term)
Thanks for the nonsense, steve.
At the risk of being off topic, what we have with Turkey and Kurds right now is a test case of what Dave talks about frequently, and which I largely agree with. We stay out of the world’s skirmishes and human tragedy can occur. Its a very tough issue.
The world and its issues can be very ugly.
The issue is that you cannot then justify your trade decisions based on economic thought about free trade. There is no more relevance than the speed of light in a vacuum has relevance to the speed of a bowling ball through water.
No but if we transfer orders from Chinese manufacturers to those in other countries
1) we aren’t subsidizing a military build-up in an irredentist country; and
2) if the other country doesn’t impose barriers to U. S. products that will reduce our trade deficit.
3) the other country probably has a convertible currency. That will help, too.
What’s happened with the NBA, Blizzard and South Park has been a real eye-opener for me, and I’m probably less ignorant of China than the average American.
I hope the blatant whoring of these Corporations raises enough awareness for the public to get politicians to take action.
“I suspect this can change the incentives of manufacturers in the medium (5 to 10 year term.)”
Heh. Here’s how it really works. You find yourself in one of those famous shootout meetings at (Pick One) Wal-Mart, Home Depot, Amazon etc. Because manufacturers aren’t stupid, the features of their products: reliability, quality etc aspects are similar and not decisive; pricing is. They know, despite the fact that Mrs Onlooker may be brand loyal, she ultimately buy mostly on price.
Company A manufactures their clothing/tools/cleaning tools/toys/electronic components etc in the US. Company B manufactures in China, and even with freight, is 10% cheaper. Consider: products such as these generally are made by 10%+- EBITDA companies. Who offers Wal-Mart the best price and who wins the shelf space? Who survives? Like right now.
That’s just common, everyday products. Think about more sophisticated, intellectual property intensive products. And god forbid products with attendant health issues. Its not right. But its reality.
But what do I know. I’ve just been doing this for 25 years. Better to listen to guys who remove gallbladders……..
“I hope the blatant whoring of these Corporations raises enough awareness for the public to get politicians to take action.”
Let’s see. The NBA could start taking a knee during the Anthem. Nike could dis the flag. The left would fawn all over them. Woke you see. To quote David Bowie: we could be heroes.
https://www.youtube.com/watch?v=lXgkuM2NhYI
There are of course other ways to open a sporting event. And they go nuts like this every single Chicago Blackhawks game.
https://www.bing.com/videos/search?q=chicago+blackhawks+star+spangled+banner&&view=detail&mid=D48972C93DECCE9521B3D48972C93DECCE9521B3&&FORM=VDRVRV
Maybe the NBA should start playing the Chinese national anthem before games.
Here is why it could change incentives.
If you read the article; all of the custom seizures were brought by 3rd parties. A couple of them by competitors to the importer.
What is the value of being 10% cheaper if at anytime, customs just holds your goods for a couple of months while you gather evidence no part of the goods is made with forced labor? What’s the penalties you pay Walmart if you cannot deliver the goods?
The threshold for “forced labor†and “reasonable†as defined by statute look low to me while the importer has to prove a negative; which is harder.
“Company A manufactures their clothing/tools/cleaning tools/toys/electronic components etc in the US. Company B manufactures in China, and even with freight, is 10% cheaper. Consider: products such as these generally are made by 10%+- EBITDA companies. Who offers Wal-Mart the best price and who wins the shelf space? Who survives? Like right now.”
I agree completely with this. It is why the capitalists will always choose Company B, which is probably a US company. One that didnt care about forced labor issues, having to give way its trade secrets, non-compliance with WTO agreements. Cheapest price wins. Everything and everyone else loses. And somehow there is supposed to bye a market solution for this.
Steve
Actually, steve, I’m a capitalist and I’ve spent the last 25 years of my career identifying, owning and improving US manufacturers. It’s all we do. US. Manufacturing. And we’ve done pretty darned well at it. But other companies have to deal with the realities of consumer choice and manufacturing cost structures. Why, I even bet you buy product and equipment for your facilities made by foreign manufacturers. You greedy pig.
As I said in an earlier comment, you should direct your ire at companies that are darlings of the left like Apple or Nike. At their product selling price points I’m not impressed that they have to manufacture in hellhole countries.
Just sayin’.
Just enjoying the inconsistencies. First you say that those companies HAVE to buy from the Chinese or they will go broke**, so it is OK if they ignore how Company B achieved lower prices. Now you support tariffs because Trump also supports tariffs, which will push up the costs of Company B’s products over those of Company A. So arent all of those buyers going to go broke? Also, still trying to reconcile opposing government interference while supporting tariffs.
** Alternatively you could be saying that Company B had to move to China, accepting forced labor and giving away trade secrets, etc in order to offer products at 10% less that Company A. That B needed to abandon all ethical and behavioral standards to compete. What is the market solution for that problem since you dont want govt involvement?
Steve
After hearing Trump / Steve Kerr’s comment today — I hope he, the NBA, Apple, Disney, Viacom, Blizzard, Pelosi, and Trump take time to reflect.
Serious things are happening in China, hopefully it will change for the better. But if not, decisions that seemed ethically justifiable 5, 10, 20 years ago could be seen as morally inexcusable in the future.
Shifting blame and what-aboutism is not going to make the hard questions and decisions go away.
I sometimes play a WWII strategic simulation game called Hearts of Iron. It lets you play as any country starting in 1936 and there are a lot fo sandbox options for non-historical and alternate history playthroughs.
When the first version of the game came out many years ago, the Chinese banned it because it had Tibet as a separate country, Taiwan was controlled by Japan and “China” consisted of several states include Japanese protectorates – which was the historical reality in 1936.
The level of sensitivity the Chinese have over what they consider their “sovereignty” is off the charts.
Your map example reminds me of an excursion into Riyadh while we were deployed. I made art into a book store and decided that I would look at an atlas just to refresh my memory of local geography. They didnt even have Israel on the map. Made me realize in a way I had not before how seriously they take things over there.
Steve