Friday, October 7, 2011

China and the Beast

It popped up in the news recently that the US Congress is considering legislation that attempts to rectify what many perceive to be currency manipulation by China. But there is more to it than that. US Congressmen see China's aggressive trading practices, industrial espionage, heightened belligerence in Asia, hoarding of scarce metals, and a new adventurism characterized by space exploration and military buildup. China often goes against the American grain in the UN Security Council, as with China's opposition to Syria sanctions. There is also a common recognition that China only respects power.

Congressmen want to do something to end apparent American impotence in the face of this rising power.

My inclination is to sigh. A really big, exasperated sigh. The last thing the world economy needs in its fragile condition is a bruhaha between China and the US. Everyone loses. China, too.

On one hand, I am not a born again American patriot, believing the US way is the best way for other countries. It was simply perfect for the circumstances 235 years ago in the New World, and it has been a great ride until now. Other countries have different cultural, geographic, historical and economic fundamentals. Different priorities. Different ways. Some are better than others, as we know from studying the Philippines.

I frankly am impressed with the way China has recently adapted its old-school communism to encompass the competitive zeal that free-market capitalism brings to commerce and development. It is a government by committee, and the committee that is in place now, by all appearances, is extraordinarily capable.

It can't be easy. Several bazillion people, ethnic fractionalization that would make a shattered window seem organized, all pushing forward on all cylinders.  Fudging here and there, throwing artists in jail, but for the "cause" of a Greater China.

As a US citizen, I admit I am open to a profound change in personal ideology. Until now, I have backed Barak Obama's presidency because I find him unusually cerebral, diplomatic, wise and even-tempered. He saved the world from economic collapse on the strength of his charisma and some bold moves by his staff. I agree with his view that the best road to jobs is a mix of tax increases, expense cuts and targeted re-investments. I am also generally sympathetic to the needs of the poor and seniors.

Whereas most of the dissatisfaction others have with President Obama is expressed in one word - jobs - I hold that he is relatively innocent of the condition of the situation regarding jobs. That is mainly fallout from Bush mismanagement. Trillions of dollars of wealth disappeared in 90 days.  It will not come back in anything less than seven years.

My objection to President Obama is strictly on new ideological grounds. I am developing a pro-corporation frame of thinking. This is startlingly opposed to the thinking of the anti-corporate protestors marching on Wall Street. They are, in my opinion, focused on the symptom of weak job production, rather than the illness, a nation that is bickering rather than conducting its economic and global affairs as an integrated whole.

China is an integrated whole, at the national level. By mandate, yes. But the entire nation moves as one. The US stumbles like a drunk bouncing off light poles. Policies are just about as articulate after they are battered by polarized partisan political gamesmanship. China must laugh at American ineptitude and penchant for self destruction.

US Republicans are more corporate minded than democrats. Of the US  Republican candidates striving for the nomination next year, I would go with Mitt Romney. He has grown since his last campaign and possesses a calm and maturity that the other Republicans simply don't have.  I find the others sorely lacking in refinement. A little nutty, frankly. Unstable. Not the kind of people to put next to the nuke button.

In debating with myself (I do this because I can offer countervailing opinions without being called a moron), I find myself liking Romney's corporate background. I'm just not sure he is strategic enough, or bold enough.

For I wonder, I wonder. Maybe we are going at this China thing all wrong.

China has let loose its global dogs. It's dogs being mining companies, in the main. And domestic companies given the implied go-ahead to steal every idea they can so China can modernize and get more competitive fast.

I say, okay, the US needs to get down and dirty, too. And, short of military might, this can be done by taking the handcuffs off its corporate giants. Stop double-taxing overseas profits. Stop shouting about the export of jobs overseas. Let the beasts loose. Let them bid against China for mineral resources, let them hire locals even in countries without the best human rights record, let the compete. Defend American corporations against unfair trade practices (why was Microsoft left to swing slowly, slowly in the wind in Europe?)

Indeed, grease the corporations up with undercover subsidies the way China plays the game. And the way Europe plays the game in some areas, too. (You think you can buy a lot of good California wines in France? You think Airbus subsidies are "fair and balanced" to Boeing?) View corporations not as businesses, not as product and service vendors, but as strategic attack dogs representing America in the global arena. If we don't have mining companies that cannot counter China's aggressive acquisition of resources, build a nationalized giant, start acquiring resources, then go public with the company later.

It is a strategic strength, American corporations. Boeing, GE, Ford, Deere, Microsoft, Intel, Cisco, Apple, any food companies that Nestles has not bought, Goldman Sachs, Citigroup. And others I can not think of off the top of my lazy head. Why tie them down or punish them for being successful?

Many of these companies are sitting on huge piles of cash. Encourage them to go shopping. Anywhere.

If that is the strategy, President Obama is the wrong guy to lead . . .

And also lose the congressional whining about China, which is counter-productive. BE stronger. Act in unison. Stop trying to punish China for aggressively pursuing self interest. Pursue American self interest. 

Aggressively. But not militarily. Not nation building.

Apply US power, US strength. Put our corporations in the game. Many are big enough to buy countries.

The new National Anthem?

"Who let the dogs out?"


  1. Joe,

    I said it before. Let me repeat.

    Economic Instability -> Currency War -> Trade War -> Real War!

    Goldman Sachs analyst Charles Nenner predicting major global war in 2013.

  2. Understand you have a weak internet connection but when you get a chance, check out Peter Schiff's Congressional testimony:


  3. Anon, We are on that slippery slope, at the top. Certainly we could be going the direction you cite, and I wonder who has the perspective and courage to stop it.

    Winky, listening now. Thanks. Regulations can indeed be constraining, eh? Do gooding gone haywire.

  4. China has the upper hand. They have billions of low-wage, non-unionize, scared automatons and child labor. They violate every environmental law there are. American corporations gladly outsource their production to China with American mass-producing, environmentally-not-friendly, decades old technology whose price outcome is cheaper if it were made in America.

    America has become service industry. Dirty, labor-intensive industries are outsourced.

  5. I read somewhere that Obama has riscinded the ozone law ? Because it's too expensive for American manufacturers to strictly follow ?

  6. Mariano, I'm confident that Congress will form an Ozone Hole Remediation committee.


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