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The Real Economic Lesson China Could Teach Us
| Good [+1]Toggle ReplyLink» databoy replied on Wed Jan 19, 2011 @ 7:07pm |
 Coolness: 107060 | by Robert Reich
Highlighting today’s summit between Chinese President Hu Jintao and President Obama is China’s agreement to buy $45 billion of American exports. The President says this will create more American jobs. That’s not exactly right. It will create more profits for American companies but relatively few new jobs. Nearly half of the deal is for two hundred Boeing aircraft whose parts come from all over the world. The rest involves agricultural commodities that don’t require much U.S. labor because American agribusiness is highly automated, and chemical and high-tech goods that are even less labor-intensive. General Electric and other companies are signing up for deals with China involving energy and aviation manufacturing. But much of this will be done in China. GE’s joint venture with Aviation Industries of China, to develop new integrated avionics systems (which presumably will find their way into Boeing planes) will be based in Shanghai. Here’s the real story. China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future. They’re intent on learning as much as they can from us and then going beyond us (as they already are in solar and electric-battery technologies). They’re pouring money into basic research and education at all levels. In the last 12 years they’ve built twenty universities, each designed to be the equivalent of MIT. Their goal is to make China Number one in power and prestige, and in high-wage jobs. The United States doesn’t have a national economic strategy. Instead, we have global corporations that happen to be headquartered here. Their goal is to maximize profits, wherever they can make the most money. They’ll make things in America for export to China when that’s most profitable; they’ll make it in China and give the Chinese their know-how when that’s the best way to boost the bottom line. They’ll utilize research and development wherever around the world it will deliver the biggest bang for the dollar. Meanwhile, Republicans and deficit hawks are cutting publicly-supported R&D. And cash-starved states are cutting K-12 education, and slashing the budgets of their great public research universities, such as the one I teach at. No contest. And no hyped-up trade deals are going to change this fundamental imbalance. Some say all we need to do is put our currencies in better balance. But even if the Chinese upped the value of the yuan and the US (courtesy of the Fed) reduced the value of the dollar – so everything they bought from us was cheaper and everything we bought from them, far more expensive – they’d still win. We’d have more jobs than now because our exports would be more attractive in world markets, but those jobs would summon fewer goods from around the world. In other words, we’d be poorer. Let’s get real. We’re losing ground. The U.S. labor force is now smaller than it was before the Great Recession began and most American families are worse off. December’s unemployment rate dropped to 9.4 percent from 9.8 percent but almost half the improvement was due to 260,000 people dropping out of the labor force. Average hourly wages grew by three cents in December; weekly wages, by $1.02. And almost all the gains in income occurred at the top. The major assets of rich Americans are financial – whose values have increased as corporate profits have grown. The major assets of the middle-class asset are their homes, whose values continue to drop. The President now says the answer is to help American business. “We can’t succeed unless American businesses succeed,” he said recently. “And I’m going to do everything I can to promote their ability to grow and prosper.” But the prosperity of America’s big businesses has become disconnected from the prosperity of most Americans. Republicans say the answer is to reduce the size and scope of government. But without a government that’s focused on more and better jobs, we’re left with global corporations that don’t give a damn. China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders. © 2011 Robert Reich Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, Locked in the Cabinet, and his most recent book, Supercapitalism. His "Marketplace" commentaries can be found on [ publicradio.com ] and iTunes. [ robertreich.org ] |
| I'm feeling softkill right now.. | |
| Good [+1]Toggle ReplyLink» DynV replied on Wed Jan 19, 2011 @ 10:25pm |
 Coolness: 109750 | [...] when there's economic war, real war usually follow. (or something alike, it's from memory) Paul Jay, TRNN |
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| Good [+1]Toggle ReplyLink» databoy replied on Thu Jan 20, 2011 @ 9:18pm |
| Coolness: 107060 | Why would China go to War with the U.S.? China owns a good part of the U.S. |
| I'm feeling softkill right now.. | |
| Good [+1]Toggle ReplyLink» basdini replied on Sun Jan 23, 2011 @ 2:28am |
 Coolness: 146145 | people who say china is going to take over the world have an oversimplified view of things and don't really understand the situation...
china faces huge challenges over the next 30 years, not the least of which is the demographic crisis they will soon have to face as a consequence of the 1 child policy...On top of that for all its expenditure in education their best Universities are no match for even average american and brit universities... |
| I'm feeling surly right now.. | |
| Good [+1]Toggle ReplyLink» DynV replied on Mon Jan 24, 2011 @ 8:35pm |
| Coolness: 109750 | Originally Posted By DATABOY
Why would China go to War with the U.S.? China owns a good part of the U.S. I was hinting the invert, China better watch out if they play tough with US. |
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| Good [+1]Toggle ReplyLink» databoy replied on Tue Jan 25, 2011 @ 3:22pm |
| Coolness: 107060 | The U.S. have a hard enough time taking out a little player like Irak, what do you think would happen if they tried there luck with China?
Besides, The U.S. and China are Economic partners, why would they want to go to war? Where would the U.S. buy all of its crap it doesn't need, and how would China pay itself back all the money they have been lending the U.S.? (to buy all that crap it doesnt need and cant afford) Update » databoy wrote on Wed Jan 26, 2011 @ 11:40am China has an advantage, when it comes to developement. Seeing as its a dictatorship, when the government decides to do something, things actually happen... for the better of for the worst. |
| I'm feeling softkill right now.. | |
| Good [+1]Toggle ReplyLink» DynV replied on Wed Jan 26, 2011 @ 1:57pm |
| Coolness: 109750 |  databoy that was a funny post! US could flatten a huge chunk of a city during a night over 50 years ago, what do you think they could do if the REALLY wanted to today? I wonder how much of a priority are Iraq/Afghanistan wars. I'm positive it's nowhere near what they keep in reserve for a serious affront.
I don't know the intricacies of the US-china relationship but the quote I made earlier about economic war leading to real war has a lot of weight and make me wonder how much of a push US need to become serious. |
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| Good [+1]Toggle ReplyLink» databoy replied on Wed Jan 26, 2011 @ 7:07pm |
| Coolness: 107060 | A lot has changed since WW2... China is just as capable as the U.S. to wage a nuclear war. Besides that game can only be played If you are the only one with the bomb. If Japan had had nuclear weapons in 1945, do you think that the U.S.would have dropped the bomb?
Where would Wall-mart buy there crap if not from China? China and the U.S. are economically interdependent, not at war. |
| I'm feeling softkill right now.. | |
The Real Economic Lesson China Could Teach Us
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