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China is very, very "business-friendly."  Corporate conservatives lecture us that we should be more "business-friendly," in order to "compete" with China.  They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay -- even lunch breaks.  They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes.  But America can never be "business-friendly" enough to compete with China, and here is why.

Workers In Dormatories, 12 To A Room, Rousted At Midnight

China is very, very "business friendly." Recent stories about Apple's manufacturing contractors have started to reveal just how "business-friendly" China is. Recently the NY Times' Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple's Chinese suppliers, in How the U.S. Lost Out on iPhone Work.  They describe how China's massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, "Those jobs aren't coming back."

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. ... New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company's dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

"The speed and flexibility is breathtaking," the executive said. "There's no American plant that can match that."

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift.  And the corporate conservatives criticize America for this, not China, saying we are not "business-friendly" enough to compete.  This is because we are a place where We, the People still have at least some say in how things are done. (Don't we?)  Later in the story,
The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That's when managers woke thousands of workers, who crawled into their uniforms -- white and black shirts for men, red for women -- and quickly lined up to assemble, by hand, the phones.
"Business-friendly" = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.  

Forced Labor Is The Real "Business-Friendly"

Arun Gupta at AlterNet, in iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months'-long "internships" in Foxconn's mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, "the Chinese hell factory," treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.

... Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.

... The use of hundreds of thousands of students is one way in which China's state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlerNet piece, iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think.  These things are not "costs" that we can compete with by lowering our wages, these things are something else.

Not JUST Low Taxes -- Massive Government Subsidies

These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies.  The Chinese government is very "business-friendly."  They hand money to businesses so they are much more able to "compete."  They are so friendly to business that they even own many businesses.

Trade Secret Theft

Another area where China has very "business-friendly" policies is when their own businesses steal from non-Chinese businesses.  This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the "unbelievably endemic" problem of Chinese theft of "intellectual property" -- the trade secrets that keep businesses competitive.  In this case China's Sinovel sole the software that ran an American company's products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China's Sinovel, the world's second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor's wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm's revenues.

... Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don't have to pay them and you can just make the things yourself.  When you get in bed with a very "business-friendly" country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating "market."

Trade Deficit Drains Our Economy

As a result of our ideological blindness, refusing to understand China's game, we have a massive trade deficit with them.  This means hundreds of billions of dollars are drained from our economy, year after year.  And to make up for this we borrow from them in order to keep buying from them.  But this does not cause their currency to strengthen in the "markets" because China loves this game the way it is going, and intervenes against the markets to keep their currency low.  And so it continues, year after year.  We believe in "markets" they believe in rigging markets so they come out ahead...

Markets Can't "Compete" With This

Corporate conservatives tell us we need to be more "business-friendly" to "compete" with China.  But at the same time Steve Jobs was being a realist when he said "the jobs are never coming back" because he understood that the current political climate, controlled by a wealthy few who benefit from China's "business-friendly" policies will not let us fight this.  Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices?  Why should they, unless We, the People tell them they can't do that to people, and that we won't let them profit from it?

As long as we continue to think that this is about "markets" competing, we will lose.  China sees itself as a nation, and they have a national strategy to continue to be so "business-friendly" that our businesses can't compete.  Our leaders and corporations may have "moved on" past this quaint nation thing but China has not.  

We, The People Need To Act To Fix This

As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose.  But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem.  Maybe the companies they manage won't be around later, but that is not their problem.  Others are concerned, but are forced to play the game because no one can compete with national systems like China's.  

When everyone is in a position where something isn't their problem, or where they can't do anything about it on their own, it means this is a larger problem, and this is where government -- We, the People -- needs to get involved.  It is our problem but we have been convinced that we -- government -- shouldn't interfere, or "protect" our industries, because "the markets" don't like "government" -- We, the People -- butting in.  This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.

We Need A Plan

In U.S. must end China's rulers' free pass at Politico, AAM's Scott Paul writes,  Read it, read it, read it!)

We shouldn't fear China's citizens. But we should be worried about the actions of its authoritarian -- and, yes, still communist -- regime that tightly controls the People's Republic. And we should be downright terrified by some of our own leaders' attitudes toward China.

... China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.

[. . .] History didn't do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites -- and seduced them into believing these policies were no longer necessary.

... There has been no strategy, no effort to prevail economically.

... No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China's intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan.  We need to understand that China is not competing with us in "markets' they are competing with us as a nation.  We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.

It's not just price, it is things a democracy cannot allow.  We can't ever be "business-friendly" ENOUGH.  We have to do something else.  We have to understand that We, the People -- the 99% -- are in a real fight here to keep our democracy, or we will lose what is left of it.

Democracy Is The Best Economics

When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job.  We need more of that, not less of that.  We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.

As long as we let democracy be a competitive disadvantage, We, the People will lose.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture.  I am a Fellow with CAF.

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Comment Preferences

  •  Conservatives fail to see the irony (2+ / 0-)
    Recommended by:
    DrFaustus, Zwoof

    that a Communist country is considered more "business-friendly" than the United States.

    27, white male, TX-26 (current), TN-07 (originally), liberal-leaning independent

    by TDDVandy on Wed Feb 15, 2012 at 01:35:54 PM PST

  •  Nearly 20 years ago, We, the People, agreed to (1+ / 0-)
    Recommended by:

    compete with the world on the world's terms.  World trade is a ratchet; it moves only one way, toward the lowest cost producer.  We demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job.  So, why is the world not beating a path to our door?  Maybe we need to change the world so that the highest priced offer gets the business?

    •  So you think democracy is doomed? (0+ / 0-)

      Seems to be your point.

      BEFORE we started this "free trade" scheme, democracy was winning and countries had to pay better wages before selling into the prosperous markets that democracy had created, or face tariffs.

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

      by davej on Wed Feb 15, 2012 at 03:55:41 PM PST

      [ Parent ]

  •  Lived in China for 4 years (4+ / 0-)
    Recommended by:
    mookins, icemilkcoffee, davej, terabytes

    Just try to open a business in China to see how "friendly" they are.  It is nearly impossible.

    When I was there (2004-08), you had to have a Chinese "partner" and as a foreigner could only own 49% of the business.

    I knew a guy that did this only to find that his partner sold all of the furnishings and inventory in the middle of the night.  The American took him to court and lost.

    My wife (Chinese) opened a small business in America with a $50 DBA license that tool all of 15 minutes to fill out, and by applying for a federal tax ID for free.

    Well, I been around the world, and I've been in the Washington Zoo. And in all my travels, as the facts unravel, I've found this to be true.... ...they don't give a f^ck about anybody else

    by Zwoof on Wed Feb 15, 2012 at 02:28:21 PM PST

    •  Exactly my point (2+ / 0-)
      Recommended by:
      Zwoof, terabytes

      All these conservatives playing footsie with China as a wedge to get rid of unions and force wages down here are learning that they are riding the tiger.

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

      by davej on Wed Feb 15, 2012 at 03:56:44 PM PST

      [ Parent ]

    •  My father spent the last 20+ years of his life (2+ / 0-)
      Recommended by:
      Zwoof, terabytes

      doing business in China, and what you said is totally true. You need a local 'partner', and despite whatever they say about how heavily they are 'hitting' the corruption- it is still very pervasive.  What happened to your friend is very typical. My brother-in-law had this exact same experience with a crooked partner stealing his factory.

      Yet another way of thinking about business in China is this- if you want to follow every law and every rule then the bureacracy would suffocate you. Every 'relevant department' would come by and demand a 'permit fee'. The only way you could survive is to ignore 90% of the laws and rules, make as much money as you can while you can. When the authorities catch up with you - grease a few palms, and make a lot of promises. Lay low for 2 weeks, and then reopen and resume exactly what you've been doing.

  •  I have one problem with this diary (1+ / 0-)
    Recommended by:

    ...and that is your repeated use of "corporate conservatives."  As far as I can tell, we seem to have a shortage of people on our side of the isle trying to fix this or even willing to speak of it(I know we have a few, but too few and definitely not in positions of leadership).  Our trade policy is the proverbial elephant in the living room which the MSM and leadership of the national parties refuse to acknowledge.  Other than that minor quibble, excellent diary.

    "When people have nothing left to lose, they lose it." - Gerald Celente

    by DrFaustus on Wed Feb 15, 2012 at 02:31:28 PM PST

  •  free trade lies (2+ / 0-)
    Recommended by:
    terabytes, davej

    From NAFTA to the latest free trade debacle with Columbia, Panama, and S. Korea, the free traders keep saying that free trade will lift all boats.  This is pure and utter bullshit.  All free trade has done is put us in the race to the bottom.  And I might add, the corporate conservatives love it.  The concept of slaves that paid them for the privilege of working for them would give them an orgasm.  They are insane with GREED.

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