Tuesday, July 20, 2010

Made in China


The U.S. no longer makes stuff. In their wisdom, America’s politicians, academics and corporate leaders willingly relinquished our manufacturing base to the Third World. Our trade deficit remains huge, we’re trillions of dollars in debt, our infrastructure (roads, bridges, ports, aqueducts) is begging for repair, and our states and municipalities are going broke.

We’re fighting two expensive wars which, with each passing day, seem to make less and less sense to the public; the gap between rich and poor is widening; our health care system (even with the tepid reforms set to take effect in 2014) is spiraling out of control; and our public education system—once a source of national pride—is scandalously under-performing.

Pharmaceuticals remain one our few growth industries, but much of that growth is fueled by drug companies inventing new diseases (shyness, excessive blinking, etc.) so they can sell us remedies for them. Currently, they’re trying to convince American women that their natural sex drives are dysfunctional, hoping to create a market for female Viagra.

If these are our deficiencies, then what are our strengths? In what categories does America lead the world? Two areas immediately come to mind: childhood obesity and prison incarceration. Addressing our burgeoning jail population, Senator Jim Webb (D-VA) made this observation, “Either we are home to the most evil people on earth, or we are doing something very counterproductive.”

We also lead the world in drug use, lawsuits, graffiti, TV evangelists, junk food, gun ownership, cosmetic surgery, teenage pregnancies, energy consumption, and credit card debt.

Now let us consider China. The Chinese government’s response to the recent strikes in the auto manufacturing industry came as a surprise to veteran observers, particularly those with images of Tiananmen Square still fresh in their heads. Uncharacteristically, the government did not crack down when workers at Foshan Fengfu Autoparts, a Honda parts supplier in Guangdong province, went on strike in June, demanding higher wages.

Instead, the Chinese government stood back and watched. The government stood back and watched even as the dominoes fell, as Foshan Fengfu strike-fever spread throughout the factories of southern China’s manufacturing heartland, with tens of thousands of workers rising up and insisting on higher wages.

Liu Shanying, an analyst at Beijing’s Institute of Political Science, sees the government’s tolerance as significant. According to Shanying, China is looking to promote higher wages not only to close the gap between the rich and poor (which Beijing sees as a potential threat to the Communist Party), but to provide citizens with more cash to spend on domestic products.

Beijing wants Chinese workers to be able to afford more Chinese goods, reminiscent of Henry Ford’s innovative notion of providing workers with wages high enough to afford the Model Ts they were building.

“If incomes won’t go up, how can domestic demand be boosted?” Shanying asks. “Strikes for better pay are very much in line with the big trend of Chinese economic development.” Apparently, staggering, runaway credit card debt doesn’t strike them as a suitable “cure.”

Compare the Chinese view to the knee-jerk, anti-union sentiment found in the U.S. Instead of acknowledging the obvious advantages of a thriving middle-class—and recognizing organized labor’s role in sustaining that middle-class—there’s a scabrous, mean-spirited movement in this country, led by the Republican Party and corporate America, to attack unions.

Instead of rejoicing in the fact that firemen, policemen, teachers and other public employees are still earning enough to contribute to the economy, people are clamoring to cut their wages and benefits, looking to gut the public employee unions just as they gutted the UAW and the Steelworkers.

Our embrace of short-term fixes and our near pathological worship of the stock market—coupled with a quasi-libertarian, every-man-for-himself mentality—have clearly hurt us. When you assault the middle-class, you risk destroying the one constituency capable of maintaining the long-term viability of a robust economy.

The decline in union membership coincides with the decline of the economy. They are interconnected. Without the safety net of union wages, fewer people are able to afford domestic goods and services. The Chinese have figured that out. In fact, they were probably contemplating the United States when they did the math.

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