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View Diary: Owners of the world, unite (271 comments)

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  •  Better read it again. (0+ / 0-)

    At best, the diary is simplistic, anecdotal and short on facts, but in case you missed some of the finer points ....

    A new agreement with the Soviets came in 1983, and in 1984 Reagan became just the second US president to visit communist China. While his meeting failed to resolve issues around the continued independence of Taiwan, China enthusiasts were heartened by the strengthening flow of capital between the two nations. The connection between free trade and freedom was drawn more strongly every day. China might be reclusive, it might be too powerful to be susceptible to military threats, but that didn't matter. Once Chinese citizens got their mitts on Big Macs and their keesters behind  the wheel of a Chevy, the communist government would pop like a soap bubble.

    US policy always recognized "One China". China was admitted to the UN and Taiwan expelled in 1971 when the PRC assumed the chair established for China as a founding member in 1945, prior to the revolution in 1949. The RoC did not petition the UN for a seperate seat until 1993. The RoC is presently recognized by 23 UM members, the balance including the US, recognizing the PRC, affirmed by the US-China Joint Declaration of 1972. The remainder of the paragraph is anecdotal, speculative and of no consequence.

    At the time Deng opened China for business, western societies had enjoyed decades of economic growth. Even though there had been periods of recession and surges of inflation, overall economies had expanded rapidly. Incomes at the top had risen, but so had incomes at the middle, and the bottom. The value of items was not completely tied to the value of labor, but the value of labor was still a big enough component in the cost of goods that workers in America and elsewhere could afford to buy the things they made. Labor cost and goods costs were still tightly coupled.

    Deng offered corporations a chance to break that connection. By moving the source of production to China, they could sharply reduce the cost of labor. At the time, labor's value was increased by years of training and skill acquisition and Chinese workers lacked the experience of American workers, but Deng's assault was well timed.  Manufacturing was becoming increasingly automated, and the value of long periods of training diminishing. Besides, the number of available Chinese workers was such that manufacturers could sort and sift to find those who learned fast and were most productive.

    The above is revisionist history. China was hardly the first poor country to open it's doors to Western businesses offering cheap labor, and in fact, there was nothing unique about it; rather China followed the path blazd by others and the only logical path to attract outside investment. Are we to suppose they would have succeeded by offereing more expensive labor? LOL.

    The lead-in to the first paragrph is a nice bit of self-fulfilling retoric; the West was rich and everybody was happy until Mr. Deng threw open the doors!

    Far more than at any point in the past, the cost of goods and the cost of labor was suddenly and irrevocably severed. The goals of manufacturing workers in the US were no longer a concern to employers, because those workers were now ex-employees. Even as prices fell, the reduced cost of labor made it possible for corporations to extract higher profit margins.

    More revisionism. Suddenly and irrevocably severed? How so? In fact, development from the mod 70's through the mid-80's was slow and painful for pretty much everyone involved and if you actually check the fact of Chinese exports you will find it was not until Asian led investment in Shenzhen, which was declared a Special Economic Zone in 1979, took root in the late 1980s that the export of low value consumer products actually took-off, and more than a decade later when China was admited to the WTO that it's economy hit critical mass. Again, a simple chart of economic data would set the subject in a more clear perspective.

    Rather than organize an international revolt of workers, Deng generated a conspiracy of business leaders willing to devalue their work force. He showed CEOs that they could become fabulously wealthy if they only reduced their companies to nothing more than nameplates and outlets – brand names for China Inc. He showed them that they could profit from the destruction of their own system. What we took as economic victory was really an invitation to economic suicide, and corporations lined up to jump.

    OK. Picture Mr Deng addressing a meeting of The World Conspiracy of Business Leaders with a flip chart lecturing them on How Capitalism Works and his surprised and astounded audiance enthusiastically taking notes. Until that day they were just a bunch of Regular Joes munching cheeseburgers in some greasy-spoon off Wall Street, the home of Altruism Inc. Do I see the CEOs of Coca-Cola and Exxon in the back row marveling at the inginuity of the clever Mr. Deng? "Gosh" Mr Exxon Valdez exclaims to Mr. Sugar Water "Why didn't we think of that?" as Colonel Sanders excitedly calculated One Wing + One Thigh + One Breast + Mashed Potatoes x One Billion on the back of his cocktail napkin. Seriously ....

    More correctly about 60% of Chinese exports are produced by MNCs and a fair amount of the remainder by their subcontractors, but they are commiting economic suicide?

    And in punching a hole in the bottom of the western moneybag, he showed how China could scoop up the falling dollar and use it to purchase the world.

    China owns the world? Really? Is my snarc detectr malfunctioning? Was this intended to be published on Saturday?

    I'm sorry, but my reading of this diary has intent written all over it and plays a bit too lose with the facts to add-up.

    What about my Daughter's future?

    by koNko on Mon May 23, 2011 at 09:39:58 AM PDT

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