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Deng Xiaoping billboard, based on a photo from Wikimedia Commons user Caiguanhao

In 1979 poor harvests and miserable planning left the USSR extremely short of wheat and corn. The problem had been growing over several years, and the Soviets increasingly addressed the issue by using their limited amount of hard currency to import grain from the US, Canada, Europe and South America. For many, this was looked at as a hopeful sign. The need for imports was forcing the Soviets to participate in world markets and opening up new inroads for diplomacy. It was the crack in the door, the camel's nose under the tent that would allow capitalism to wash away the inefficient central government.

However, despite the very real threat of severe shortages in some areas of the Soviet Union, in January of 1980 President Carter used executive authority to restrict sales of US wheat, soybeans, and other agricultural goods to the USSR. The move was unpopular with US farmers, who saw the president's move as directly taking money from their pockets. It wasn't popular with farm state legislators of either party. It wasn't popular among other world leaders, who continued their sales to the Soviets and filled the gap caused by the missing US grain.

Unilaterally chopping off a vital component of the food supply may seem an odd move for a president whose foreign policy is perhaps best remembered for a staunch insistence on human rights, but in 1979 the Soviets were in the middle of their invasion of Afghanistan. Carter could not see how the US could respond militarily, but he was determined that the response would be more than a diplomatic wag of the finger. His conclusion was that US trade was strengthening the Soviets and allowing them to concentrate on their military invasion. Trading with the Soviets was tantamount to arming them.

Opposition was fierce and bipartisan. George McGovern appeared before a Senate hearing to declare that the fall in grain prices meant that the US was being asked suffer more than the Soviets. The grain embargo fueled hatred of Carter in many farm states, and helped seal his loss that November. In his campaign for the White House, Ronald Reagan made the overturning of the embargo one of his key policies. Soon after he took office Reagan kept his promise to repeal most parts of the embargo, though it would be three years before a new agreement was negotiated and the US was once again supplying a large part of Soviet grain. The USSR was happy. Farmers were happy.

But Reagan wasn't quite so happy. Despite ending the embargo, he wrote in his diary on 4 Feb 1981:

Cabinet discussion of grain embargo. I've always felt it hurt our farmers worse than it hurt Soviets. ... We need to take a new look at whole matter of strategy. Trade was supposed to make Soviets moderate, instead it has allowed them to build armaments instead of consumer products.
Despite Reagan's mulling, US policy more and more revolved around the idea that expanding economic ties and the insertion of market-based economies, would disrupt centrally-planned economies and weaken the autocratic governments who ran them.

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.

But the man Reagan had come to meet had other ideas.

Deng Xiaoping had made the long march with Mao, played a key role in the defeat of the Chinese nationalists under Chiang Kai-shek, and been a leader in the Chinese communist movement from a time when Mao was just another member. Still, his background was more varied and far more cosmopolitan than most of the Chinese leaders he had displaced.

Deng had been educated in France and the USSR. Unlike Mao, whose insistence on unworkable small scale furnaces to produce steel was one of the great failures of the Great Leap Forward, Deng had actually worked in a steel plant in Europe and understood enough of the process to reform the program when Mao was forced to step back following the disastrous Leap. Unlike the Gang of Four who had taken control during the Mao-inspired Cultural Revolution, Deng understood the importance of education. He didn't distrust intellectuals. He didn't base his ideas of the economy on wishful thinking.

The result of Deng's favoring of pragmatic strategies over strict adherence to dogma had been that he twice was forced from power, but once he outmaneuvered and unseated the Gang of Four, Deng moved quickly to consolidate his position in the Chinese government. By 1976, even though Mao's hand-chosen successor Hua Guofeng was nominally still leading the country, Deng was pushing open the door to foreign investment in China.  He bought airplanes for Boeing and manufacturing equipment from a laundry list of western companies. In 1978, Coca Cola announced their commitment to build a plant in China. The closed kingdom was open for business.

Reagan's visit to China might have been the US president's first encounter with Chinese leadership, but it wasn't Deng's first visit with a president. As he was pulling together the cords of his coalition, Deng made visits to many nations, including dropping in on Jimmy Carter and visiting many US cities.  By 1980, Deng was in position to institute sweeping reforms, and those reforms swept in capitalism, waves of manufacturing investments, and an economic growth rate that's become the envy of the world.

It's very tempting to write "the end" at that point in the story. Sure, China hasn't yet seen that tidal wave of democracy that will inevitably follow free trade, but it's coming.  A Sino Spring could be just around the corner; another Tiananmen Square where this time the tanks refuse to roll.

But there's another way to read Deng's actions – one that's not nearly so flattering to those who believe that free trade is an either a harbinger of political freedom or an unstoppable force.

It's true enough that Deng realized that the Chinese economy needed an influx of capital if it was to compete with the rising technological tide that was sweeping through the west. However, he had also worked in the west. It was his treatment in western factories, not some scribbling from either Marx or Mao, that inspired Deng to join the Communist movement.  Deng saw the flaws in the Chinese system, but he wasn’t blind to the flaws in the western system.

For Deng, the whole idea of communism was never to achieve the hypothetical end-stage envisioned by Marx. His understanding was, as always, visceral and pragmatic. He saw a centralized government and tight economic controls as a means through which China could overcome the vast advantages of the west. He saw a way for his nation to rise to equality, if not prominence.

Even if it's the enterprise zones and the Coke factories that we remember, what Deng instituted between 1976 and his death in 1997 was not an abolition of central planning – it was better central planning. It was central planning backed up by solid analysis, careful study, and computer models. It was the replacement of Mao's cult of personality with a cult of competence. Deng's economic reform was not an abandonment of his long held beliefs in favor of an embrace of free market capitalism. It was an attack, an open exploitation of the weakness in the system.

He started with a gamble. Deng bet that, despite grand talk, what mattered most to western nations was the establishment of economic ties, not as a means to an end, but as an end in themselves. So long as he was willing to open the nation to trade, everything else would fall by the wayside. It was a gamble he won. The stark truth of this can be read in the western reaction to the massacre in Tiananmen Square.  By 1989, just a decade after Deng shoved open the doors, the US was already so dependent on trade with China and so committed to the idea that the foundation of freedom was free trade, that the response to the Chinese crackdown was extremely muted. Sanctions against China were limited to military sales. Even a bill to allow Chinese students to remain in the US until China's human rights abuses ended was vetoed by President Bush. The first action of the US government wasn't to withdraw from China, but to work toward "improved relations."

That the west would tolerate any level of political suppression for access to China was only one of Deng's insights. It was what opened the door. Though his understanding of communism was different from that of Mao and other leaders, Deng still followed the labor theory of value. It was on that point that Deng launched his attack.

Going back to Adam Smith and David Ricardo, economists had recognized that the first value of any item was the value of the labor that it took to create it. In a capitalist system, the price also included the compensation awarded to those who controlled the means of production. So if factory workers were paid $100 to make a TV, but the sales price of that TV was $200, the factory owner pocketed the difference. Under capitalism, the price of an item no longer reflected just the labor cost, but both labor and the premium to the owners. Because of this difference between labor value and ultimate price, the goals of employers could be very different than the goals of employees. It was this disconnect between the value of goods and the reward to workers that Marx saw as the intrinsic exploitation of the capitalist system. It was in this difference that Deng saw opportunity.

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.

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.

By opening China as a manufacturing hub for the west, Deng punched a hole in the tub. He destroyed the value of labor, convinced corporate management that they could separate their customer base from their worker base, and broke the back of western manufacturing. He decoupled labor value from product value and wrecked the system that had made the US and other western nations wealthy. The result was a flood of inexpensive goods flowing in, a flood of money pouring out, enormous disparity in incomes between those who owned the factories and those who used to man them, and a rapidly approaching point where even cheap isn't cheap enough.

It's become popular to view American workers in the decades after World War II as "highly paid." The truth is they were "rightly paid," with incomes that tracked well against the value of the products they produced. This was only possible because of the tight alignment between workers salaries and the price of goods.  

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.

Deng and the leaders who followed him rightly judged that we would overlook any abuses for money. That we would not severe relationships no matter how radical their actions. That we would mouth platitudes about the connection between capitalism and democracy, long after we were fully aware that no such relationship existed.

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.

Originally posted to Daily Kos on Sun May 22, 2011 at 06:00 AM PDT.

Also republished by History for Kossacks.

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Comment Preferences

    •  Luckily we have the Obama administration (19+ / 0-)

      to set things to rights, huh?

      Yes.. that is supposed to be dripping with sarcasm.  Obama's words during the last campaign will (and rightly so) come back to haunt him in 2012.

      A large part of his campaign used statements condeming:

      China's unfair trade practices that have long been protected by the Bush-McCain economic policies

      He railed against NAFTA.. he called for tariffs against China if they didn't revalue their currency.

      After he gets elected?  crickets..  Or even more trade agreements favorable to China.  Nice.

      I lived through the Carter years.. I was not happy with him in regards to the agricultural boycott and even less so with his Olympics boycott.  But you have to give him credit for sticking to his principles.  Obama on the other hand...

      •  Yes. Odd Conflict of principles... (2+ / 0-)
        Recommended by:
        Jeff Y, koNko

        If you restrict food sales to a country in need, who suffers? Of course, those least likely to get food in the country's regular economy. The poorest. The connected and wealthy will do fine, and will doubtless increase their power as the poor become more desperate and vulnerable to manipulation.

        Was Carter's policy another instance of a humanitarian destroying the lives of countless regular people for some abstract conception of the common good?

    •  remember Lenin's New Economic Policy? (9+ / 0-)

      We Americans never learn anything from history because we are proudly and totally ignorant of it.

    •  I would say you are short on evidence for that sta (7+ / 0-)

      tement. Looks to me like the Kleptocrats pretty uniformly are able to do what they do, fostering the theology of "ME-ism" and "MORE-ism," and escape all consequences or retribution or restitution for what they do. Madoff and DeLay and Lay and Milken (and sad old Martha Stewart) are just tiny exceptions to the larger rule.

      In small ways and large, we all steal from each other any more, pretty uniformly. "Externalization" of costs and risks is the operative model, except in tiny areas of counter-entropy among a few humans who strive for sustainable community. We are "consumers," not "citizens," certainly not part of any Family of (Wo)Man.

      If there is a giant collapse coming, some kind of Ragnarök, ypu can bet your sweet bippy that the worst and most artful of the Takers have created places for themselves to weather the storm. And most of them have internalized and live by that wonderful alliterative acronym "IBG-YBG," that knowing sneer-between-Wall-Street-Thieves that translates to "I'll be gone -- You'll be gone" (or at least immune to prosecution for criminal acts that have been rendered "not illegal" by their captive legislatures, or pretermitted by their gutting of the mechanisms of social control and enforcement. (Anybody else waiting, vainly, for Holder's DOJ to drop a huge pile of indictments on the federal court clerks' In boxes?)

      Midas' tale is an instructive myth where the social units are smaller and there are consequences and the possibility of really restive and revolutionary and retributive behavior by those who are stolen from. That ain't the case today. The vast majority of the Greed Is Good crowd does not even have to be "above the law" any more, because they OWN the freakin' law, and write it to suit their fancies. I doubt very seriously that any significant number of them are going to find that they have killed their daughters by turning them into MORE for themselves, and if you get the Financial Times, you get the weekly glossy supplement magazine titled, shamelessly, "HOW TO SPEND IT," chock full of $600,000 cars and $300,000 Wrist Chronographs, and of course private jets and private islands and security devices and private guards to help you keep ALL OF IT.

      And these folks have the fundamental human design flaws that are going to kill us as a species: Knowledge of our own limited personal life spans so no fear of consequences that will happen in "out-years" to other people, a limbic system that drives us to self-pleasing in every possible way, tribalism that cripples the majority and keeps us from seeing how the Kleptocrats foster the consumer economy that is killing the planet in exchange for temporary pleasures (iPod, iPhone, iPad in a seemingly endless series of personalization glorificatiion,) and a few more major engineering failures.)

      It seems to me to be total wishful thinking that there will be any Midas-style consequences, any scintilla of "destroyed by greed." All the evidence and data point very much the other way.

      "Is that all there is?" Peggy Lee.

      by jm214 on Sun May 22, 2011 at 09:21:00 AM PDT

      [ Parent ]

      •  You miss one facet of this dynamic. (1+ / 0-)
        Recommended by:
        jm214

        The MidEastern Arab spring shows more courage and heroism in their town squares than 308 million out of nearly 309 million Americans have shown away from their TV and gadgets.  That is the facts, not a simple slam on fellow citizens and vistors.  Politics is a game played by professional politicians and the corporate lapdog media, we are merely passive spectators if we tune in. Otherwise we are ignored and ineffective non players.

        Between having a weak grasp of real history, both world and domestic and labor and an urge for self preservation at all costs, we are willing to let someone else lead and fight for the future.

        Cheetos, tacos, pizza, Coke or the vegan equivalents.

        It is all regardless of flavor as meaningless as any other to the powers that be. Laughing all the way to the bank.

        No Americans were raptured today, and no one noticed.

        Is it possible God doesn't care one whit what Americans claim or do or don't do?   Just maybe this isn't the Most Important Place In the Universe  (JMTI-TMIPITU).The future belongs to those making it, not consuming it  even before it can be built.  Just maybe it won't be America leading the next great revolution in human affairs.

         We are happy not to lead in the things that really matter or are really difficult.  All the evidence from the middle of the last century up to today shows that.

        cast away illusions, prepare for struggle

        by Pete Rock on Sun May 22, 2011 at 08:08:25 PM PDT

        [ Parent ]

  •  Difficult to know (12+ / 0-)

    ...how we will ever get back to economically self sufficient. I am afraid we are only seeing the very beginning of the erosion of out standard of living. While ecologically, our lifestyles could have never been sustained, the fundamental needs of our population will soon be in jeopardy. Indeed already are for many and with the advent of tea bagging libertarians, they and many like them don't even care.

    -7.5 -7.28, Democratic Socialism...It's not just for Europeans.

    by Blueslide on Sun May 22, 2011 at 06:17:09 AM PDT

    •  I hope wiser women and men rise soon. (5+ / 0-)

      Because I don't see how our current path ends peaceably.

      Democracy is often an indictment of the voting populace.

      by electricgrendel on Sun May 22, 2011 at 06:28:07 AM PDT

      [ Parent ]

    •  The two - self-sufficiency and (13+ / 0-)

      prosperity - don't always go hand in hand. Belgium, for example, isn't a hellhole, despite having a share of exports in GDP of 90%. Laos, which has a share of exports in GDP of 13%, might be (incidentally, that's the same share of E/GDP that the US has).

      And China's method really isn't new. Most of the advanced Asian economies used a similar development strategy: First, attract foreign capital with inexpensive labour. Then, pursue an industrial policy which develops human capital (education) and capital-intensive industries. I could mention Japan. I could mention Taiwan and South Korea. Eventually, though, all these countries became normal, fair competitors.

      What is novel is the scale of the distortion caused by China and the fact that its regime allows for a slower development of a welfare state. Still, I would argue that a better solution is to allow punitive measures if a country of a certain level of development doesn't meet minimal social and environmental standards.

      Ordinary tariffs would be a disaster. Oh, not because of the developed world, but because of the developing world, since it can offer only three things to the global economy: Cheap labor, natural resources, and a lack of environmental standards. The latter is ruled out because of global warming. Natural resources are incidental: A country may have them or may not. Furthermore, if they're nonrenewable a country only gets one try.

      Therefore, if you disallow cheap labor you effectively force the developing world to price itself out of the global economy and remain stuck in poverty. Not a decent solution if we are into human welfare, I think. Better to enact minimal standards to prevent the us of an erosion of social rights  as a beggar-your-neighbour strategy.    

      Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

      by Dauphin on Sun May 22, 2011 at 06:35:46 AM PDT

      [ Parent ]

      •  "enact minimal standards" sounds nice.. (1+ / 0-)
        Recommended by:
        BigOkie

        but what does that mean?  Do you disallow imports from countries not meeting those standards?

        If we were to do that, a lot of what China now imports would be banned.  That's ok by me, but sounds impractical, at the very least.

        •  Why banned? Just enact higher tariffs (3+ / 0-)

          to equalise.

          Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

          by Dauphin on Sun May 22, 2011 at 07:07:51 AM PDT

          [ Parent ]

          •  tariffs are useless (5+ / 0-)

            An excerpt from my diary series on the history of the supranational corporation:

            http://www.dailykos.com/...

            Tariffs

            A favorite tactic utilized by protectionists is the punitive tariff. Tariffs are surcharges that are added to the price of cheap imports in order to artificially raise their selling price to match those of more expensive domestic products.

            As the global economy declined in 2008-2010, calls for protective tariffs became increasingly common from both Democrats and Republicans, even those who had formerly supported tariff-free “free trade”, as a measure to “help the American economy”. In 2009, Obama, bowing to pressure from the United Auto Workers union, imposed a 35% tariff on imported Chinese tires, which had captured about 17% of the US market. Some American tariffs actually double or even triple the price of particular imported products; the American synthetic-textile clothing industry is protected by a 32% tariff, most imported automobile parts have a 25% surcharge, imported sneakers and sport shoes pay a 48% tariff, some European meats and cheeses pay a 100% import tax, and the American tobacco industry is protected by a whopping 350% tariff. In 2010, the House passed, with heavy bipartisan support, a bill empowering the Commerce Department to impose a new round of tariffs as retaliation for China’s policy of manipulating its currency to keep the value of the yuan artificially low and thereby make Chinese imports cheaper for other nations.

            The whole intent of the WTO’s free trade framework is, of course, to eliminate tariffs and other trade barriers, and WTO has the authority to unilaterally invalidate protective tariffs passed by any member nation. The WTO agreement, however, does not cover all areas of trade, and the WTO does not have any jurisdiction over tariffs in economic areas that fall outside of those covered by GATT.

            Even in areas where the WTO cannot invalidate a trade barrier, however, it is unlikely that protective tariffs will actually play any effective role.

            Tariffs can be justified in certain cases. For decades, small nations in the developing world suffered as predatory corporations, most of them American, dominated their economy, crushed domestic industries, and turned the country into a virtual economic colony—and tariffs were seen as one weapon to gain economic independence. The “Asian Tigers” (Singapore, Korea, Taiwan), for instance, used tariffs to protect their infant industries until they were strong enough to compete in the world market and become economic powers in their own right. Developing nations in particular are still anxious to utilize protective tariffs to protect their small-scale farmers who are incapable of competing with the heavily-subsidized American and European agribusinesses (though the developing nations would prefer instead that the wealthy economies stop subsidizing large agribusinesses and drop their own protective tariffs against the small farmers in poorer countries). In cases where smaller and weaker economies are protecting themselves from larger and wealthier ones, tariffs may indeed have a progressive role to play.

            Most tariffs, however, have the purpose of protecting those large wealthy industries from competition by cheaper products in developing nations—not of protecting the weak from the strong, but of protecting the strong from the weak. The American industries with the loudest calls for protective tariffs—steel, textiles and auto parts—are formerly-huge rich industries who now face the stiffest competition from younger foreign companies. I.e., they are industries who are desperate to protect their formerly privileged position. Not coincidentally, they are also industries who still have large and politically-powerful labor unions.

             As the furor over the “Buy American” provision in the Stimulus Bill demonstrated, however, most corporations still reject protectionism and embrace the free-trade framework, making it difficult for the US to pass protective trade barriers. American corporations opposed tariffs not only because they did not want to  re-ignite the destructive trade wars of the 80’s, but also because most American corporations now had large portions of their productive capacity located overseas. For instance, at least 60% of all the products exported to other countries from China actually came from companies that are owned by Americans, Europeans or Japanese. Critics point out that tariffs to keep out cheap imported Chinese products are pointless when it is American companies themselves who are making and importing them. The American corporations do not want tariff “protection” from low-wage unregulated Chinese products—they are the ones who have been flocking to China to make them, and they want to be able to continue importing them back into the US as cheaply as possible.

            Other critics point out that measures to “protect American industry” are useless in a global economy where there are no “American industries” anymore. As American-based corporations move productive capacity overseas, the “foreign” corporations are locating more and more of their factories in the US. When the US used tariffs and import quotas in the 1980’s to try to keep Japanese cars out of the American market, Toyota and Honda responded by simply moving their factories here—today, most of the Japanese cars sold in America are actually manufactured within the US. In 2009, the German steel industry responded similarly to protectionist sentiments in the US by building a huge production plant in Alabama.

            Finally, progressive critics point out that protective tariffs don’t help American workers, and don’t help workers in developing countries either. Although tariffs raise the prices of imported goods, they don’t raise anyone’s wages, including those of the American workers they are supposed to be “protecting”. Indeed, by artificially raising prices and denying consumers access to cheaper imported products, tariffs actually hurt American workers by forcing them to pay more for products that they could otherwise get less expensively, thereby pushing their purchasing power even lower and decreasing their real wages. And, since the indigenous workers in developing countries do not get any of the money from the increased price of their product, they continue in the same low-wage poverty as before. The situation helps no one except the particular American corporations whose profits are being artificially protected.

            •  Who cares about any of that? (0+ / 0-)

              High tariff rates help lawyers get rich, as they find ways around them.  Many times, these lawyers donate to Democratic candidates.

              High tariff rates also help federal government employees obtain high-paying jobs as consultants.  They consult on ways to avoid paying these tariffs.  Many of these former federal government employees also give money to Democrats.

            •  huh? (3+ / 0-)
              Recommended by:
              Cordyc, Blueslide, Bensdad

              none of that makes any sense.

              Yes, "American" companies make shit in China.  Making an American corporation pay import tariffs is just as good as making a Chinese corporation pay tariffs.

              Yes, foreign companies opened factories in the United States.  That's what we want.  If we could repeal Taft-Hartley, we could make them pay living wages too.

              Your supposed objections are hot air.  Your supposed example of how protectionism can't work are proof that it has already worked.

              •  what *I* think doesn't matter diddley (0+ / 0-)

                Protectionism is dead because the American corporations themselves--the ones we are supposed to be "protecting"--don't want it, and have successfully opposed it.

                There simply is no "American economy" to protect, anymore.  It doesn't exist.

                Which makes the entire argument, nothing but hot air.  On both sides.

                Which was, of course, my point.

                •  There is no such thing (1+ / 0-)
                  Recommended by:
                  Bensdad

                  ...as "American corporations". Corporations are transnational and could not care less where or how they make their money, as long as they make a lot of it and increase their wealth year over year for their owners. They surely have no allegiance what so ever to the country where they may have been founded.

                  Of course corporations oppose tariffs, it puts a wrench in how they do business. China keeping the value of the yuan artificially low is for all intents and purposes is a tariff. It appears to be working quite nicely.

                  -7.5 -7.28, Democratic Socialism...It's not just for Europeans.

                  by Blueslide on Sun May 22, 2011 at 04:11:42 PM PDT

                  [ Parent ]

                  •  China won't be able to get away with it for much (0+ / 0-)

                    longer--the only reason they can do it now is because WTO doesn't have authority to regulate international finance.

                    But the Dohan Process was intended to correct that oversight, and although the Dohan Round got derailed because of a peasants revolt over agrarian subsidies, there is already talk within the Obama Administration of re-opening the talks.  And once WTO gets the authority to regulate currency rates, that will be the end of China's game plan.

            •  Tariffs plus attention to charter borders. (2+ / 0-)
              Recommended by:
              Cordyc, Blueslide

              Can't do business in any state if you are not licensed there. Cannot do business in a nation if you are not licensed there.

              This is very simple: We have the power to limit and regulate access to our markets.

              You should know this. It is a fact that is stated every time there is a story about a state dropping taxes in order to lure a greedy ceo to come do biz there, so that the ceo can take home large piles of cash that would have otherwise been paid as taxes.

              Foreign corporation? We have the power to tax their business in this nation.

              Nike has a subsidiary in thailand making shoes for a nickel? We have power to tax the capital flowing out to that factory at a high rate, which would act as pressure to keep capital here in our borders.

              This is our land, our people, our customers, our markets. We don't have to let corporations with foreign charters flood our domestic markets with cheap products in a process called 'dumping'. That's what tariffs are for.

              This is our land, our people, our customers, our markets. We don't have to let domestic corporations suck untaxed trillions out of our economy in exchange for mere billions in products. That's what tightening the corporate charter borders is for.

              Remember, Nike of USA purchases products from Nike of Thailand or somesuch location, overpaying for the products as a way to shift capital across borders under the label "Free Trade". Taxing the money going out puts a higher cost on companies who keep the labor cost and the value of the goods severed.

              That's how to counteract what Deng set in motion, put a cripplingly high cost on the business practice of foreign outsourcing of labor.

              •  too late (2+ / 0-)
                Recommended by:
                swaminathan, arendt

                Those things are no longer under our control. Trade regulations now are the domain of the WTO--and they have veto power, legally, by treaty, over any action undertaken by any government.

                We no longer control our own trade policies.  No nation does.

                It's not the 80's anymore.

                •  Then we need to change that (1+ / 0-)
                  Recommended by:
                  Blueslide

                  because it's never too late.  

                  •  it's too late (1+ / 0-)
                    Recommended by:
                    arendt

                    Every nation (including us) that has tried to defy WTO has failed, and surrendered abjectly.  The entire system is set up specifically so that no nation can defy it--no nation, not even the USA, is capable of winning an economic fight against the entire world.

                    Not to mention that the most staunch opponents of American economic sovereignty are the American corporations themselves--the same ones who bitterly opposed (and ultimately defeated) the "Buy American" provisions in the Stimulus Bill.  

                    •  Takes two to fight. (0+ / 0-)

                      There's a profound difference between acting toward a goal of hurting other nations, and simply disengaging from them.

                      To put it in other terms... There's a profound difference between actively fighting to change the minds of people like Paul Ryan (ostensibly so they can be trusted to use their power wisely) and simply disengaging them from having power over us.

                      For example, I saw a diary yesterday about yet another anti abortion bill coming up for vote in some midwest state. The Dems got up and spoke passionately, I suppose engaging as if they could change Rep minds. They shouldn't have bothered, those minds were made up and to continue to engage as if they could change something was folly - the same sort of folly you point to when a nation tries to defy the WTO. What should have been done instead is to use the true power of government - their people.

                      Time to get back to basics. Governments are instituted among people and are empowered by the consent of the governed. Time to withdraw consent where necessary.

                      Such as Benton Harbor. Supposedly there's an emergency financial manager who's word is law. But that sort of power requires the people to recognize the Manager's authority, and if it is not accepted then those people are not going to be  governed by that guy. Stand firm, and it becomes a standoff where Michigan Gov Snyder has to send in the toughs, the national guard, make Benton Harbor a gestapo police state where Financial Manager Joe is held in power through force alone, and nothing more, and all of his decisions must be enforced through constant user of muscle. And that is when we will have won our country back. Joe says those people's nice beach belongs to the neighboring town? Snyder better station some of the national guard on that beach to patrol against the residents. Joe says the school closes down? Better station more Guard on the premises in order to keep the kids from showing up. Joe says X, better send more Guard to force that decision into place. Can't do that statewide, there's not enough Guard, not even if you add all the cops too.

                      By withdrawing our consent, and forcing the authoritarians to show their totalitarian militancy in order to get their way, we gain support.

                      By withdrawing our connection to nations that economically are at war with us, we force the WTO to either accept our unilateral move or attempt to force us to trade with those countries. What, is the WTO going to forcibly extract money from our banks and forcibly deposit cheap products in our shipping ports?

                      Takes two to have a legal or policy fight, both sides have to be willing to have a conflict on that field, in that stadium. Should one decide instead to simply not bother stepping on the field and simply turn off power to the stadium, that one wins in a more profound way.

                      Time to win in more profound ways. No drama, simply act in accordance with the most undeniable path to success.

              •  Another option would be to (0+ / 0-)

                deregulate everything and let the angry town mobs rip the rich to shreds. Citibank's memo about the new plutocracy is very right about the masses of people still being able to outnumber the rich through sheer numbers.

                The top 400 richest people in america have more wealth than the bottom 155,000,000

                If I were to bet who would win in a war between those 400 and the other 155,000,000 I would figure there would be 400 pulpy red smears on the ground before the day was done.

                The President was very correct when he told the ceo's of the 5 top banks that he was the only thing between them and millions of angry americans. I sure do wish he would get out from between those bankers and the courts.

                •  alas, the richest people in the world are, (1+ / 0-)
                  Recommended by:
                  billmosby

                  increasingly, no longer American.  Ditto for the largest corporations in the world.

                  We are falling to Third World status. The real players are now elsewhere.

                  The ONLY way to bring an economic power to its knees (and remember that in our current world it is the CORPORATIONS who are the largest and most powerful economic entities, not nations) is to cut off the flow of money to them, totally and completely.

                  Only one group of people have the capability, even in theory, to do that----its own workers.  Not a box moves, not a sale is made, not a widget gets produced, unless one of us does it. And if we sit down, fold our arms, and refuse to do a goddamn thing, then the whole thing comes to a crashing halt.

                  THAT, my friend, is a power that they simply cannot defeat in the long run.

                  We learned that lesson at the national level, back in the 20's and 30's.

                  Now, it's timje to learn it again at the international level.

                  •  You missed something. (0+ / 0-)

                    The point of fact is that it is the 400 richest americans I was talking about, not the 400 richest on the planet. Carlos Slim the mexican business magnate is not on the list, because he's not american.

                    And, you come at it from a different direction than I, but your point about corporations depending on the actions of people is the same endgame as I was thinking of. Where you are thinking physically, with people sitting down and bringing the physical gears to a grinding halt, I am looking at the economical gears brought to a halt from the chairs of forensic accountants and green eyeshade people sitting in the master computer rooms of the big banks. Takes fewer people to bring those gears to a halt, though.

                •  But who will win the information war? (0+ / 0-)

                  And who will be able to distract?

                  I didn't intend the above as a factual statement.

                  by Bensdad on Sun May 22, 2011 at 06:26:07 PM PDT

                  [ Parent ]

      •  Difference between China and Japan... (14+ / 0-)

        ...well, there are several differences, of course -- starting with the huge difference in population.

        But the difference that I want to focus on is how the two countries ended up becoming big players in the west.  Both countries started out with a similar niche, essentially exporting low cost, low value junk to the west.

        But they took very different paths to move past that.  For the most part, the Japanese established and built powerful brands, whereas the Chinese coopted existing western brands.  The consequence is that the Japanese didn't just compete on cost, but also on quality of their design and manufacturing -- by the late seventies, customers buying Japanese products were making a conscious decision to select a Japanese brand that represented a better value.  

        As an example of this, I was shopping for a small 13" color TV with money that I'd saved as a high school student in the summer of 1977.  Sony was outside of my consideration set, because their TVs were already more expensive than most of the competition, and thus were outside my budget.  But I was able to compare Japanese brands like Panasonic against US brands like RCA, Zenith, and GE.  And the Panasonic set was just a better, more reliable TV for the same money as the US competition.  In fact, I still have that Panasonic TV...and it still works.

        Same thing with cars.  In the late seventies and onward until fairly recently, the Japanese cars were just more reliable than their American counterparts.  And if you were looking for a small car, the disparity was especially large.  When the choice was between a Toyota Corolla and a Chevy Chevette, it was an easy choice indeed.

        In contrast, the Chinese have just coopted existing western brands (ironically, that includes the Japanese companies) by convincing them to discard their domestic labor in favor of outsourced manufacturing in China.  The design process still takes place (in most instances)  outside of China, but the manufacturing is performed as cheaply as possible in China.  China doesn't have to develop it's own brands, and corporate profits go up.  The end customer is often unaware of where the product actually comes from.  And the move to China rarely results in an improvement in quality, as was so often the case with the Japanese.

        Consider this:  most of us who bought a Panasonic or Sony television knew we were buying something made in Japan back in the day.  How many people buying an Apple product perceive that as a Chinese product, versus being an American product?

        Political Compass: -6.75, -3.08

        by TexasTom on Sun May 22, 2011 at 08:09:36 AM PDT

        [ Parent ]

        •  Excellent Point and a hint at a solution (4+ / 0-)
          Recommended by:
          swaminathan, Blueslide, TexasTom, arendt

          "How many people buying an Apple product perceive that as a Chinese product, versus being an American product?"

          Herein lies the heart of the problem.  The constant barrage of corporate product PR permits the true costs of a product to be hidden, to be passed on to consumers in the form of shoddy craftmenship, increasing presence of toxic and defective products and environmental pollution that enters into dynamic ecosystems and eventually into the human food chain.  It also permits the costs to taxpayers to be hidden as well given the hollowing out of the tax base, pressures on workers to accept degraded and more dangerous working conditions and jobs with less benefits, etc.

          Only through education that focuses consumer and taxpayer attention to addressing the total and real costs to society of any commercial transaction can rational choices that don't lead to overall economic decline.  Just like disclaimers that are required for advertising drugs, we need legislation that forces a much more intensive accounting of these real costs (ie cost in terms of carbon dioxide produced, number of US workers displaced by use of foreign labor, environmental damage done, mean-time between failure, number of customer complaints received, etc).  At least this way, consumers are in a position to make informed choices.  With the masses making irrational and uniformed choices in the face of unchecked greed, we are doomed as a species.

        •  How much of an Apple product is made in China (2+ / 0-)
          Recommended by:
          yoduuuh do or do not, arendt

          Very little, in fact. Most of the hardware value in Apple products is imported into China where it is assembled using low cost labor by Chinese workers employed by a Taiwanese company.

          In fact, on the basis of value, China makes the lowest contributiuon of value of any country involved in manufacturing these products and the the lowest profit.

          And this underlines the problem you state and which China faces; that the world is already crowded with multinational corporations with established brands and controlling market access, so the the barriers to crashing that gate are nearly unsurmountable.

          In fact, the only regions where Chinese companies have brand franchise are developing countries that consume low cost/value consumer proucts, and where consumer step-up to US, Japanese and European brans when they can afford to because of the precieved prestige and value.  For example, in emerging African economies, Chinese brand mobile phones lead the market because they are half the price of (low end) Nokia or Samsung phones.  Whether Chinese companies can eventually leverage that into brand loyalty for higher value products remains to be seen but the global mind share of the existing leaders suggests the prospects are not good.

          What about my Daughter's future?

          by koNko on Sun May 22, 2011 at 11:04:42 AM PDT

          [ Parent ]

          •  this is a good point---- (4+ / 0-)
            And this underlines the problem you state and which China faces; that the world is already crowded with multinational corporations with established brands and controlling market access, so the the barriers to crashing that gate are nearly unsurmountable.

            But there is a way around that barrier--and it is the preferred method of corporations everywhere. Cooperation replaces competition. If a big corporation dominates a market that you want to get into, the best thing to do is partner yourself with that corporation.  That is why, over the past 15 years, there has been an explosion of cross-border mergers, joint ventures, cross-ownership, etc etc etc.  In most industries it is no longer possible to draw boundaries between corporations--they are international entities in their own roght who answer to no government. The very idea of a "Japanese corporation" or a "German corporation" or an "American corporation", is outdated and outmoded. They are global.

            The boundaries are being surmounted by removing them. And that of course is the essence behind WTO---to make every market everywhere accessible to every corporation without anyone having a privileged position. The corporate definition of "democracy".

            •  Example from Russia: (1+ / 0-)
              Recommended by:
              koNko

              the Chevy Niva.

              Moderation in most things. Except Reactors. IFR forever!

              by billmosby on Sun May 22, 2011 at 03:18:06 PM PDT

              [ Parent ]

              •  I always found it ironic that (3+ / 0-)
                Recommended by:
                billmosby, raster44, koNko

                back during the big protectionist wars in the 80's, the Japanese and American car companies both owned big chunks of each other.

                •  I was similarly struck by (1+ / 0-)
                  Recommended by:
                  koNko

                  the various luxury brands owned by Ford. I guess they still own Jaguar, don't they. I remember reading several years ago that Jaguar owner's clubs were starting to miss the good old days when they could sit around and complain about the unreliability of their cars (remember Click and Clack's phrase, "Lucas, Prince of Darkness"?). Sounds like they are more reliable these days, but now they're V-8's instead of inline 6's, and they are starting to look different, too. Not quite like a 90's Taurus, but different.

                  Moderation in most things. Except Reactors. IFR forever!

                  by billmosby on Sun May 22, 2011 at 04:08:49 PM PDT

                  [ Parent ]

                  •  Ford sold Jaguar to Tata (India). (1+ / 0-)
                    Recommended by:
                    billmosby

                    Which also own Land Rover.

                    What about my Daughter's future?

                    by koNko on Sun May 22, 2011 at 08:36:45 PM PDT

                    [ Parent ]

                    •  one needs a scorecard nowadays (1+ / 0-)
                      Recommended by:
                      koNko

                      It's hard to keep track of who owns what this week.

                    •  Thanks for the update! (0+ / 0-)

                      Eventually, Apple will probably own it along with everything else, lol. Well, except for Skype, that is.

                      Moderation in most things. Except Reactors. IFR forever!

                      by billmosby on Mon May 23, 2011 at 06:06:52 AM PDT

                      [ Parent ]

                      •  LOL .... Goggle+Microsoft+Skype+Nokia? (1+ / 0-)
                        Recommended by:
                        billmosby

                        Desperation time in Redmond, methinks.

                        But something interesting is happening to Apple. It's success has been based on excellent product and software design mainly using technology developed by others. Now I think Apple faces a pending crisis with a narrowing of it's market as the use of PCs decline and it's response has been to (a) become a retailer and (b) take more hardware design internal, becoming a more vertical company.

                        The later presents Apple a significant challange since it's management culture is not really well suited to the business which requires greater disapline in design and technology development, strategic technology licensing that would canablize some of it's existing suppliers, and enough volume to turn a profit.

                        In other words, what happens when the commoditization of Smartphones and Tablets errodes the premium Apple products currently demand?

                        I suppose their strategy is, ultimately, to use devices as loss leaders to sell content and advestising, but that is ultimately a monopitalistic model markets reject and could hurt them just as Microsoft's monopoly of desktops ultimately bit them in the ass.

                        That said, Apple has a big pile of cash at this point so is in a good position to just about whatever Jobs likes, the question is what comes after Jobs.

                        What about my Daughter's future?

                        by koNko on Tue May 24, 2011 at 03:54:37 AM PDT

                        [ Parent ]

                        •  Good points, except that (1+ / 0-)
                          Recommended by:
                          koNko

                          their pricing on iPhones and iPads is not at all out of line; in fact, isn't the iPad cheaper than many alternatives?

                          The only thing I worry about is that Macs may be displaced by iPads to such an extent that they become a more expensive, niche product. Well, that and the CEO succession problem, of course.

                          No company fires on all 8 cylinders (well, 4 1/2 if you're Microsoft, lol) forever, Apple has already had a good run. I think it will outlive me, though (I'm 62).

                          Moderation in most things. Except Reactors. IFR forever!

                          by billmosby on Tue May 24, 2011 at 07:16:42 AM PDT

                          [ Parent ]

                          •  Tablets errode PCs but don't replace them (0+ / 0-)

                            For internet or media consumption tablets are great but not really a replacement for apps requiring a keyboard, mouse and greater storage.

                            I think that means an eventual errosion of PC market share and less choice (fewer OEMs, fewer models), and the opposite for tablets and handhelds which should find more users than PCs.

                            But overall, prices come down over time as technology is commoditized and competition increases.

                            In tablets it's a matter of time until Apple faces serious competition, most likely from the same players that compete with iPhone such as Samsung, hTC et al.

                            So what I see is Apple and Microsoft trying to compete with Goggle and Social Networking sites for advertising and media related business.

                            Handhelds are cheap because they are subsidized by phone companies who make it back in service fees. The handset OEMs have to make a profit from sales to the service providers.

                            Apple has resisted commoditization by exclusivity, but the wall is cracking because to increase volume and sell in some markets were users normally have multiple accounts used in one phone or jailbreak locked phones, they have to sell to consumers on the open market. Potentially it means they can charge a higher premium for a new model but price errosion gets beyond control since there is no monopoly involved.

                            Assuming that as a long-term growth model for Apple, I would expect them to eventualy compete by getting more revenue from selling software and and media tied to their software O/S (already is that way) and increase revenue from advertising (both Apple and Microsoft are trying to compete with Goggle which has nore than 60% market share in net ad revenues).

                            Under such conditions, Apple face the prospects of having to use the hardware as a loss leader just as Sony, Nintendo, MS, et al do in Gaming Platforms (which are sold at a substantial loss as hardware).

                            Goggle and Microsoft are already pure-play software companies and let others worry about the hardware. Apple has certian franchise because the sum of parts is attractive to a certian affluant segment of the market, but just as iPhone has lost share to Android, I would expect iPad to face increasing competition.

                            I predict the novelty of a insanely great rectangular display with round corners will not last forever, could be why Jobs is so pissed at Samsung these days (but they are Apple's Flash Memory supplier).

                            And what is the next big thing?

                            What about my Daughter's future?

                            by koNko on Tue May 24, 2011 at 10:15:16 PM PDT

                            [ Parent ]

                          •  Apple is doomed, doomed! (1+ / 0-)
                            Recommended by:
                            koNko

                            Really, I have my doubts that it will long survive Jobs. And even if it does, it has always been more of a niche company than a company which desires to compete in all spaces. So says Jobs himself. I count myself blessed that its rise and....possible fall coincides with my own. I was about 28 when Apple surfaced (I bought an Apple II in about 1980, and my first Mac 4 years after that), am 62 now, and probably don't really even need to buy one more Mac- the 3 year old one I have will probably see me though to the end, if the longevity of ones I have owned before are any indication. But I'll probably get another one any year now anyway.

                            Moderation in most things. Except Reactors. IFR forever!

                            by billmosby on Tue May 24, 2011 at 10:56:08 PM PDT

                            [ Parent ]

                          •  Doomed? (1+ / 0-)
                            Recommended by:
                            billmosby

                            Hardly, but it will be interesting to see how they evolve in the next few years particularly when Jobs retires.

                            Will his plan to clone himself work?

                            What about my Daughter's future?

                            by koNko on Wed May 25, 2011 at 04:59:56 PM PDT

                            [ Parent ]

                          •  I was trying to be funny. (1+ / 0-)
                            Recommended by:
                            koNko

                            The phrase was attributed to a tech columnist about 15 years ago; can't remember his name at the moment, although he still writes on tech quite a bit. I do remember the false quote, though. Sometimes a "bwahahahah..." is attached to it.

                            Moderation in most things. Except Reactors. IFR forever!

                            by billmosby on Thu May 26, 2011 at 05:59:07 AM PDT

                            [ Parent ]

                          •  This may interest you (1+ / 0-)
                            Recommended by:
                            billmosby

                            I read an interesting profile of Apple in Fortune this month that gives an indider's view of how they operate, which pretty much reflects my own experience working with them but also explained a lot.

                            Unfortuately the full article is only available on the newstand or from Amazon, but these to links have some teasers:

                            Gizmodo: Fortune's "Insie Apple"

                            CNN: How Apple works: Inside the world's biggest startup

                            Like any sucessful ompany they have some strong and weak points but it does underline (but not answer) the question of how Apple would change without Jobs at the center of the universe.

                            My other question is how changes in the industry and communiations will change Apple.

                            What about my Daughter's future?

                            by koNko on Thu May 26, 2011 at 11:13:11 PM PDT

                            [ Parent ]

                          •  Thanks! (0+ / 0-)

                            I had seen excerpts from the Fortune article a few days ago somewhere or other, probably on Google news.

                            Accountability is a wonderful thing. I've worked in places that had it, and places that didn't. I always felt more useful in places that had it. I never rose to the levels where reasons didn't matter, though.

                            Moderation in most things. Except Reactors. IFR forever!

                            by billmosby on Fri May 27, 2011 at 05:16:27 AM PDT

                            [ Parent ]

            •  Sure, aggreed. (0+ / 0-)

              Actually, I work for a Japanese MNC in China and it is an imperative for the company to expand globally because the domestic (Japanese) market has been in decline for years.

              There are positive and negative aspects to this, the biggest negative being tax evasion (in my viewpoint).

              International law needs to be strengthened.

              What about my Daughter's future?

              by koNko on Sun May 22, 2011 at 08:35:03 PM PDT

              [ Parent ]

    •  we won't ever see economic independence for anyone (8+ / 0-)

      We no longer live in an economic world made up of nation-states.  Our economy is global, and it is dominated by huge supranational corporations who belong to no nation, answer to no government, and owe loyalty to no people.

      The world of 2011 is not the same as the world of 1995.  The entire framework has changed.

    •  Energy crisis (12+ / 0-)

      and depletion will change it all again.  The world economy will localize and not be worldly anymore I will guess.  Energy will change our future.

      And she's good at appearing sane, I just want you to know. Winwood/Capaldi

      by tobendaro on Sun May 22, 2011 at 06:56:42 AM PDT

      [ Parent ]

  •  Excellent Overview (24+ / 0-)

    And a catch phrase that every progressive politician should use can be distilled from the article - American workers were not highly paid, they were rightly paid.

    If I have seen further it is by standing on the shoulders of giants.

    by julien on Sun May 22, 2011 at 06:20:23 AM PDT

    •  China is already no longer the low-wage haven (19+ / 0-)

      There have been strikes in China--STRIKES IN CHINA--that have caused the Chinese government endless headaches. Indeed, the Chinese workers have so successfully forced their wages to rise that the supranational corporations are already leaving--they are moving all their low-wage high-profit factories to Cambodia, Thailand or Vietnam, the new low-wage havens.

      The corporados will simply chase the low wages all around the planet, hitting every country in turn, until they run out of countries.  Then they're fucked.

      •  We can't wait that long. (4+ / 0-)
        The corporados will simply chase the low wages all around the planet, hitting every country in turn, until they run out of countries.  Then they're fucked.

        In the GOP your status is inversely proportional to your integrity.

        by anothergreenbus on Sun May 22, 2011 at 07:16:05 AM PDT

        [ Parent ]

      •  Look to Barbie (2+ / 0-)
        Recommended by:
        fayea, Utahrd

        I have been told that looking to see where Barbie and Ken are made is a good tipoff to where wages are low.  Most children in the US would have an interesting economic lesson if they just looked at the changing "Made in ...." labels on their toys.

      •  By that time, so are we (1+ / 0-)
        Recommended by:
        happymisanthropy

        Money=speech; every dollar has a right to be heard. The Supremes

        by orson on Sun May 22, 2011 at 09:19:02 AM PDT

        [ Parent ]

      •  Chinese wages rose 20-30% in 2010 (1+ / 0-)
        Recommended by:
        Eric Nelson

        To compete, production is being driven inland to poorer provines which bring with it some economic benifits, but you are correct in stating China is no longer cheap and increasingly losing out to lower wage countries as the economic cycle runs it course.

        All of which suggest Americans reconsider the equasion and focus on what can be gained in the Chinese market.

        Most certianly export led countries such as Germany and Japan look at China from that perspective and have much healthier trade balances as a result.

        Refer to my long-winded comment addressed to the diarist elsewhere as I close on this point.

        What about my Daughter's future?

        by koNko on Sun May 22, 2011 at 11:10:49 AM PDT

        [ Parent ]

        •  again, you are right (2+ / 0-)
          Recommended by:
          Thomas Twinnings, koNko

          China's value to the supranational corporations is no longer as a low-wage haven----that role is already disappearing and is being taken up by other nations such as Vietnam and Cambodia. China's value to the corporados now is as a market--just as the US's value to the global economy is as a market.

          Does that mean everyone will pull all of their factories out of China?  Nope---there are advantages to having one's production very close to one's major market---which is of course why most Japanese cars sold in the US are actually made in the US. Others will do the same in China.

          That will mean a tremendous change for China.  The utility of a low-wage haven lies in, well, its low wages.  But the utility of a large market lies in its purchasing ability--which requires HIGH wages.  It is in the global economy's interests, therefore, for Chinese wages to go up.  A lot.

          The more money they have, the more things everyone can sell to them.

          •  The so-called "China plus One" (0+ / 0-)

            Is a common policy of multinational corporations, meaning, you have to have a presence in China first for the market, and you need at least one other plant in a lower wage country to maximize profit and avoid over-dependance on China.

            But now it is becoming "China plus Others" as wages rise.

            Long-term it is absolutely necessary for China to become more domestically led and that makes opportunities for others in China - we agree on that - but it will take time and the demographics suggest the Chinese market will peak along with population about 2040, after which the population will rapidly age.

            The good thing is domestic consumption in affluent costal cities is already quite strong and as jobs move West so will consumption so the market has legs due to size, unlike some smaller countries that peak rapidly.

            What about my Daughter's future?

            by koNko on Sun May 22, 2011 at 08:28:38 PM PDT

            [ Parent ]

    •  Except for this rather odd bit: (1+ / 0-)
      Recommended by:
      koNko
      Unilaterally chopping off a vital component of the food supply may seem an odd move for a president whose foreign policy is perhaps best remembered for a staunch insistence on human rights, but in 1979 the Soviets were in the middle of their invasion of Afghanistan. Carter could not see how the US could respond militarily, but he was determined that the response would be more than a diplomatic wag of the finger.

      to make it seem like Carter was miffed by his administration's successful goading of the USSR into invading Afghanistan is an odd interpretation . . .

  •  Nice (if depressing) analysis (30+ / 0-)

    The best line was

    He showed them that they could profit from the destruction of their own system.

    That is why throwing money at the "job creators" has never worked and it never will.

    "I shall never surrender or retreat." --Lieutenant Colonel William Barret Travis

    by badger1968 on Sun May 22, 2011 at 06:21:13 AM PDT

  •  Man, the world governed by unintended consequences (4+ / 0-)
    Recommended by:
    Mark Sumner, brooklyngal, koNko, xgz

    but somehow Deng Xiao Ping has perfect understanding of the results of his actions!  It's a miracle!  He's a genius!

    Or, just perhaps, there's a flaw in the analysis...

    Give me your tired, your poor, Your huddled masses yearning to breathe free
    ¡Boycott Arizona!

    by litho on Sun May 22, 2011 at 06:26:55 AM PDT

    •  So, share with us your insight. eom (3+ / 0-)

      The Democrats set the Rules of the Senate. Don't like the President's nominee's being filibustered? Don't forget who could have kept it from happening. The Democrats. Why didn't they? They didn't want to.

      by Rick Aucoin on Sun May 22, 2011 at 07:06:28 AM PDT

      [ Parent ]

    •  or maybe there's a flaw (4+ / 0-)

      in your understanding of the analysis.

      Of course, it's hard to say, since you didn't actually write anything specific.

      •  Despite the neat teleology of deviltower's (4+ / 0-)
        Recommended by:
        brooklyngal, xgz, Eric Nelson, koNko

        analysis, it's not at all clear that Deng ever intended this outcome:

        By opening China as a manufacturing hub for the west, Deng punched a hole in the tub. He destroyed the value of labor, convinced corporate management that they could separate their customer base from their worker base, and broke the back of western manufacturing. He decoupled labor value from product value and wrecked the system that had made the US and other western nations wealthy. The result was a flood of inexpensive goods flowing in, a flood of money pouring out, enormous disparity in incomes between those who owned the factories and those who used to man them, and a rapidly approaching point where even cheap isn't cheap enough.

        It's not controversial to say that he intended to promote economic development in China.  It's extremely controversial to say he intended to promote the economic decline of the West.  In fact, it counts as an extraordinary claim, one which requires extraordinary evidence.  But Mark presents no evidence whatsoever for it.

        Give me your tired, your poor, Your huddled masses yearning to breathe free
        ¡Boycott Arizona!

        by litho on Sun May 22, 2011 at 10:31:46 AM PDT

        [ Parent ]

        •  there has been no "economic decline of the West" (1+ / 0-)
          Recommended by:
          koNko

          The corporados are making record incomes and profits. And they are doing it by chasing the cheapest wages.

          As for the economic decline of plain old ordinary working folks in the West, the corporados don't give a rat's ass about that. They're not in business to give us all good-paying jobs. (shrug)

          The destruction of high-wage jobs through outsourcing is purely the fault of the business owners, and no one else.  China can't move a single factory anywhere on the world, and neither can the US government. Only the owners can do that. And they did it--happily, enthusiastically and willingly.

          And already are again---now that China's strikes are successfully creating upward pressure on wages, the corporados are already packing up and moving again to new low-wage havens.

          And China can't do a damned thing to stop them, any more than we in the US could.

        •  Result not intent. Where is intent shown? (0+ / 0-)

          I guess I didn't find a motive ascribed in the diarists post, just the result. Good point but I just didn't assume that since Deng's focus was on the west, but inward - national modernization.

          •  yep. All of the Leninists, in whatever variant, (0+ / 0-)

            whether it be Lenin or Mao or Deng or Fidel or whoever, are, at core, radical nationalists.

          •  Take a look at these two paragraphs (1+ / 0-)
            Recommended by:
            Eric Nelson
            It's true enough that Deng realized that the Chinese economy needed an influx of capital if it was to compete with the rising technological tide that was sweeping through the west. However, he had also worked in the west. It was his treatment in western factories, not some scribbling from either Marx or Mao, that inspired Deng to join the Communist movement.  Deng saw the flaws in the Chinese system, but he wasn’t blind to the flaws in the western system.

            For Deng, the whole idea of communism was never to achieve the hypothetical end-stage envisioned by Marx. His understanding was, as always, visceral and pragmatic. He saw a centralized government and tight economic controls as a means through which China could overcome the vast advantages of the west. He saw a way for his nation to rise to equality, if not prominence.

            These introduce the broader discussion of the impact of Deng's reforms.  Then we've got this gem:

            That the west would tolerate any level of political suppression for access to China was only one of Deng's insights. It was what opened the door. Though his understanding of communism was different from that of Mao and other leaders, Deng still followed the labor theory of value. It was on that point that Deng launched his attack.

            Subsequent statement's of Deng's agency include "Deng saw opportunity"; "Deng offered corporations"; and "Deng's assault was well-timed".  Finally, we get the kicker that I quoted above: "Deng punched a hole in the tub."  All of that reads to me as an argument in favor of intentionality, except of course that there's no actual evidence he intended to provoke the downfall of western economies.

            Give me your tired, your poor, Your huddled masses yearning to breathe free
            ¡Boycott Arizona!

            by litho on Sun May 22, 2011 at 02:28:03 PM PDT

            [ Parent ]

            •  Deng's 'theories' punched a hole in may have been (1+ / 0-)
              Recommended by:
              litho

              a better wording. I read it that way.  

              That the west would tolerate any level of political suppression for access to China was only one of Deng's insights. It was what opened the door.
              ..seems like opportunism  as a national concern, not necessarily a directed focus against the U.S.
              I read it as a measurement of success, not a balancing or acheiving of the greater amount of a finite amount of national success that either benefits one nation or the other - but not both.

              But I get your point, it is worded more personalizingly ( is that a word?)

          •  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

            [ Parent ]

      •  I elaborate the flaws elsewhere (3+ / 0-)
        Recommended by:
        litho, xgz, andgarden

        Diarist makes some fundamental errors in his conclusions.

        China is not terribly unique and is not mainly responsible for the effets of US policy implemented long before China opened-up.

        Diarist mae a reasonably good start, but clearly does not have an expert historical perspective nor much apperent understanding of economics particulary when it comes to manufacturing.

        China is big.

        What about my Daughter's future?

        by koNko on Sun May 22, 2011 at 11:16:10 AM PDT

        [ Parent ]

      •  Or a flaw in your interpretation of his comment (0+ / 0-)

        This is GREAT news for John MCain.

        What about my Daughter's future?

        by koNko on Mon May 23, 2011 at 08:17:58 AM PDT

        [ Parent ]

    •  Obviously (0+ / 0-)

      The diarist has more insight into the mind of Deng Xiaopeng than the Little Bottle did himself.

      Imagine him convening an International Conspiracy of Business Leaders to lecture them about Capitalism with a flip-chart!

      Fantastic!

      What about my Daughter's future?

      by koNko on Mon May 23, 2011 at 08:16:27 AM PDT

      [ Parent ]

  •  So, what's the path from here? (4+ / 0-)

    Will the low-manufacturing cost countries stay that way, or will we become the lowest-cost country at some point? Then what?

    I don't have a very good feel for this stuff.

    Moderation in most things. Except Reactors. IFR forever!

    by billmosby on Sun May 22, 2011 at 06:26:58 AM PDT

  •  Which leads to two divergent analyses. (3+ / 0-)
    Recommended by:
    BigOkie, TexasTom, Egalitare

    Should the western workers revolt and demand a tighter coupling of product values and wages, moving toward the Marxist goal, then he would be a shrewd and legendary communist.

    But until that happens, this leader in the Communist Party of China will be a shrewd and legendary capitalist.

    Democracy is often an indictment of the voting populace.

    by electricgrendel on Sun May 22, 2011 at 06:27:22 AM PDT

  •  Three observations (7+ / 0-)

    1) Goods have never sold for their labor value alone; before capitalism there were seignorial ways of extracting surplus.

    2) Deng didn't discover or invent the cheap-labor paradigm.  Before China there was Taiwan.

    3) American workers may have been well-paid, rightly-paid, whatever-paid between the 1940s and 1970s, but it was an unsustainable situation.  The rest of the world was either destroyed or industrially undeveloped.  The only way we could have sustained our industrial hegemony would have been to maintain, presumably by force, that situation.  Even then, you'd have conflict between those US industrial giants who make capital goods and those who make consumer goods: capital goods, after all, permit the user to eventually make consumer goods.

    It's better to curse the darkness than light a candle. --Whoever invented blogs, c.1996

    by Rich in PA on Sun May 22, 2011 at 06:36:28 AM PDT

    •  Sounds like Noeliberal creed. (17+ / 0-)
      American workers may have been well-paid, rightly-paid, whatever-paid between the 1940s and 1970s, but it was an unsustainable situation.

      Within the Neoliberal elite there was no desire to protect our own interests, American interests.  My brother in law sets up factories for 3M in East Asia.  3M can't move the jobs off shore fast enough and they are giving away their own intellectual property as they do it, not to mention destroying lots of American jobs.

      This is piracy not an economic strategy like say, Germany's focus on high tech manufacturing.  Pretending that there is nothing we can do as a nation is part of the big lie of Neoliberalism.  There was no reason to open the flood gates but greed.

      http://prospect.org/...

      Great article Mark!

      In the GOP your status is inversely proportional to your integrity.

      by anothergreenbus on Sun May 22, 2011 at 07:02:08 AM PDT

      [ Parent ]

      •  China protects its own interests (11+ / 0-)

        as do most other developed nations.  The US is alone in its insistence on pursuing private gain at the expense of a strong economy and healthy commercial base.

        It is the mark of an educated mind to be able to entertain a thought without accepting it. ~ Aristotle

        by Betty Pinson on Sun May 22, 2011 at 07:46:39 AM PDT

        [ Parent ]

        •  Exactly. (6+ / 0-)

          And that is why I call it piracy not economics.  It's easy to appear like an economic genius when you are selling off your assets.  Then what, move to Dubai?

          In the GOP your status is inversely proportional to your integrity.

          by anothergreenbus on Sun May 22, 2011 at 08:00:59 AM PDT

          [ Parent ]

        •  Good point and towards a solution (0+ / 0-)

          In corporate America greed is the paramount virtue, politics are merely an art form needed to achieve its most effective manifestation.

          To counter act this trend America needs laws on all products and services that account for the true costs of production, including the environmental damage caused in their production and disposal.  

          We need laws like those seen for drug advertising where all the adverse side effects must be spelled out, including the weakening of the US tax base, flow of jobs overseas, cost of technology transfer in terms of national competitiveness, transportation and production and disposal costs in terms of  carbon dioxide produced, health care costs, etc.  Presently, these are just all passed on to the unwary buyer who is too uninformed to make a rational choice among alternatives.

          Ultimately, it is like all choices, they will be made on the values of the consumer and taxpayers.  The critical thing is that the true costs are better accounted for when making those value judgments.

          •  that can't be done at the national level . . but (2+ / 0-)
            Recommended by:
            davej, Thomas Twinnings

            it CAN be done at the INTERNATIONAL level.

            Nation-based solutions no longer are possible, since no nation is free to set its own trade policies anymore--WTO has veto power, legally, by treaty, over any such actions undertaken by any individual nation.

            The solution, then, lies in altering the WTO's terms of trade themselves, by adding consumer, environmental, and safety protections that themselves become part of the international trade regulations, and must be followed by everyone everywhere.

            That effort is known as the "fair trade movement". And it is indeed the only way forward.

      •  No, history. (0+ / 0-)

        And you should note Germany has a much higher Export/GNP ratio than China and a much healthier trade balance with china than the US, something I mention in my comments elsewhere.

        What the diarist completely misses or seems not to understand is the policy issues that ran-down the US manufacturing base over decades, and that these were decisions mde in Washington not Beijing.

        Of course, it makes much better light Sunday reading to blame that clever crypto-capitalist Dung Xiaopeng for creating this mess, and as fantasy goes, an amusing tale but as serious economic or political analysis I find it an incredible tale. He presents no facts to support his main conclusions because they don't exist and so proposed solutions.

        Before the US had client dictators south of it's border it had slavery at home, and then it imported labor to tae the dirty work and from at least the mid 1960's began exporting the labor-intensive jobs to capitalize on growing sonsumer market as the US became more prosperous.

        Particularly in textiles, clothing and electronics, the US (and others) have been manufacturing off-shore in low labor cost countries for decades.

        This is a structural problem. But that does not make entertaining reading.

        Dung Xiaopeng on the other hand, was an interesting character who makes great reading.

        And quite quotable : "实事求是" !!!

        What about my Daughter's future?

        by koNko on Sun May 22, 2011 at 11:42:38 AM PDT

        [ Parent ]

        •  you are mistaken here: (0+ / 0-)
          What the diarist completely misses or seems not to understand is the policy issues that ran-down the US manufacturing base over decades, and that these were decisions mde in Washington not Beijing.

          Those decisions were not made in Washington.

          They were made in corporate boardrooms.

          Washington can't close down a single factory and move it elsewhere.  Only the people who own it can.

          •  Washington/Corporate Boardrooms (0+ / 0-)

            What's the difference?

            koNko: I don't think Mark is attacking Dung Xiaopeng per se, only pointing out that there was a economic strategy being played out that shrewdly took advantage of corporate Americas readiness to sell out their country.  And here we are.

            In the GOP your status is inversely proportional to your integrity.

            by anothergreenbus on Sun May 22, 2011 at 01:06:06 PM PDT

            [ Parent ]

            •  there is a huuuuuge difference. (1+ / 0-)
              Recommended by:
              koNko

              One of them is elected.

              One of them ain't.

            •  Did I say attack? (0+ / 0-)

              I don't think it was meant as an attack, but I do think he misunderstands or misrepresets the historical importance and motivation.

              In other words, the clearly stated suggestion that this was a major turning point or the primary factor at work is simply incorrect and an over-simplification.

              Perhaps he meant to use it as an exemplar to explain an economic process, but as written it is misleading at at odds with history and economic fact.

              My simple arguement aginst this would be for him to actually look at the economic data of Chinese exports as well as the decline of US manufacturing and industrial exports, then correlate those to events, which tell a much different story.

              The spike in Chinese exports is relatively recent and follows membership in the WTO.

              His claim that the US was already dependant on Chinese exports prior to that is simply nonsense and unsupported by data.

              What about my Daughter's future?

              by koNko on Mon May 23, 2011 at 04:00:23 AM PDT

              [ Parent ]

          •  Not really. (0+ / 0-)

            Policy made in Washington to promote the Financial sector significantly weakened US manufacturing for years starting approximately in the mid 1970's. If you compare, for example, German and American investment, taxation, industrial and trade policy you would find a stark contrast between the two with German policy promoting industrial investment and US policy discouraging it. The US was not always that way.

            Furthermore, the political power of the MIC ultimately had the distorting effect on the US economy Eisenhower predicted.

            Personally I think it's a crime; no developed country can really sustain an economy based on services alone save some "City states" such as Singapore Hong Kong or London (each arguably a city state).

            US needs to reverse policy to save itself and this does have to happening Washington because Wall Street will invest wherever it will make a buck.

            What about my Daughter's future?

            by koNko on Mon May 23, 2011 at 04:11:54 AM PDT

            [ Parent ]

        •  Famous for the comment: (0+ / 0-)

          "Who cares if the cat is black or white, as long as it catches mice?"

          That applies to economics (forced rapid growth thru trade and investment supplying export market aimed manufacturing)  China had resisted such a path for nearly thirty years, except for small exchanges with other socialist oriented economies.

          Now that there is a domestic appetite and purchasing power, can a domestic oriented expansion take off? It is China's new frontier.

          cast away illusions, prepare for struggle

          by Pete Rock on Sun May 22, 2011 at 08:52:25 PM PDT

          [ Parent ]

    •  I have read this third comment a number (4+ / 0-)
      Recommended by:
      HamdenRice, Julia Grey, Egalitare, Cordyc

      of times here, and it doesn't make sense to me.  US Industrial might pre-dated WW2, even with the Depression.  Economic growth in Europe should have created markets for us to sell our goods - so it should have been a win-win.  They grow and produce, and they sell to us and we sell to them.

      The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

      by fladem on Sun May 22, 2011 at 07:15:57 AM PDT

      [ Parent ]

      •  Thank you. There's a lot of zero sum thinking (3+ / 0-)
        Recommended by:
        Julia Grey, Egalitare, Cordyc

        in DK economics threads.  As long as consumers can go from buying 1 pair of sneakers, to two, to five to ten, pairs of sneakers, affluence in a previously poor country does not mean poverty in previously affluent countries, as Europe proved as America rose.

        The key for the US is a sort of Clintonian-German model of growth by constantly educating the labor force and using industrial policy to go after high tech, high wage industries.

        •  curious . . . (0+ / 0-)
          using industrial policy to go after high tech, high wage industries.

          How do you suggest we implement a national policy like this in the face of WTO regulations that forbid "restrictions of free trade" . . . ?

          When American corporations now have over half their productive capacity located overseas (and of course it is precisely the "high-wage industries" that are targeted for outsourcing) and generate over half their profits outside the country, how can one even talk about a "national policy"? And even if we CAN successfully formulate a nation-based economic policy in a global economy, how do you plan to have the US adopt it when our own American corporations are opposed to it--as witnessed by the all-out bitter (and ultimately successful) campaign by American corporations to drop the "Buy American" provisions in the Stimulus Bill?

          What meaning can "an American national economic policy" have when even our own companies won't even support it (and will in fact actively oppose it)?  

        •  Maybe, but (1+ / 0-)
          Recommended by:
          Cordyc

          it seems to me that the sustainability and potential scale of a "Clintonian-German" model remains to be seen.  The driving force of the economy is profit (realized on the micro level of the firm) and not innovation as an end in itself.  While there are circumstances where profits will be sought through technical innovation, which requires highly skilled labor and therefore a premium on wages (although not necessarily the full value added by the worker's skill -- Bill Gates is a brilliant guy, but I'm skeptical that the value added by his skills in organizational management or software engineering are worth billions), capitalist firms are perfectly happy to realize profit by "bottom feeding," a model pioneered by WalMart (low prices, low wages and outsourcing production to where the wages are even lower).

          In fact, capitalist firms seem perfectly content to make profits with no production or value added whatsoever, which is essentially the case in the privatization of government services, such as prisons or education.  There, profits are realized by co-opting the soverign power of the state to tax in order to charge a "commission" to provide a service (a "public good").  "Privatization" may be good for the profits of government contractors, but it's demonstrably less efficient in sectors like health care (just compare the administrative overhead of Medicare to Aetna, or of U.S. healthcare delivery to Canada).

          So I'm skeptical that educating the labor force and attempting to occupy a high tech niche in the world economy is a viable solution for a country as large and diverse as the United States.  There's only so much demand for skilled labor when "bottom feeding" for profitability is possible through outsourcing, privatization, etc.

    •  Middle way - Germany (1+ / 0-)
      Recommended by:
      Bensdad

      Exporting nation, good social benefits, strong labor, strong manufacturing... problems? sure... but the industrialists and bankers etc. do not see regular people as some sort of annoyance or source of value to squeeze unsustainably.... Labor as the enemy and the solution to gut know-how and the industrial base. Instead, evolved, kept the workforce involved and trained shared the productivity gains more equitably

      The US did it the lazy way, kill it all off by skimming off the increased value and returns of productivity gains and export increasing profits to invest elsewhere for their own benefit.

      Pogo & Murphy's Law, every time. Also "Trust but verify" - St. Ronnie (hah...)

      by IreGyre on Sun May 22, 2011 at 01:05:22 PM PDT

      [ Parent ]

      •  I'd hold the praise if I were you . . . . (0+ / 0-)

        German companies are already undercutting everything their country offers, by moving increasing portions of their jobs overseas--many of them here in the US. Now that the US is a low-wage unregulated union-free business environment, the German business owners are more than eager to escape their high-wage heavily regulated union environment by relocating here.  I.e., they are doing to the US what the US itself did to Mexico and China.

        Not surprisingly, the American workers at the German-owned American factories get only a fraction of the wages and benefits that workers in Germany get.

        But it's not just Germany---Japan and England are doing the same thing.

        •  They held out a lot longer than others (0+ / 0-)

          maybe the US gutting the middle class is good for the long game race to the bottom and meet the Chinese going the other way.. but the disregard for the lives destroyed and stunted in the process has been staggering. Will Germany do a softer landing or end up as scorched earth as US companies have been? At least the unions have more input and are accepted there as a positive contributor not as something to declare all out war on.

          there always was going to be some readjustment to the unsustainable disparity of the US vs the rest of the world... BUT the glee and speed that the investor class declared the switch to the "service economy" with tax changes to allow them to corral more and more of the nation's wealth and the rapidly developing self impressed neo nobility they are becoming is not going to help the quality of life for the average person.

          China has both a growing economy with semi unfettered capitalism AND a much more overarching plan controlled from above. With that they can easily make the US money play their game every time. The rich and their wanna-be enablers and support auxiliary in the US will still mostly do well but everybody else will not. While in China it is evolving in the other direction... they are out of control in some ways but more protections and rights are being introduced as will more real democracy. When will they be freer than the US eventually?

          With the US media in the back pockets of the ruling elite and the political class moved to the right according to ALEC plans is there any hope for a fightback by regular folks or is the new wave of greed to well entrenched with a much better grasp on power? The stealth "kinder gentler" big brother that makes you love the new balance even as it destroys you has a lot of aces up its many sleeves but even so... just like the Fair Deal, and the New Deal and all the other populist waves in US history there will be a continued awakening... hopefully it will be a sensible one that allows people some security (not losing homes so easily or being preyed upon by various vampire elements of banking etc...) and saner taxation that pulls back wealth balance from the 1% and the 10%...

          But the wealth grabbers knew that their latest overreach would have consequences but this time they were prepared. The Tea Party is just an attempt to co-opt the inevitable populist backlash that had to come after the looting and implosion. Will it work in the long run or will the not as low information members of it notice they have  been had and turn on their tamers with a vengeance? Germany for all its challenges at the moment will at least do more than pay lip service to keeping people from suffering too much in an economic realignment.

          So in the end will using "beggar thyself" policies to end up killing off the more egalitarian societies and grabbing even more wealth? Making the US a low wage society to siphon in investment from elsewhere can only be sustained as a scam if the rewards are kept away from the average worker for as long as possible. Why else go all out to choke off the inevitable upsurge in Labor activity and membership?

          All of this only enriches the oligarchies of the world at the expense of average people. And for what? Loose cannons only out for themselves is damaging far more than the health and quality of life of most of the world's population... and eventually even they will suffer, last of course, and it could all have been avoided.

          Pogo & Murphy's Law, every time. Also "Trust but verify" - St. Ronnie (hah...)

          by IreGyre on Tue May 24, 2011 at 04:36:02 AM PDT

          [ Parent ]

  •  "Value" of labor vs. (7+ / 0-)

    "cost" of labor. From what I can see the shift from the former to the latter is nearly complete.  See, e.g, Wisconsin and the attempted destruction of the public labor unions.

    "Dumb-shittery stops right here." - Elon James White.

    by mikidee on Sun May 22, 2011 at 06:44:40 AM PDT

    •  I never bothered to learn a damn thing about (2+ / 0-)
      Recommended by:
      Misterpuff, Cordyc

      economics or even finance until later in my career. I viewed foreign policy through a stritcly military lens. Mistake. Big Mistake.  I learned through shock, at my place of work: a hospital. Once upon a time, departments were looked at as units, the OR, the ER, the Lab, X-ray, etc. Some of these units were profitable--OR, Lab, Cath Lab, X-ray--places that performed procedures which were pretty well reimbursed (some still are). These departments helped to subsidize less well reimbursed areas, you know, the units that actually took care of post-operative or post-procedure patients. The units that helped make people well enough to go home safe and healed, or at least safe and treated. Then came the MBAs who explained how we were looking at it all wrong. While a procedure  might be profitable, those who helped to make it happen, from housekeeping to nursing, were not. Suddenly, the backbone of the hospital, nursing, became a cost center, no longer even a consideration in the process of profit or even production. The doctors even felt a tiny pinch (and boy can they scream), but not much, because they were the "draw", the ones who brought business to the hospital. Huh. You thought it was illness or injury, didn't you? So did I. Within no more than five years, I, who had been trained to believe that it was a conflict of interest for a nurse to even consider, much less make a professional decision or judgment based on what a piece of equipment or a supply might cost (the patient comes first thinking), was seeing in my performance reviews a whole section on cost effectiveness, from my time utilization to my use of supplies efficiently. In other words, the proviso of sterilization, "when in doubt, throw it out," now became "I wonder if the five second rule applies to this unopened package I dropped on the floor."  That was my financial consciousness raising moment, when I knew I had to force myself to begin learning something about economics and their myriad theories. I'm still trying, though I find it quite depressing. And the patient? The MBAs never talked much about them, except that we be always smiling, always giving them the "feeling that we care" (which was infuriating as that is our job). But in the view of the MBAs, the patient was clearly secondary to cost/profit.

      •  The short sighted greed of most MBA (1+ / 0-)
        Recommended by:
        Bensdad

        programs has destroyed so much of American business.  Short term profits over long term growth has ruined our economy.

        The entertainment industry is another example.  The creativity has left the building once the MBA's took control so we get remakes of previous hits and mindless reality shows and sitcoms.  Lot's of channels yet nothing to watch.

      •  Late to reply to this - (1+ / 0-)
        Recommended by:
        kait

        but wanted to let you know I love it. Even if we know more now, we must continue to flinch (at least) whenever the value of labor is reduced to its cost.

        "Dumb-shittery stops right here." - Elon James White.

        by mikidee on Thu May 26, 2011 at 02:52:56 PM PDT

        [ Parent ]

  •  Mark Sumner you did (9+ / 0-)

    a wonderful job for this front page piece.

     This explains things simply and concisely.

    No matter how much we not like this policy pandora's box has been opened never to be closed again.

    ~a little change goes a long way~

    by missliberties on Sun May 22, 2011 at 06:53:59 AM PDT

    •  Taken to Its Logical Conclusion (6+ / 0-)

      The global free trade regime will result in either the complete subjugation of all labor to a tiny number of capitalists -- or a global war.

      People will rise up before either of these things happen and demand that government enact regulation and make policies that protect working people.

      At least I hope so.

      We can't count on Obama or the current crop of Democrats to do it, though.  That is why now is for biding our time.

      Find me fast on Daily Kos by following me.

      by bink on Sun May 22, 2011 at 07:01:17 AM PDT

      [ Parent ]

      •  Smart people understand that (3+ / 0-)
        Recommended by:
        fayea, Egalitare, sagesource

        capitalism must be tempered and when it is it functions well.

         There is no one human on earth, including President Obama, who can fight to 'do it', as you stated.

         The problem is that 'it' is complicated.

        ~a little change goes a long way~

        by missliberties on Sun May 22, 2011 at 09:14:18 AM PDT

        [ Parent ]

        •  It Is Only Complicated (2+ / 0-)
          Recommended by:
          happymisanthropy, Cordyc

          Because the rich and powerful want the unlimited ability to obtain labor at the cheapest level possible.  Other than that, there is no complication.  The Democrats and the White House are throwing their lot in with the rich and powerful -- because they have lost faith in the ability of the democratic process to help regular people.

          The problem is that this strategy does not work over time.

          20% percent of adults under 30 are officially unemployed.  The real number is 7 to 10 percent higher.

          That is where the chickens will come home to roost.

          We'll get a foreshadow in Europe.  Spain, with youth unemployment of ten percent higher than ours faces an explosive situation.

          Find me fast on Daily Kos by following me.

          by bink on Sun May 22, 2011 at 09:18:27 AM PDT

          [ Parent ]

          •  All this is not news (2+ / 0-)
            Recommended by:
            davej, sagesource

            What would be news is IF people started mentioning that fair trade and economic justice create stable governments.

             Trade can be free and fair.

             Markets can open up opportunities for the poor.

             The rich elite can step up and become more ethically responsible in the business dealings AND make money at the same time. $$$

              I did note that our President has mentioned universal rights in several of his recent speeches, which lays the foundation for economic justice.

            ~a little change goes a long way~

            by missliberties on Sun May 22, 2011 at 10:24:31 AM PDT

            [ Parent ]

          •  Missliberties is correct (3+ / 0-)
            Recommended by:
            Egalitare, missliberties, Cordyc

            one is not going to eliminate greed by complaining about it.  It must be tempered by regulations that expose its costs on a product by product basis.  These costs in the form of social dislocation and environmental damage are ignored and not accounted for.  That said any true full accounting must be fairly made across the economies of all nations.  

            To do otherwise is only to permit the costs to eventually accumulate in the form of environmental degradation and this leads as you note to highly adverse economic outcomes everywhere this strategy is employed.  Oh sure, people don't recognize global warming and destruction of biodiversity as the result of economic activity, but the reality is that unless it is addressed in the context of environmental issues, the economic sustainability and soundness of alternative contexts will become irrelevant.

  •  Labor theory of value (8+ / 0-)

    Karl Marx's version of the labor theory of value--that the value of a thing is equal to the labor put into it--does not appear to be the same as Adam Smith's--that the value of a thing is the value of the labor it fetches in the marketplace.  More importantly, more economists subscribe to the utility theory of value--roughly, that the value of a thing is the amount of satisfaction someone finds in it, and hence the amount of money someone is willing to pay for it.

    •  Good comment (0+ / 0-)

      The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

      by fladem on Sun May 22, 2011 at 07:14:08 AM PDT

      [ Parent ]

    •  you are mistaken (2+ / 0-)
      Recommended by:
      Mark Sumner, Julia Grey

      The two labor value concepts are the same.  Marx adopted his wholesale from Ricardo and the classical economists.

      What is different is the misinterpretation that others have thrust onto Marx's use of the term.

      As for the "market" and "how much someone is willing to pay for it", that is the social mechanism by which we determine how much labor value is "socially necessary"--a crucial component that is usually left out of Marx's concept by those who don't understand it.

      •  Lenny (4+ / 0-)

        Respectfully, Marx didn't adopt Smith's and Ricardo's labor theories of value uncritically.  The fundamental difference between Smith and Ricardo and Marx on the labor theory of value is the latter's historical materialist methodology.

        Value is in no way equal to price for Marx.  Price is the outward facing form of value in the sphere of circulation.  Value is determined in production by the amount of socially necessary abstract labor time used in production.  Socially necessary is defined by Marx as the amount of labor time necessary to produce a commodity using the normal conditions of production and with the average degree and intensity of labor.  (Marx, Capital, Vol. 1, p. 39, International Publishers edition)

        If I was a communist, rich men would fear me...And the opposite applies. The history of all hitherto existing society is the history of class struggles.

        by stewarjt on Sun May 22, 2011 at 07:55:43 AM PDT

        [ Parent ]

        •  respectfully, you misunderstand Marx (0+ / 0-)

          He adopted the labor theory of value wholesale. Historical materialism explains its existence, but doesn't change it in the slightest.

          I don't recall anyone ever declaring that "price" and "value" are the same.  Quite the opposite, in fact.

          And "socially necessary" also refers to the amount of commodities that can be successfully purchased.  It refers to the "demand" side as well as the "supply" side.

          •  I declare that price and value are the same (0+ / 0-)

            How do you name a thing's value? It must in terms of some currency, right? That is price.

            Price is the only practical method for determining value.

            That's why any controls on prices, in any area you can name, screws up any economy. The value of something has just been set arbitrarily by a central planner, and now signals are sent out into the marketplace that that thing is worth more, or less, than it actually is (according to real overall need and demand), so providers of whatever the thing is will offer more, or less, of that thing in the market, and resources will be misused. It may be labor, it may be corn, but corrupting the price mechanism will always hurt the marketplace.

            Sorry to digress. But back to the original point, price, arrived at strictly through consumer demand signals, using a stable currency, is the only accurate way to determine a thing's realistic value in a complex economy.

            •  by that logic (0+ / 0-)

              no one has ever been cheated on a land deal...

              Even Antiques Road Show gives three different prices for every item.  But you know better.

              •  Try to keep up (0+ / 0-)

                Value (expressed as a price for practical purposes) is subjective.

                I have a car that runs fine and that I like, therefore the new car on the lot on the corner, although the sellers are desperate and have marked it down to just above the cost of building it, is worth $0.00 to me.

                For someone in the market for a car, who likes what the dealer is offering, it might be an incredible deal. The seller needs to find a price that will match enough people's subjective valuation of their product, so they can sell enough to make a profit.

                I don't watch Antiques Road Show, but I would assume their three prices pertain to three different situations--three different subjective valuations of the item in question, with the value expressed in a quantity of currency.

                Is this making sense?

                The price is set by collectors' enthusiasm. Entirely subjective.

                Certainly people can get cheated, if the attributes of a thing are misrepresented by the seller. An employee can also get cheated if the worker turns out to be incompetent. This means the value of the thing was not well understood by the buyer. It has nothing to do with the fact that price is an excellent way to express a thing's real value in a complex economy.

                •  employer (0+ / 0-)

                  I meant employer

                  •  Then (0+ / 0-)

                    given that you have no objection to multiple, subjective views of value from different perspectives, why do you object to mentioning the Labor Theory as only one of several interpretations of value?

                    Labor theory is used in real life in a number of areas.  Mechanics, for example, charge parts and labor by the book.  If you're estimating the cost of a project, you will do better to estimate cost of labor and supplies, instead of looking at the market price of similar finished projects.

                    Your objections would only make sense if someone here were suggesting that the government should be fixing prices according to Labor Theory calculated Values, which as far as I can tell no one is.

                    •  I think (0+ / 0-)

                      The labor theory of value is the notion that the market price of something is mainly determined by the labor necessary to produce it.

                      I object because this is false. A thing's price is determined by its usefulness or desirability, which can change suddenly, when other factors enter the equation.

                      An artist can spend years on large painting, but if nobody likes it, he may have wasted all of his labor. A modern factory can produce horse-drawn buggies, using a great deal of labor. Are enough people going to value these products highly enough to make this a wise endeavor? try it, and see if the labor theory of value is proven true or false in a real market situation....

                      I object because this theory fundamentally undermines people's understanding of how markets serve the public.

                      •  you think wrong (0+ / 0-)
                        The labor theory of value is the notion that the market price of something is mainly determined by the labor necessary to produce it.

                        I object because this is false.

                        It absolutely is false.

                        It's also not what the labor theory of value says. Price and value simply are not the same thing.

                        It is, of course, what is usually said by the free-market fans who don't understand what the labor theory of value says. (shrug)

                        •  Explain (0+ / 0-)

                          Ive made an effort to explain what seems like the irrefutable common sense fact that price is simply a practical method for expressing value...please explain how and why I'm wrong, as you keep asserting without evidence or logic, so I can avoid making this mistake in the future.

                          Thanks in advance for your clear, thoughtful and informative breakdown of this issue.

                          •  I've already pointed you to a few hundred pages (0+ / 0-)

                            about it.

                            Read them.

                            But of course when someone says:

                            The labor theory of value is the notion that the market price of something is mainly determined by the labor necessary to produce it.

                            They are simply wrong.  Period.  That simply is not what the theory says. It is like claiming that the theory of evolution is the notion that the earth revolved around the sun. It is wrong. Period.

                          •  It's just sad, Lenny. (0+ / 0-)

                            That's about the fifth time that you've stated I'm wrong, without producing any coherent thoughts to back your statement.

                            I'm sure it's clear to anyone reading this that you haven't ever actually comprehended the logic behind the views you espouse, which is why you can't put your support for Marxism into words.

                            I mean, I already knew that there is no consistent logic explaining Marxism, but I've seen far more effective attempts at hiding this fact than yours. You simply fling empty statements and run.

                            Regarding your other response, anyone can produce links to other people claiming they're proving something. I would hope, since you're making strong declarations on this thread, that you would know what you think and why you think it. Clearly, you have no idea, and are hoping to hide behind pedantic phrases and other people's arguments.

                          •  read. the. damn. thing. (0+ / 0-)

                            STFU until you do.

                    •  nor can anyone . . . . (0+ / 0-)
                      Your objections would only make sense if someone here were suggesting that the government should be fixing prices according to Labor Theory calculated Values, which as far as I can tell no one is.

                      since value and price simply are not the same things.

              •  what's the value of something that's free . . . ? (2+ / 0-)

                Our libertarian friends miss another crucial distinction made by Marx--the difference between something's "use-value" and its "exchange-value".  They're not at all the same.

                Under the libertarian fantasy, when starving people don't buy food, then that food has no "value"---it is not bought at any price.

                That of course is NOT because starving people don't NEED the food--it's because they can't PAY for food, and under capitalism, all that matters is how much money is made. If starving people die because they can't afford food, capitalism has no problem with that, since giving food to starving people doesn't create any "value", in their eyes. Business owners aren't in business to provide food to starving people--they're in business to make profit--and if there's no profit to be made in giving food to starving people, then people will starve. (shrug)

                Particularly if the libertarians get their way and dismantle the "communistic government" that gives food to starving people (remember the idiotic comment elsewhere in this thread that both Bush and Obama are "central planners"?--the libertarian nutballs really DO think that all government is communistic).

                Social Darwinism at its worst.

                •  Okey (0+ / 0-)

                  Nothing is free. Everything that allows us to exist above the animals requires labor applied to resources. If someone gets something for free, it is simply because someone else, in another part of the economy, has paid for it, in some way.

                  I must say, that the fact that you don't understand this extremely simple, fundamental economic law, destroys your credibility, and makes this conversation feel like a waste of time.

                  Making distinctions between different kinds of central planning, with different supposed goals, but imposed by the same method--threat's and force--is just pedantry. Neocons are pursuing their vision of the greater good. Progressives are pursuing theirs. Which is more noble and ultimately better is a strictly subjective judgment. You get a different, but equally passionate, response depending on who you ask. Do you deny this? And yet, both groups agree that they should be allowed to threaten everyone into compliance with their proposed policies.

                  •  too funny (0+ / 0-)

                    Again with the "all governments are communistic!!!!!" crapola.

                    But tell me please, in your nonauthoritarian free utopia, what role is played by the multinational corporations, who are not only larger, richer, more powerful and have more direct control over people's everyday lives than any government does---but are completely totally absolutely unelected and not responsible to anyone, anywhere. And according to your ideologue vision, should stay that way.

                    •  Excellent question (0+ / 0-)

                      What you have to understand is that your multinational corporations, in every instance, rely on the protection and favors of government, and in many, many ways--to the point of controlling the media and national conversation, and brainwashing well-intentioned people like yourself into calling for more government controls to solve problems that were created by government controls.

                      Without government protection, without monopolies on currency, selective enforcement of regulations, without prohibiting a free exchange of ideas (as we're having now, thanks to a medium that resists central control), any group of people seeking to have universal control of markets will have very few devices at their disposal to make it happen.

                      If a currency is destroyed through manipulations and favors, free people can store the value of their labor and property in another currency, which other free people would be allowed to offer if it wasn't for a government-imposed monopoly. If people object to Chinese quasi-slavery, they can launch competing industries themselves, provided the government doesn't throw up endless barriers to the creation of new business--as is the case now.

                      The possibilities for solutions are basically unlimited, if people are allowed to apply their energies to any given problem, and if the perpetrators of the problem can't use government violence and threats to protect themselves.

                      I know, I know. It's a fantasy. And your proposal of giving more power to a government that causes more death and destruction and waste than you can fathom, is brilliant. I know your whole argument. But you still can't show how it's logically consistent.

                      •  so the corporations are run by the government? (0+ / 0-)

                        BWAAAAAAAAAA HA HA HA AH AHA AHA HA AHA HA AHA AH AHA AHA HA AHA H AHA HA AH AH HA AHA HA AH AHA HA AH AHA HA AHA  !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

                        No WONDER everyone thinks libertarians are nutty.  (shrug)

                        But if you want to disband the corporations and turn them into mom and pop shops (thereby bringing back the Adam Smithian fantasy that you love, and which hasn't existed for over 100 years), then please explain how we'll have all the things we have now?  How can small Adam Smithian mom and pop businesses build supercomputers, or international communications networks, or even jumbo jets?

                        Or is it your intention to return us to the 19th century in terms of technology as well as economic structure?

                        •  I think (0+ / 0-)

                          he is saying that since we allowed our government to be captured by the big corporations (largely thanks to libertarians...) therefore all government is always going to be corrupt and we shouldn't see government under democracy as a model for organizing society.  I think.

                          --
                          Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

                          by davej on Sun May 22, 2011 at 01:05:17 PM PDT

                          [ Parent ]

                          •  I think not (0+ / 0-)

                            I think he just has an ideological need to blame the big bad communistic government for anything and everything.

                          •  Thanks (0+ / 0-)

                            Yeah, that's closer.

                            Of course, I disagree with the idea that libertarians, whatever they actually are, promoted policies that allowed corporations to capture government. I would argue that the corruption had to begin in government, that by overstepping its bounds, it created power that violated basic human rights (which I take to be the rights articulated by Bastiat in "The Law"; and in fact, the process I'm describing is exactly what's descrubed by Bastiat in that book).

                            The problem, begins and ends the assumption that certain rights can be negated for the "greater good." So government tries to punish business to help the poor, and it grants itself all these new powers. Now those powers, just by virtue of existing, are there to be taken over by the businesses they were intended to control, and they inevitably are. But the process began with the notion that the government should violate very basic property rights of business owners on humanitarian grounds.

                            THere's always a credible argument to violate basic rights. But the eventual consequences must be reasoned out. My argument is that our present, horrid system, is the logical result of central government granting itself more and more powers over time. Of course, those control devices were seized by the corrupt and used to create and maintain power. What else could anyone expect?

                          •  too funny (0+ / 0-)

                            So it wasn't the corporations who corrupted the American political process by flooding it with money so they can get whatever laws they like-----it was the corrupt government (corrupted by . . . someone else, apparently) who offered it to the corporados out of the malevolence of their authoritative communistic hearts.

                            And presumably that happened in every other country on the planet, too.

                            And next, John will be telling us how the WTO formed itself, and how the various national governments ruthlessly appointed corporate representatives to write up pro-corporate rules that trumped anything passed by any national government, forcing the poor free market economy into it.

                            Too funny.

                          •  so tell me . . . . . . (0+ / 0-)

                            If the big bad communistic governments had not existed back in the 1860's when corporations first began to become prominent through the 1990's when they became the dominant international powers----what would have prevented them from taking over the entire economy just like they did?

                            What principle of "the free market" would have stopped them from continuously growing ever more larger and more powerful?

                          •  I'm still waiting . . . . . . ? (0+ / 0-)
                        •  Imbecile (0+ / 0-)

                          The corporations, to the degree that they're corrupt, that they influence the market beyond voluntary participation, rely strictly on government favors and protection.

                          Get that?

                          That's what I'm saying.

                          The mom and pop thing, and the rest of the labels, are your own sad attempts at putting together any kind of refutation.

                          Corporations, or business organizations, or manufacturing interests, are great. Just don't give them the option of using selectively-enforced government regulations to protect themselves from market competition. That is the cause of the system we have now.

                          Government is force divorced from accountability or consequences. Make this force available to corporations, you get one brand of corruption. Make it available to Marxist utopianists like yourself, you get another, and probably worse, brand.

                          Anyway, I really feel like you have a third rate mind, and are more interested in trying to win some rhetorical battle, for which you aren't equipped, than having a conversation. Thanks for trying, anyway. I'm going for a bike ride.

                          •  and vice versa (0+ / 0-)

                            Or have you forgotten how thoroughly the corporados and their campaign contributions determine who gets elected and who doesn't.

                            The idea that corporations can't exist without the government giving them favors, is asinine.  The corporations are bigger, richer, and more powerful than any government.  That's why they have set up the WTO, which has legal veto power over any act by any national government.  

                            The mom and pop thing, and the rest of the labels, are your own sad attempts at putting together any kind of refutation.

                            OK, so you can't answer.  As expected.

                            Government is force divorced from accountability or consequences.

                            government <------------->  corporations

                            Which is elected and accountable to people, and which is not.

                            Anyway, I really feel like you have a third rate mind, and are more interested in trying to win some rhetorical battle, for which you aren't equipped, than having a conversation. Thanks for trying, anyway. I'm going for a bike ride.

                            I must have hit a nerve, huh.

                            But then, I don't blame you for not trying to defend libertarian drivel.

                          •  Okay, I'm out the door. (0+ / 0-)

                            Lenny, I'll be back in an hour or so.

                            Please explain how prices and values are separate, and also, if you could, please cite some instances of businesses having an ongoing, universal, and negative influence on society without the favors and protection of government.

                            I'm sure you're up to the challenge. You're quite passionate about what you believe, it couldn't be that you're just wantonly expelling gas.

                            Go ahead. Prove both that you understand your own philosophy, and that there is evidence to back your assertions.

                            In return, I will do my best, as anyone will note that I already have, to answer any direct questions, and to back my assertions with logic. I'm not hiding behind bluster and nonsense. Are you?

                          •  since I've already pointed you to several hundred (0+ / 0-)

                            pages (which you of course will not read) I can do no more. Either you will read it, or you won't.  (shrug)

                            BTW, it might interest you to know that I'm a former IWW executive board chairman, and have been a syndicalist for a very long time.  Most Americans, of course, can't even pronounce "syndicalism" correctly, much less know what it means.  But before you start yammering about my love of tyrannical government again, look the word up.

                            SURPRISE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

                            (snicker)  (giggle)

                          •  Okay, thanks. (0+ / 0-)

                            I take this as an admission that you're shooting blanks. Of course, if you had evidence or reasoning behind all your statements, you would be glad to show me, right?

                            Man, quit wasting everyone's time, you clown. Read your own books. See if the ideas make sense, and THEN go promote them.

                          •  ok thanks (0+ / 0-)

                            I didn't think you really were interested in the question.

                            They're still there whenever you want to quit waving your arms and just read the damn things.  (shrug)

                          •  (shrug) (smirk) (laugh) (0+ / 0-)

                            I could just provide links to several books and claim I had supported my statements. So could anyone....But it's important to process and thoroughly comprehend things. Try it --it'll save you from popping off promoting theories and ideas you don't actually understand, and then getting called out and making a fool of yourself.

                          •  um, I wrote those books, you idiot (0+ / 0-)

                            I am the author.  They are my own words. I wrote them.

                            Moran.

                          •  In that case, I applaud the effort. (0+ / 0-)

                            I didn't notice you stating, anywhere, that you were the author.

                            But, in that case, isn't it rather shocking that you are unable to summarize the most basic parts of your belief system in concise, comprehensible statements? Isn't it telling that you enjoy throwing rocks, and presuming to correct people, but you offer no substance at all?

                            And, just in point of fact, claiming you're right because you wrote and self-published a few thousand words on a subject, falls under the heading of the "appeal to authority" fallacy.

                            I still haven't seen you capable of putting together a coherent defense of your version of Marxism. I don't think you actually have a clue how on earth prices and values can be different in any practical sense. The fact remains, without prices arrived at honestly, with honest currency and little or no central manipulations of the market, goods and services cannot be directed to recipients, or produced in appropriate quantities, in any sane way, over time, in a large-scale economy. It is simply how things work, regardless of Marx's, or any other economist's, assertions.

                          •  and you still didn't read it. (0+ / 0-)

                            Just as I expected you wouldn't.

                            (shrug)

                          •  btw, I find it amusing beyond measure to (0+ / 0-)

                            listen to a libertarian whose free-market mantra has led to the most catastrophic economic collapses in history--twice in the past 70 years--lecturing everyone on "how the economy works".

                            (snicker)  (giggle)

                          •  I think I'm arguing with a drunk (0+ / 0-)

                            Are you hammered, Lenny?

                            I accept that you believe "libertarian" ideas have caused economic collapses. I get it, I get it. I get your whole worldview.... So, instead of throwing out blanket statements without evidence, go ahead and illustrate how "libertarian" ideas, when put into practice, led to these collapses.

                            Then, I will be very happy to explain to you how you're ignorant.

                            I have no interest in your book, because you have no ability to put anything into concise, sane terms when you're asked a direct question. You realize, if you can't reduce ideas to principles, and illustrate the principles readily with examples and logic, the ideas are most likely crap.

                      •  by the way, this is simply wrong: (1+ / 0-)
                        Recommended by:
                        davej
                        provided the government doesn't throw up endless barriers to the creation of new business--as is the case now.

                        In the ideal world of the free-market libertarians, the economy consists of a large number of Lilliputian small businesses, none of which is large or strong enough to dominate the others—the theoretical basis of neoliberal classical economics. In this economy of small competitors, however, there are inevitably winners and losers. In the ideal Smithian world, the losers are quickly replaced by new competitors. In the real world, however, as the losers are absorbed by the winners, the winners get bigger and more powerful, and the number of players slowly shrinks. As the number of players gets smaller through competition, moreover, the winners continue to get bigger and bigger—particularly when large numbers of small players agree to improve their power by banding together into one player, the joint stock corporation. This not only greatly reduces the number of players, but the huge amount of money that is now necessary to allow newcomers to enter the field, limits and eventually eliminates the possibility of new players. Therefore, as competition between the small number of huge corporations carries on, the winners continue to absorb the losers and get even bigger, while the number of players continues to decline as they absorb each other. If the process is allowed to continue naturally, through the free market, the inevitable result is oligopoly, where a tiny number of players own everything—and then leading to monopoly, in which one ultimate winner stands supreme.

                        That is why the libertarian free-market philosophy fails. The inevitable result of competition is monopoly, and the only way to prevent that is to prevent economic winners from growing larger through absorbing losers—i.e., by massive government interference in the natural process of the “free market”. Which makes the free-market ideology itself utterly irrelevant. We simply do not live in an Adam Smithian economy. The free-market fundamentalists are defending a world that no longer exists—and indeed in their ideological fervor, most of them refuse to even acknowledge that it no longer exists.

          •  btw, for those interested in Marxian economics . . (0+ / 0-)

            I humbly offer the following:

            http://www.amazon.com/...

            http://www.amazon.com/...

            http://www.amazon.com/...

            And the introduction I wrote to this:

            http://www.amazon.com/...

    •  LTV (2+ / 0-)
      Recommended by:
      Julia Grey, AoT

      One should be precise when discussing the labor theory of value in the works of any economist.

      Marx's labor theory value states that the value of a commodity (Not a "thing."  A commodity is the social form taken by labors' product within peculiar social relations.) is determined by the amount of socially necessary abstract labor used in its production.  Price is the form of appearance of value in the sphere of circulation.

      Marx critiqued and extended both Smith's and Ricardo's labor theories of value.  Smith had a labor embodied theory of value that applied to "an early and rude state of society" before the accumulation of capital and the private appropriation of land.  Smith believed that the differing quantities of labor seemed to be the only basis on which to explain their exchange ratios or prices.  Beyond the "early and rude state," that is, in capitalism, Smith's value theory becomes confused.  He had a labor commanded theory of value and an adding up cost theory of value.  

      Neoclassical economists assert the equilibrium prices and quantities are determined by supply and demand curves.  the foundational concept of demand is utility or satisfaction, which is subjective.  This is the most popular school of thought in economics primarily because those economists are the scientific representatives of the capitalist class.  They present capitalism as the best of all possible worlds.  It's usefulness is its ideological importance, not its scientific validity.

      If I was a communist, rich men would fear me...And the opposite applies. The history of all hitherto existing society is the history of class struggles.

      by stewarjt on Sun May 22, 2011 at 07:47:59 AM PDT

      [ Parent ]

  •  Reasons (0+ / 0-)
    Sure, China hasn't yet seen that tidal wave of democracy that will inevitably follow free trade, but it's coming.  -M. Sumner

    Could you please define "free trade?"  Also, could you please provide the logic or evidence supporting your above conclusion?

    If I was a communist, rich men would fear me...And the opposite applies. The history of all hitherto existing society is the history of class struggles.

    by stewarjt on Sun May 22, 2011 at 07:00:45 AM PDT

  •  Well reasoned by a bit Americo-centric (11+ / 0-)

    Also, just want to point out that your use of irony at one point almost derailed my reading of your argument.  You wrote that the opening of China swept in capitalism, but then go on to discuss smart central planning, so I assume the capitalism comment was irony.

    The point I'm making is that China is definitely not capitalist.  We really have to stop seeing China through the lens of now badly dated capitalist triumphalism that invaded our thinking with the collapse of the Soviet Union.  It's especially misplaced now, with a global crisis of capitalism and China becoming the economic engine of the world.

    There is a kind of tautological thought process in the mainstream media that goes something like: capitalism triumphed and socialism failed; China is triumphant; therefore China must be capitalist.

    China is not capitalist.  It is exactly what its leaders say it is: a socialist market economy.  

    You can understand China's socialism by studying its guts -- its legal system and economic structure.  Almost all land is owned either by the central government or by collectives.  These entities "lease" land through a system of permits that enables the government to maintain strict control and avoid giving landowners "economic rents" just for being in the right place at the right time.  

    This system also enables China to carry out massive socialist infrastructure programs like high speed rail, which are all but impossible in America because of the system of private property.

    Chinese socialism enables many localities to organize collective enterprises, which, while they don't produce the most goods by value are tremendously important in terms of absorbing labor and developing local economies.  

    China also does indeed engage in central economic planning, provincial planning and local planning.  Private economic activity takes place within the context of planning.

    I think that Deng's main insight was that many of the ideas that we in the west came to associate with socialism/communism, because of the way the Soviets ran their economies,  really had nothing to do with those systems.  Foremost among these was administered prices.  They are almost impossible to get right from the central planning bureau, radically increase costs, create black markets and serve no useful purpose in a socialist economy.  The planners can intervene strategically on price issues, but there is no reason for them to administer every price.  That was just silly and was a big part of the Soviet collapse.  I remember reading once that the prices of grain and bread were so out of whack in communist Poland that farmers were not buying pig feed, but instead buying bread to feed their pigs because it was cheaper.

    I think that you are putting America and western interests at the center of your China story.

    Deng and the Chinese leadership had no particular desire to lower the living standards of American workers.  The interests of American workers are peripheral to the Chinese leadership which cares mostly about China.  

    The goal was building China and building Chinese socialism, not any particular goal vis a vis the internal economies of the west.  

    Also, I think you underestimate the role of western capital in China.  Sure, they brought some techniques and product lines, but what's really remarkable about China's economic explosion is how Chinese it was -- Chinese factories, producing goods for Chinese consumers and for export.  

    Also, Taiwan played a huge role in the development of China.  The tensions between China and Taiwan are the most preposterous kabuki theater in global relations today.  China and Taiwan both agree that Taiwan is part of China, the amounts of cross straits investment is staggering.

    When the son of Jiang Zamin, Jiang Mianheng, is in business with the son of one of the richest men in Taiwan (along with Neil Bush), the idea that China and Taiwan are enemies is beyond ludicrous -- it's an insult to the world's intelligence.

    •  Wow, lots of typos (2+ / 0-)
      Recommended by:
      fayea, brooklyngal

      "Well reasoned by a bit Americo-centric" -- obviously I meant "but a bit Americo-centric"

      Egads, "Also, I think you underestimate the role of western capital in China" -- should be "overestimate" the role.

    •  oops, you mis-spelled "state capitalist" (2+ / 0-)
      Recommended by:
      TexasTom, happymisanthropy
      China is not capitalist.  It is exactly what its leaders say it is: a socialist market economy.  

      It's a corporation with an army and navy.

      •  That would explain all those collectives (2+ / 0-)
        Recommended by:
        brooklyngal, Pete Rock

        er, actually it wouldn't.

        We get it -- you don't like China.  Your dislike of China, however, does substitute for analysis of how China actually works.

        •  er, actually it would (1+ / 0-)
          Recommended by:
          happymisanthropy

          Capitalism has coops too, in case you didn't notice.

          Oh, and you seem unaware that the collectives are consuming bodies, not producing ones.

          As I said before, we didn't learn the lessons of Lenin's NEO because we long ago forgot its very existence.

          •  Obviously you've never worked in China (1+ / 0-)
            Recommended by:
            Pete Rock

            collective enterprises are production cooperatives owned by local collectives, which are mostly villages.

            At any rate, what you think doesn't matter one wit.  Like many American leftists, you want to snatch defeat from the jaws of victory and have a capitalist triumphalist mentality every bit as rigid as Tom Friedman's.  You simply can't imagine that the most successful development model on earth right now is a socialist market economy.

            The reason that what you think, or Tom Friedman thinks, or I think is not important is that what China does and what other countries do, will determine the future.

            Right now, African countries are doing deals with China such that it is very likely that the Chinese model will be exported.  You can wring your hands and embrace noble predetermined failure for the rest of time, but that won't affect how the world actually develops.

            •  um, no. (1+ / 0-)
              Recommended by:
              Thomas Twinnings

              The collectives are bit players.  The big boys are all Communist Party hacks who operate joint ventures with foreign corporations. And get all the money.

              Perhaps you're not familiar with the distribution of wealth in China, or how it gets that way.

              The idea that "the collectives own everything in China" is just as idiotic (and just as ideologically motivated) as the claim that "everyone in the US owns stock and that makes corporations democratic".

              At any rate, what you think doesn't matter one wit.

              On that, you are absolutely correct. That's why I've not said a single word about what I think or what I want--what I want doesn't matter diddley doo.  What I've done is describe what is, whether I like it or not.  Reality is what it is. I don't make reality--I only describe it.

              Like many American leftists

              Ha!!!!!   There haven't been "leftists" in the US since the IWWs were all arrested back in 1919. It's only the idiot libertarians who think Bush and Obama are both commies, who think there's anything resembling a "left" in the US.

              , you want to snatch defeat from the jaws of victory and have a capitalist triumphalist mentality every bit as rigid as Tom Friedman's.  You simply can't imagine that the most successful development model on earth right now is a socialist market economy.

              Yeah, that's it exactly.  (snicker)  (giggle)

  •  Great article (4+ / 0-)

    some points:

    1.  Deng's move clearly benefited millions.  It has allowed China to get out ot a system that starved millions (see the great leap forward) into one where the average Chinesse is benefiting.

    2.  China remains seriously nationalistic in their approach to economics.  They have required government participation in joint ventures.  Think about the money that the government holds in its soveriegn wealth fund - despite the fact that populace is still not rich.  You can argue this is a holdover from the Communists in a way.

    The fast that the US does such a horrible job understanding the threat that China poses to American living standards isn't their fault.  It's ours.

    3.  The theory of surplus labor value isn't really a widely held view in the economics profession.  See DFinMN's comment about.

    The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

    by fladem on Sun May 22, 2011 at 07:13:52 AM PDT

    •  China doesnt pose any threat to US living standard (12+ / 0-)

      US corporations do.  China didn't hold a gun to anyone's head and force them to move all the high-paying jobs to their low-wage haven.  US companies did that willingly, voluntarily and enthusiastically.  THEY are the threat to our standard of living, not whatever low-wage haven the corporados happen to be moving to at the moment.

      Too many of us seem to have this silly idea that the American corporations want nothing more than to give us all good-paying jobs.  They don't.  They're not in business to give us jobs, and they're not there to make money for us. We are not people to them--we're expenses, and the primary rule of any business is to cut the expenses.

      •  Yes it does (0+ / 0-)

        Not necessarily because the Chinese are doing anything US corporations wouldn't do, but because of the environmental consequences inherent in the "hidden" costs of production creation and distribution that are simply permitted to accumulate as part of "business as usual".

        •  no it doesn't (0+ / 0-)

          That is also the fault of the corporations themselves.  I have never seen a single one of them demand that the Chinese government impose environmental regulations or workplace safety rules or child labor restrictions or anything else, on them.

          The Chinese government doesn't force any corporation to evade and avoid and ignore safety and environmental regulations--the corporados are only too happy to do so, all on their own. If the corporations really gave a flying fuck about all those things, they'd impose it on themselves, whether the Chinese government wanted them to or not.

          But they'll never do any such thing. Because they DON'T give a flying fuck about any of those things.  That is not the fault of the Chinese government or any other government.  It is the fault of the business owners and the system they have set up to benefit themselves.

          •  I disagree on this (0+ / 0-)

            Don't blame the companies, they do what they have to.  They're just machines that follow the tracks they are placed on.  Blame the rules they are told to follow.

            I know many business owners who wish they could do the right thing and are put in a terrible bind because they can't.  They are forced now by the rules of the system to push the limits to maximize short-term profits, by a government that does not require them to do the right thing.

            Companies are not sentient entities.  They can only do what the system requires, and our govt is not requiring them to provide good wages, high environmental standards, etc.  The govt is now essentially requiring them to pursue short-term plunder over long-term sustainable solutions, move factories to China, etc.

            Blame the ideologues who made those into the rules now, the billionaires who pumped out the propaganda that led the public to let that happen.

            --
            Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

            by davej on Sun May 22, 2011 at 01:20:16 PM PDT

            [ Parent ]

            •  alas, the rules are not forced onto the (0+ / 0-)

              poor resisting corporations who are only trying to do the right thing but are prevented by the big bad government telling it what to do.

              The corporados are bigger, richer and more powerful than any government.  They make the rules.  Literally---the WTO sets every nation's trade policy, and it has legal veto power, by treaty, over any act by any government.

              The corporados not only make the rules, but answer to no one for them.

    •  There's a difference... (4+ / 0-)

      Between Marx' surplus value of labor theory and the traditional idea that labor plays a role in defining the value of goods. But even economists who discredit the Ricardo emphasis on labor recognize that some parts of the original theory remain true. In particular, the difference between market price and labor cost opens a gap in the goals of employees and employers -- a gap that can be exploited.

      •  In neo-classical economics (2+ / 0-)
        Recommended by:
        fayea, yoduuuh do or do not

        supply surves are defined at the margin.

        Thus, many workers are paid more than the lowest wage they would accept.   Accordingly you can say that workers not at the margin actually extract surplus value from their employers.  That is certainly where modern extensions of Smith would lead.

        Whether the worker surplus is bigger than the employer's would depend on the slope of the supply and demand curves.  You can argue that the best way to understand China's is that it caused a shift in the labor supply curve, which in turn has acted to reduce the employee surplus.

        This is complicated, but most would economists reject marx' theory here.  I am not a labor economist, and I didn't finish my PhD in economics, but that is my understanding of the current state of thinking in the profession.

        That doesn't mean that DENG didn't think it was right.

        Really though the missing part here is a focus on the different paths Taiwan and the Mainland took after WW2.  In my reading of China (and I am not an expert) it seems that the nationalist explanation at times is more accurate than the ideological one.  The fact that Taiwan's economy exploded after WW2 while the mainland's did not played a pretty big role in Deng's thinking - I think.  Again, not an expert.

        Your piece was great.

        The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

        by fladem on Sun May 22, 2011 at 09:09:29 AM PDT

        [ Parent ]

  •  Carter (1+ / 0-)
    Recommended by:
    Utahrd
    Unilaterally chopping off a vital component of the food supply may seem an odd move for a president whose foreign policy is perhaps best remembered for a staunch insistence on human rights,

    A staunch insistence on human rights?

    Is this an attempt at humor?

    If so it is in extremely bad taste.  He gave Archbishop Romero the finger.

    "The attack on the truth by war begins long before war starts and continues long after a war ends." -Julian Assange

    by Pierro Sraffa on Sun May 22, 2011 at 07:21:44 AM PDT

  •  well-meaning people (friedman (11+ / 0-)

    and those who parroted his nonsense) told me in the 80's that free trade with china would open china to democracy. through trade interaction they would become more like us: a free democratic people.

    "nonsense", i kept saying, "we will become more like them. undemocratic, poorer and saturated in propaganda. and interested only in money."

    i admit that i love to say "i told you so."

    Any man can stand some adversity. If you really want to know a man's character, give him power. Abe Lincoln.

    by maskling11 on Sun May 22, 2011 at 07:46:30 AM PDT

  •  Wow (3+ / 0-)

    I am impressed by this detailed analysis, it sure makes sense.My question then is, what the hell do we do about it?

    End the tyranny of the 1%!

    by MasterfullyInept on Sun May 22, 2011 at 07:47:18 AM PDT

    •  there are only two possible options (1+ / 0-)
      Recommended by:
      Thomas Twinnings

      As long as workers in one country are paid X and workers in another country are paid one-tenth-X for the same job, the jobs will move where it's cheapest. And there is no power on earth that can stop that now.

      So we have two choices.  Either we lower our wages to match theirs, or we raise their wages to match ours.

      Which do we prefer?

    •  The scope of the problem and of the solution (0+ / 0-)

      is less than meets the eye.  China has not been a haven for complex manufacturing, in part because the U.S. still has export controls for some high tech with dual military uses, but mostly because of political risks and the caliber of China's workforce.  Look at what countries are thought to have thriving manufacturing sectors -- China, and . . . Germany.  There's more going on than just a race to low wages.  In fact, there's a piece in last week's Economist arguing that as labor costs fall as a percentage of total costs per unit, there is less advantage to move to China or other low wage countries, at the risk of giving up on a country with a stable legal system, etc., and having to buy into a Chinese property bubble and high inflation.  Now, the impact may just be that the tide of outsourcing is stemmed, as the wage aribtrage opportunities lessen.  Partly this is temporary, due to QE, but the point in the diary about the falling dollar ignores another way China exploits the west -- manipulating its currency.  The threat to China isn't from trade, per se, it's from current account surpluses.  What happens if the Chinese middle class can start buying things with a rightly-valued Renmibi, instead of having that wealth confiscated by the central bank's hoarding of dollars?  Maybe fewer factory jobs in the short term, but perhaps better ones in the long term.

      Anyway, China could exploit the capitalist system or wages in the post-war ear in the States were "right," but it can't be both.

      "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

      by Loge on Sun May 22, 2011 at 10:38:37 AM PDT

      [ Parent ]

  •  Sell to whom? (3+ / 0-)

    The corporations profit in the short term, but we are seeing the destruction of demand in the Western nations.  With declining incomes Americans buy less and the marketplace shrinks.  More businesses fail, more people are unemployed, and demand shrinks further.  It seems inevitable that, in the long run, world wages will stabilize at a point where American, Chinese, and Indian workers share a standard of living much closer to today's China than 1950's America, while a small plutocracy shares unimaginable wealth.

    Sweden. That's bad?

    by docterry on Sun May 22, 2011 at 08:10:22 AM PDT

    •  that is indeed the key (3+ / 0-)

      The basic problem with capitalism is that it produces things to SELL--it does NOT produce things because people need them. Under capitalism, people who can't afford to buy food starve, and people who can't afford to buy clothing go naked, because capitalism DOESN'T CARE if people have food or clothing. Commodities in capitalism are nothing more than a method of moving money from your pocket to theirs.

      But here's the insoluble conflict----in order for the business owner to produce as cheaply as possible, he must keep wages low. But in order for the business owner to sell his products, people must have money--and the more the better.

      Hence, capitalism tries to keep wages both high and low at the same time.  It simply can't be done.

      The problem is best illustrated by a story, perhaps apocryphal, told about UAW Prez Walter Reuther.  Reuther was one day touring a new Ford factory with Henry Ford--a new prototype factory that had replaced all its workers with robots. As the mechanical arms whizzed and whirred on the assembly line, Ford turned to Reuther and triumphantly asked, "Well, Walter, how do you plan on getting these robots to go out on strike?" And Reuther shjot back, "Well, Henry, how do YOU plan on getting these robots to buy Fords?"

      •  This happens because (1+ / 0-)
        Recommended by:
        yoduuuh do or do not

        we permit only a limited discussion of "costs" to be presented to the consumer, not a full accounting of the social, economic, political, and environmental costs that go into and disposal of  products and services.

        We need far stronger advertising laws and disclaimer notices like one sees for drug advertisement on all products.  The amount of Carbon Dioxide and foreign workers that go into manufacturing and shipping costs need to be placed into the disclaimer, as well as specific environmental costs associated with pollution and biodiversity destruction as well.

        Only then, will consumers be really in a position to "weigh the costs".  That would be a start, but we also need to beef up our consumer protection and education efforts so that people have the knowledge and understanding to weight the costs.

  •  Economic illiteracy? (2+ / 0-)
    Recommended by:
    barrettzinn, Julia Grey

    Thanks, Mr. Sumner, for an informative and well-written--if somewhat flawed--piece.

    One extremely important point I would correct you on, is this:

    Going back to Adam Smith and David Ricardo, economists had recognized that the first value of any item was the value of the labor that it took to create it

    And this:

    [American workers] were "rightly paid," with incomes that tracked well against the value of the products they produced. This was only possible because of the tight alignment between workers salaries and the price of goods.

    You need to look up "subjective valuation." Prices, or marketplace values, of labor, or goods, or services, are definitely not determined in the way you describe.

    For instance, a star may appear on a magazine cover in a pink dress, so suddenly the demand for pink dresses increases, the item becomes more scarce, and prices rise. Although it costs much more in terms of material and labor to produce, say, a black dress with ruffles, the market value of the pink dress has been increased dramatically by factors no central planner could anticipate.

    OR taking your example of the TV, a new marketplace innovation, a better TV using just-discovered technology, may take far less labor and material to produce, and provide better picture and sound quality. The marketplace, therefore, will suddenly value your $200 TVs at something like $0, although, according to your model, the value could not be less than $100 because of the labor needed to produce it.

    And, looking at it from the labor side, the employees in the old TV factory may have suddenly obsolete skills, so despite good work records, etc., the market value of their labor has just plummeted.

    And the second TV factory may be put out of business by online streaming, or some other innovation nobody can anticipate, or maybe it is proven conclusively that TV causes gross stupidity, and the public goes back to reading.

    The value of anything--labor, goods, services, property--you see, is determined by both real-world need, and perception. It can never be reduced to a formula, because reality and our perceptions of reality change constantly, and in ways no one can anticipate.

    This is why the entrepreneur provides an incredible service to society. He is risking his capital and time and energy attempting to anticipate or discover exactly what needs exist in a given environment, and to bring an appropriate product or service to market. No central planner could replace the countless experiments in public service conducted by entrepreneurs in a free market.

    I would also point out that China benefited tremendously from favorable US trade policies, and concurrent domestic regulatory policies that made it unappealing for manufacturers to continue making things here, and quite appealing for them to ship jobs all over the world. The US government set out, it seems, to destroy manufacturing in the US, and to thereby destroy the middle class, and the economic mobility of the lower classes.

    •  Excellent point (2+ / 0-)
      Recommended by:
      Julia Grey, Loge

      The cost of materials is also completely absent from the writer's analysis.

      Recurring run-ups in the cost of basic commodities have occurred in recent decades. As the world's consumer population explodes with the emergence of market-based economies in India and China, everything is changing.

      Nearly half the world's people live in these two countries. Most still live in abject poverty. Isn't the increase in the standard of living for them important?

      •  "increase in standard of living" . . .? (1+ / 0-)
        Recommended by:
        davej

        Seriously? You think corporados are flooding to China and India so they can increase those poor people's standard of living?

        They're not in business to give anybody jobs, dude.  They're not in business to make money for anyone but themselves, and the only "standard of living" they give a flying fuck about is THEIRS. That's why the "standard of living" of a tiny proportion of the world has gone up, while everyone else's has gone DOWN, as the super-rich get ever more super-rich, and everyone else lives on the crumbs. Haven't you been paying attention for the past 30 years?

        This idea that some of us seem to have, that business owners have all our best interests at heart and want nothing more than to give us all good-paying jobs, is laughably idiotic.  I don't know how the corporate apologists can even say it out loud with a straight face.

    •  prices and value are two different things (1+ / 0-)
      Recommended by:
      happymisanthropy

      Your analysis is incomplete.

      And it was not the US government that "destroyed the US economy"---it was private business owners who did that, willingly, voluntarily and enthusiastically.  The US government cannot move a single factory overseas, because the US government doesn't own any of them.

      The idea that it was taxces or business regulations or even trade policy that "made" the business owners move, is silly.  Business owners moved their jobs for a crashingly simple reason----people in China get paid one tenth of what people in the US get paid.

      If you want to see who is to blame for emptying the US economy and moving it to China, go to the rich part of town where all the corporados live.

      •  Eh? (0+ / 0-)

        You don't understand that by regulating activity, by making one thing more difficult or costly, and another thing easier, or cheaper, the government can create an environment where certain things tend to happen?

        If you don't take into account the real-world effects of policy choices, your analysis is entirely irrelevant.

        And, as I stated above, prices and values are the same thing. Prices simply put a specific number to value, that we can then base calculations on. It's a pretty straightforward concept. Without a reliable price system, an economy is doomed.

        •  and you don't understand that the costs of those (0+ / 0-)

          things are miniscule compared to the tremendous savings companies get by simply going where the wages are cheapest.

          The notion that it's the actions of the government that "make" all those businesses move where it's cheaper, is just another example of the libertarian ideological proclivity to blame the big bad government for everything and everything.  It's idiotic.

          If we cut taxes to zero and eliminate all regulations entirely, the companies would still be moving to the low-wage havens.  Why? Because they make lots more money that way.

  •  "[Deng] didn't base his ideas of the economy on (1+ / 0-)
    Recommended by:
    happymisanthropy

    wishful thinking."

    Precisely.  "Free-Market" True Believers are our Mao and Gang of Four.

    •  Interesting (0+ / 0-)

      So, people who study and endorse an ideology that is the opposite of Mao's, become the equivalent of Mao, and Deng, who was closer, if not a great example, of a free market true believer, becomes the equivalent of American quasi-socialists.

      This is some painfully garbled thinking.

      It could be that there is no direct parallel, and any attempt to find or see one, is what is wishful thinking.

      The only accurate measure of any of these systems is the amount of central control imposed by force--not the name or rationale given to that central control. You have greater or lesser degrees of this in societies, and the more you have it, the more people's behavior and incentives are distorted, and the more lives are ruined.

      Deng increased regular people's happiness to exactly the degree that he increased their freedoms. Bush and Obama, and any other central planners, destroy regular people's happiness to exactly the degree that they diminish their freedoms.

      •  My point is (0+ / 0-)

        that uncritical belief in Maoism or "Free Markets" are both ideologies.  How much "central control" is "imposed by force" when a plant closes and moves overseas, devastating its employees and a community?  I would say plenty. (Although I would also grant that the Chinese government is far more repressive than ours and I'm not about to emigrate to China.)

      •  too funny (0+ / 0-)

        Libertarians are amusing creatures.

      •  Thank you, Paul Ryan (1+ / 0-)
        Recommended by:
        Thomas Twinnings

        for returning to America's seniors the freedom to starve or freeze to death!  And thank you for protecting the freedom to die of untreated chronic medical conditions!

        Now if only someone would restore my freedom to bleed to death in front of an emergency room because I can't afford treatment, my liberty will be complete!

      •  Central Control is not the issue (0+ / 0-)

        "The only accurate measure of any of these systems is the amount of central control imposed by force--not the name or rationale given to that central control. "

        I disagree.  It really doesn't matter if its "central control", whatever that means or "distributed control", whatever that means.  The problem lies in the eventual effect, which requires a more complete assessment of the actual total costs of a given product or service that do not mask the "hidden" costs that are passed on in the form of a degraded and more polluted, heated environment, a weaker tax base, more wide-spread poverty resulting from diminishing wages, a less democratic society, and an BIOLOGICALLY unsustainable economic systemsetc.

        It is not that assessing the relative "costs" does not drive producers and consumers, but the failure to account for all the costs to civilization as a whole that drives human economies toward systems that eventually prove unsustainable.  High unemployment is but one symptom of the fact that biology of human economics being dramatically out of balance and an a clear indication of increasing ecological instability in the system.

        We need much more truth in advertising as is seen in disclaimers on drug ads for ALL products and services.  We need to institutionalize a system to promote much more complete accounting of total costs of products.  Its the only way to eventually drive products, practices, and services that actually harm civilization is used as intended out of our economic system.  These shouldn't favor one nation or one industry over another, or one commercial interest over another, if they are to effectively be put in place.  

        However, one thing is for sure, if they are not soon put into place, human extinction is a certainty, perhaps in as little as 100-500 years.  The environmental fallout is becoming much larger than human ability to control it.  The effects of such fallout are not linear but multiplicative and accumulative.  Adverse environmental changes are driven by the inadvertent consequences of anthropomorphically  induced  planetary change and its consequence on the physical constraints on biological systems that drive the evolution of entire ecosystems.  It is unfortunate that so few are sufficiently trained to comprehend the magnitude or direction of these perturbations, nor how once perturbed by man will be completely impossible for humans to reverse them.  Ecosystems will die and humanity along with them.

        •  Don't panic! (0+ / 0-)

          Central control is the only issue. If you have a universal or near-universal, or universal to a segment, societal problem, and it is not disease or natural disaster, it came about as a result of central control. Of government-dictated behaviors.

          This is the case every time. Always. Everywhere. Name me an instance that proves this wrong.

          You are going down a rabbit hole of boogeymen and incomprehensible causes and forces in the universe out to get all of us.

          Just operate on the level of what humans can and can't do. If we can't force everyone in a given society to behave in a certain way, then we can't create society-wide problems with human conduct.

          This is a fact. It's also a fact that, if allowed to choose, people will find solutions and select the best options for themselves and their families. This means that people need to be allowed to choose information too. And other people need to be allowed to offer ten thousand different products and services. It's comprehensive.

          It's only when people are denied choices, when their behavior is channeled, on a large scale, into strange and self-defeating endeavors, that things go to hell. As we see.

          •  because the American Republic is exactly like (0+ / 0-)

            Nazi Germany or Stalinist Russia.

            Damn government authority.

            (sigh)

            No wonder everyone thinks libertarians are nutty.  Fortunately for all of us, though, you're pretty harmless, since nutballs like you can't get elected dogcatcher if they say their agenda out loud and actually try to pass it.

            As you are about to find in 2012.

  •  Nice analysis, and thanks (1+ / 0-)
    Recommended by:
    kait

    for the thought and work involved.

    Deng was a smart little guy. And it's a good thing he did buy aircraft from Boeing. Before that, CAAC was flying old Ilyushins -- and the cabin crew went around passing out candies and party favors, probably to take your mind off the fact that they had no radar. Bad weather at the origination point or your destination? You sat where you were until it cleared and they could fly on VFR, as I found out one very long day in Xian.

    As for US understanding of China, I am somewhat bemused that so many people seem to look at it as a place intent on becoming like other places. China was, and is, a center unto itself, still the Middle Kingdom, and we forget that at our peril.

    Amount of federal money to National Public Radio in 2010: $2,700,000 / Amount to Jerry Falwell's Liberty University: $446,000,000 / Source -- Harper's Index, June 2011

    by Mnemosyne on Sun May 22, 2011 at 09:20:48 AM PDT

  •  Only Part of the Story (0+ / 0-)

    If Deng Xiaoping's purpose was to help the workers of China by stealing Western jobs, why are they being paid so little of the overall profit?  Why is there such a high rate of disillusionment and suicide among them?

    There is also a lack of discussion here about how families high in the Party hierarchy become the new Chinese robber barons.

  •  Brilliant (0+ / 0-)

    This makes so many things clear about how we got to where we are, making sense of what can sometimes appear too complex for those of us who are not economists.  Thank you.

    When shit happens, you get fertilized.

    by ramara on Sun May 22, 2011 at 10:46:22 AM PDT

  •  History incomplete; conclusions flawed (3+ / 0-)
    Recommended by:
    xgz, seriously70, HamdenRice

    I think this diary will play well on Daily Kos because China has become an increasingly attractive scapegoat for problems created by a failure of US domestic policy that are hard to correct and so it's is easier for politicians and political commentators on both the Right and the Left to blame CHINA, just as it was convenient to scapgoat Japan before it, and just as mistaken and non-productive.

    As the China bashing in the last electoral cycle demonstrated, it can be an effective diversionary tactic at a time when persistent unemployment at home is a major concern that comes at little short-term political cost just, far less than, say, immigration, since Asian voters are a smaller bloc. But I have to ask what comes of this in terms of actually solving the problem which is rooted in policy that goes back decades and will likely take at least a decade to reverse if legislators were actually to formulate the rational industrial and economic policies to solve the structural problems involved? Nothing, because it focuses on the symptons, not the disease.

    China did not invent low cost labor; colonial powers exploited it for centuries and, let's not forget the ex-colonial USA employed the worst sort, slavery. United Fruit, anyone? Post WWII the US business was hardly shy about seeking low cost labor whenever it saw an economic benifit particularly in Asia - Japan, Korea, Hong Kong, Taiwan, Singapore, Indonesia, Malaysia Phillipenes and now Thailand, Vietnam, Cambodia Bangladesh, Pakistan, India etc have all been low cost labor bases not to mention the US "Posessions" (defacto colonies).

    And yet Dung Xiaopeng devalued labor? You are either misinformed or being disingenious but this does not change the facts.

    What is different about China is size, meaning lots of hands and a huge potential market, and now, as you are discovering, a government that in some ways more competent and more self-determined than some others such as Indonesia, but not less than Japan, Korea, Singapore and Taiwan who are the willing partners of the US in exploiting these low cost labor bases.

    It is true that China is now the world's "worshop" but as I have stated this has more to do with the size of China than any unique characteristics or government policies (it has, for the most part copied the policy playbook of it's predecessors), but increasingly industries that chase low cost labor (such as garments) are decamping China for countires with lower cost labor and now China finds itself in a rather difficult position of having to climb a value chain that saturated with multinational corporations that control markets with few if any flagship companies that have international brands, and a chronically low share of the profits for the proucts it prouces with that cheap labor. (Much is made of the fact iPhone are produced in China but the value fraction is the lowest of any nation contributing to the product the winners being Japan, Korea, Germany, Taiwan and the USA, and even so those chinese workers are employed by a Taiwanese company.)

    You also assert that China is using low value Dollars to "buy up the world".  Care to present the facts?

    Frankly your thesis is rediculous and since it you are making this claim I suggest you list the value of foreign holdings of major nations which I'm confident would tell exactly the opposite story, particularly the holdings of the US in China verses China in the US - something you seem to grasp when suggesting Mr. Deng knew how to attract FDI (I agree) since it suits your argument, but conveniently ignore in asserting this claim.

    Certianly China has experienced stellar growth but that is usually the case when you are starting at the bottom (some African countries now have growth on the order of 15% which China has never achieved, for tha same reason_.

    And certianly the economy of China will eventually surpass the US, but at such point Chinese will still be relitively poor by comparrison and I am quite certian Chinese will never attain the affluance that Americans and stern Europeans have in recent years because, simply put it is neither economically or environmentally sustainable and would require China to go back in timne to a period when oil was cheap and the world economy and political system dominated by economic and military hedgemons, which is no longer the case (although a case can be made for corporate hedemons of which China has none - unless I'm missing something and you can correct me).

    I have a suggestion: use your next front page article to address the real problem, that US policy has failed the US people and that this needs to be corrected by US politicians.

    There are pleanty of examples to prove it can be done; Germany, for example, has excellent industrial policy and enjoys robust trade with the world, including with China and, in fact, has a much higher GDP/export ratio than China.

    Such a diary might explore the stated policy initiatives Mr Obams has elaborated - he seems to have an excellent grasp of the issues - and what Dems could do to promote this political and economic agenda.

    You might also consider what the US has to gain in China, now it's second largest and fastest growing export market and what types of policies would leverage the relationship to US advantage, particularly given the fact the US competes there against other developed nations with apperently better policies.

    If the purpose of this site is to promote more and better Dems, presumably for the benifit of Americans, wouldn't that be a better use of colume inches?

    When I lived in the US as a student and worker I learned Japan owned the US and would soon dominate the world. That seemed not to happen.

    Now we read China will soon own the world. Given the problems we face - not the least of which is a huge population that is headed for an Age Bomb that will dwarf that faced by Japan today, I find it completely incredible.

    If China can achieve moderate affluance for a majority of it's people in the next 50 years (at a level equivelent to the US in the 1950's) it will be a major accomplishment and far exceed reasonable expectations, but given the state of the world today particularly the deteriorating state of the earth's environment, it's questionable whether that will happen so I always ask myself the question posed in my sigline.

    Reccommended for taking an honest stab at a complex and difficult subject, but I do suggest you rethink this particularly the frame with supposes China is as unique and powerful as you suppose.

    Your thoughts?

    What about my Daughter's future?

    by koNko on Sun May 22, 2011 at 10:50:41 AM PDT

    •  one point: (2+ / 0-)
      Recommended by:
      Thomas Twinnings, koNko

      All of the flaws I see here from everyone come from the basic refusal to recognize that the economy is simply no longer made up of nation-states and national economies---it is made up of supranational megacorporations who are larger, richer, more powerful and have more direct impact on everyone's lives than any national government (including ours). It is also regulated and controlled by a sujpranational regulatory body (the WTO) which is unelected and not responsible to anyone--and has veto power, legally, by treaty, over any policy or law that is democratically passed by any national government.

      This is no longer the 80's.  The arguments from the 80's no longer have any relevance.

      The corporados have already recognized that, and are steadily building their international economic system for their exclusive benefit.

      We have to fight them at the level they are on.

      •  Agreed. (0+ / 0-)

        Thanls for amplifying that point which underlies some of the above but not clearly stated.

        Most definately the world in the 21st Century is differnt in some importiant ways e have yet to come to grips with, and I think all governments struggle with the eonomic supremacy of MNCs.

        What about my Daughter's future?

        by koNko on Sun May 22, 2011 at 08:45:24 PM PDT

        [ Parent ]

  •  The Seeds of China's Downfall (0+ / 0-)

    Have already been sown. They are creating environmental disasters that will damage the health of the people and the nation. They are increasing their use of energy faster than their sources of renewables. And Peak Oil will make super cargo ships very expensive to use.

    But for now, they are kicking our butt and we have Republicans offering to force everyone to bend over.

    I call it "the Breathing Syndrome." When Obama breathes in, they will criticize him for using air. When he exhales, they will complain about pollution. If he holds his breath, they will attack him for doing nothing.

    by Tuba Les on Sun May 22, 2011 at 11:16:22 AM PDT

    •  on the other hand . . . . (0+ / 0-)

      China is by far the world leader in green technologies and are investing far more of their resources into it than we are. They realize much better than we do that the current practices are unsustainable and that they, with their larger population, will feel the effects of it sooner and much more intensely than we.

  •  Agree (0+ / 0-)

    This lines up with my own analysis, that China is seizing the means of production, and our plutocrats are selling them the rope to hang them with.

    --
    Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

    by davej on Sun May 22, 2011 at 11:56:16 AM PDT

  •  I have questions, lots of questions, but (0+ / 0-)

    they are so basic that I suspect I owe it to myself to go off and do some reading, and as usual at dKos, some rereading. Thank you for a very interesting and (I think) important diary. Including valuable dialogue without pie fights. Yay!

    I do believe that all the comments about the environment should be factored into consideration--but I worry that we're already way behind the curve, and nature may be deciding for us. I don't see an environmental future for my kids that I would be at all happy living with, but they may turn out to be far more adaptable a/o innovative than I can anticipate.

  •  Neatly argued. (0+ / 0-)

    It made people think.

  •  By opening China as a manufacturing hub for the (0+ / 0-)

    ...west, Deng punched a hole in the tub. He destroyed the value of labor, convinced corporate management that they could separate their customer base from their worker base, and broke the back of western manufacturing.

    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. - emphasis added

    So much for Capitalism equals Democracy, the politically sanctimonious  purity meme that has been the very foundation of the Gop.

    Excellent analysis M.S.

    The value of human life never really matters to a corporation when  profit is on the line.

    •  a temporary solution, however. (1+ / 0-)
      Recommended by:
      Eric Nelson
      convinced corporate management that they could separate their customer base from their worker base

      I've alreeady noted above that capitalism has a fatal internal conflict that it can't resolve---it needs low wages for high profits, but needs high wages for high sales.

      You are precisely correct--what the corporados are doing now is to try to have both at the same time, by separating the producers from the consumers. They want low wage manufacturing in China and elsewhere, while simultaneously having high-wage consumption markets in the US and Europe.

      Alas, as they are learning now, that is simply not a stable situation.  Inevitably the wages equalize, and the corporados are back where they started.

      •  We haven't heard enough of this side of the (0+ / 0-)

        equation. The consumer
        By reducing labor costs as the default/primary cost cutting mechanism, the other side of the market is overlooked - the consumer.
         Who are they marketing to? What consumer base - where is the market, not with the financially strapped workers.

        We need more on this imo.

        •  we see its effects all around. (0+ / 0-)

          The current "jobless recovery" is a classic overproduction crisis, aka a demand crunch. It's not that we don't have the capacity to produce enough economic output for everyone--it's that we've cut wages so low for so long that people don't have the means anymore to BUY it.

          In the past, demand crunches were solved by Keynesian government spending, which increased demand without increasing capacity.  Now, however, we are in thrall of ideologue nutters who think all government is communistic--which prevents us from carrying out the solution that has always worked in the past.

          Wages simply must go up.  There simply is no other way to relieve the demand crunch. The economy is simply not fueled by a handful of billionaires buying second and third yachts---it is fueled by the millions of plain old ordinary working folks buying all the everyday things they need for their lives.

          That is the reality. It won't go away. And reality always wins in the end.

          We simply will have massive Keynesian government spending. From both parties.  Whether the libertarian ideologues like it or not. (shrug)

  •  Do you begrudge the Chinese people (0+ / 0-)

    their massively improved standard of living?

    And where are you on immigration?

    Ok, so I read the polls.

    by andgarden on Sun May 22, 2011 at 01:27:20 PM PDT

    •  of course not. (0+ / 0-)

      Nor am I foolish enough to believe that the corporados moved all our jobs to China to improve the Chinese standard of living.

      There's only one standard of living the business owners care about--and it's not that of their workers in the US or China.

      •  Respectfully, that amounts to misdirection (0+ / 0-)

        "The owners" are irrelevant--unless you're engaged in "great man" economics, which I doubt anyone takes seriously.

        This is a question of policy.

        Ok, so I read the polls.

        by andgarden on Sun May 22, 2011 at 01:56:46 PM PDT

        [ Parent ]

        •  respectfully, you are wrong (1+ / 0-)
          Recommended by:
          yoduuuh do or do not

          The owners are the only ones who matter, since they are the only ones who have any legal authority whatsoever to decide where a business goes and why.

          The business owners did not move jobs to China because the government of China or the US made them, or forced them too, or threatened them if they didn't. Nor did they move all those jobs there because of their humanitarian concern for the poor poverty-stricken starving masses of Chinese people.

          They moved all those jobs because they made a ton of money doing it---and that's all they care about.

          •  So what? (0+ / 0-)

            Are you going to put all of the people who value profit first in jail?

            This is ultimately a question of policy.

            Ok, so I read the polls.

            by andgarden on Sun May 22, 2011 at 02:14:02 PM PDT

            [ Parent ]

            •  non sequiteur (1+ / 0-)
              Recommended by:
              yoduuuh do or do not

              It is not a matter of policy.  The business owners didn't move our jobs to China because of government policy.  They moved them out of raw naked individual self-interest.  Nothing else.

              Are you going to put all of the people who value profit first in jail?

              In the case of those who put profit before health, safety and environment, then yes, I'd have no complaint about putting them in jail.

              Would you?

              •  I generally assume (0+ / 0-)

                that people will do what they can get away with and set policy with that in mind.

                Do you support an embargo on all goods sourced from China? If not, what do you propose to do about the fact that their means of production doesn't live up to our standards ?

                Ok, so I read the polls.

                by andgarden on Sun May 22, 2011 at 02:36:52 PM PDT

                [ Parent ]

                •  it's not just China, it's every nation everywhere (1+ / 0-)
                  Recommended by:
                  yoduuuh do or do not

                  So the solution to it also cannot be nation-based, but must happen everywhere.

                  There is only one way to do that---write environmental, worker, consumer and safety rules into the WTO's international trade structure itself, so it applies to everyone everywhere.

                  That is the aim of the "fair trade movement".

                  As for "getting away with what they can", you continue to miss the point completely. No one who doesn't own a factory, can decide to move it someplace else.  The only ones who can do that are the ones who own it. Period.

                  •  I think this issue is simply (0+ / 0-)

                    more complicated than you present it.

                    Working conditions and wages every bit as bad as those now seen in China were prolific in this country not 100 years ago. And people from eastern and southern europe risked everything to come here and take those jobs.

                    Factories in China (or anywhere else in the developing world) aren't going to get any better until the people who work there have the economic or political power to demand better.

                    Ok, so I read the polls.

                    by andgarden on Sun May 22, 2011 at 02:49:34 PM PDT

                    [ Parent ]

    •  Somebody once told me (0+ / 0-)

      that I don't deserve to make $11 an hour (less 15% or so self-employment tax, at that) as an online math and physics tutor because few people in China have ever made that much.

      Somewhere I suppose there are people making even less than the Chinese. Perhaps we should seek them out and reward them before considering the plight of the Chinese?

      Moderation in most things. Except Reactors. IFR forever!

      by billmosby on Sun May 22, 2011 at 03:05:57 PM PDT

      [ Parent ]

      •  there's also a big element of racism (1+ / 0-)
        Recommended by:
        billmosby

        since most Americans simply don't think "those people" SHOULD be paid as much as we great white merkans.

        Me, I see no reason why a Ford worker in China should get paid any less for the same job than a Ford worker in Michigan does.

        The company certainly doesn't voluntarily lower its profit levels on the argument that it doesn't "deserve" to make as much money in China.

  •  Don't forget our internal enemies. (0+ / 0-)

    People like Carla Anderson Hills.
    People who have done far more damage to the people of the US than any enemy in our history.
    And she's still at it:

    5th Chairwoman of the Council on Foreign Relations
    Serving alongside: Robert E. Rubin
    Incumbent
    Assumed office 2007

    "Double, double, toile and trouble; Fire burne, and Cauldron bubble... By the pricking of my Thumbes, Something wicked this way comes": Republicans Willkommen auf das Vierte Reich! Sie Angelegenheit nicht mehr.

    by Bluefin on Sun May 22, 2011 at 03:00:39 PM PDT

  •  After a second read (0+ / 0-)

    You wrote:

    Unilaterally chopping off a vital component of the food supply may seem an odd move for a president whose foreign policy is perhaps best remembered for a staunch insistence on human rights, but in 1979 the Soviets were in the middle of their invasion of Afghanistan. Carter could not see how the US could respond militarily, but he was determined that the response would be more than a diplomatic wag of the finger. His conclusion was that US trade was strengthening the Soviets and allowing them to concentrate on their military invasion. Trading with the Soviets was tantamount to arming them.

    True, and likewise, China's support of the US Treasury has enabed the US to continue fighting in Afghanistan and Iraq.  Food for thought?

    Another point you made I would put a finer point on: the value of labor applies mainly to traditional, labor intensive industries and in the 21st Century it is the value of information and IP that leads, so this should be a major concern of Americans and lead to improvement of and investment in education, which is something competitors of the US including China understand.

    The US still has an edge on China in this regard but China has numbers and determination, and that could trump the US if it fails to maintainit's edge.

    In that regard, the assumption that freedom alone will put a chicken in every pot could prove mistaken.

    Really suggest you follow-up wiuth policy.

    What about my Daughter's future?

    by koNko on Sun May 22, 2011 at 09:25:40 PM PDT

  •  Recc'd but where's the tip jar? (0+ / 0-)

    Nicely done Mark.  Blasted out on Facebook.
    -Clint.

    "Life is too short for front-wheel drive." -Sabine Schmidt

    by nhox42 on Mon May 23, 2011 at 04:26:18 PM PDT

  •  Brilliant Piece... (0+ / 0-)

    Thank you.

    I expect that Marxist analytical tools -- if not the associated prognostications from the 19th century -- will enjoy a much-deserved resurgence as economic conditions continue to deteriorate for the vast majority.

    -9.00, -5.85
    If only stupidity were painful...

    by Wintermute on Tue May 24, 2011 at 03:16:11 AM PDT

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