The Chinese “did exactly what we asked them to do,” Lifton said. “They started low-cost manufacturing using raw materials they could also produce at the lowest cost.”
“The capitalists in New York were popping champagne, saying, ‘We have achieved low cost!’” Lifton continued, “And now the Chinese are saying, ‘Phase two: we’re going to be the supplier, you guys can go out of business, and the capitalists in New York are saying, ‘Oh, you evil people.’ It’s completely ridiculous.”
According to Scott, Margonelli and Appelbaum, by focusing on price alone, the U.S. allowed the market to determine the value of crucial components like rare earths.
Fortunately, a company is trying to re-open the rare-earths mine in California in the next couple of years, as market theory would predict. But in the meantime the delay will result in more harm to American manufacturing and a competitive advantage to the Chinese.
This story shows why trade policies toward China and industry in general need a serious re-examination.
It's 1984 at CJR. Protectionism+isolationism+mercantilism = free trade.
Seriously though. How can you even imply, with a straight face, that the U.S. govt allows free trade in the first place? The U.S. govt has been a mercantilist/protectionist racket since Hamilton & Co. began "winning" the Constitutional debates.
Is it so hard to see that U.S.-govt policies make it prohibitively expensive, and practically impossible, for Americans do start or grow a business, or save money — and that, for the same reasons, American jobs and American dollars have gone overseas in droves?
And why are the same academics and journalists who decry the "greed" of "Wall Street" and "big business" blind to the fact that the very U.S.-govt policies they favor are serving to prop up same govt-favored big businesses?
"Buy American" is a fraudulent, get-elected" slogan that has fooled too many generations of increasingly burdened Americans. Why should the govt make it difficult for Americans to purchase goods at the lowest cost?
A wise man once said something to this effect: Protectionism is when govts do to their own people in peacetime what their enemies do to them in wartime.
Protectionist tariffs, NAFTA, and other so-called "free trade" agreements are not the tools of a free enterprise; they are the State's weapons of economic warfare against Regular Jane and Joe.
#1 Posted by Dan A., CJR on Fri 14 Jan 2011 at 12:55 PM
The issue of free trade is, obviously, relative. To ignore degrees is to miss the point and is rather sophomoric if not embarrassing for Dan A.
As for business entry cost, in fact there is an argument to made it's not high enough. Huge resources are squandered by the market every year, resources that as a nation we cannot afford anymore.
The problem as expressed by Dan A to this article is an emotional blame-America and ignore the world, if not reality. The model we want is not, in my opinion, China, Mexico, etc. but a very different economic model. Who wants to have national aspirations for massive poverty and dictatorial rape of the citizenship? In short, not the horribly discredited Texas model of super cheap labor and oligarchy dominated government.
The Southern Political strategy has taken this country to the brink of the toilet bowl. Go to those countries in Europe that thoroughly reject this model, e.g., Germany, Denmark, and you will visit countries that are doing profoundly better than our country.
#2 Posted by Stewart Nusbaumer, CJR on Sat 15 Jan 2011 at 12:56 PM
"To ignore degrees is to miss the point and is rather sophomoric if not embarrassing for Dan A. As for business entry cost, in fact there is an argument to made it's not high enough."
Right on, because govt-favored Wall Street firms, arms manufacturers, and auto-makers — collectively a.k.a., monopolies — are not entrenched enough as it is; the govt should make it even more difficult for smaller and newer businesses to compete with them. Seriously though. Why should an aspiring taxi driver, e.g., be forced to pay tens of thousands of dollars to the govt before he can begin to compete with the established taxi companies? This is an example of licensing as a cartelizing device.
And what do you mean by "degrees"? You either have a policy of arranged marriage or you allow free association. You can tweak a "mixed economy" (e.g., Keynesianism) all you want, and to whatever degree; yet, that will not make it any more fundamentally sound. (BTW: You'd do well to study non-govt-approved [honest] economic and political history before referring to your opponents' arguments as ignorant or sophomoric.)
"Who wants to have national aspirations for massive poverty and dictatorial rape of the citizenship?"
You, apparently.
"Huge resources are squandered by the market every year, resources that as a nation we cannot afford anymore."
Huge resources are squandered by govt-backed firms (and govt-subsidized programs), which benefit from the newly created easy-credit of the Fed. They are not afraid to speculate with the resources because they know they will be bailed out anyway. But that is not free-market capitalism, where malinvestment is corrected naturally, by allowing ill-used resources to be voluntarily and efficiently reallocated. No system is malfeasance-free; but, in a free market, bankruptcies and buy-ups are allowed to occur freely, honestly, and mutually beneficially — as opposed to the protectionist/corporatist model, where failure and fraud are rewarded and the worthless assets are dumped onto you and me.
"The problem as expressed by Dan A to this article is an emotional blame-America and ignore the world, if not reality."
Talk about demagogic reality-inversion and transference. At least I don't apologize for the very systems that are run by monopoly (govt), for monopoly. Moreover, "America" is not the govt. I blame govt policy and policy makers; whereas blaming America only pigeonholes innocent Americans into the same group with corrupt politicians, bureaucrats, and banksters.
"The model we want is not, in my opinion, China, Mexico, etc. but a very different economic model."
Who is arguing for those models? And who are "we"? You are not me; I am not her; a 20-year-old fisherman in Alaska is not an 80-year-old retiree in Florida; and private individuals are not are not the govt. That's why the best model is one that allows the individual the greatest array of choices — the one that punishes fraud and force, while employing the least amount of central control over economic transactions.
"In short, not the horribly discredited Texas model of super cheap labor and oligarchy dominated government. The Southern Political strategy has taken this country to the brink of the toilet bowl."
"Texas model?" "Southern Political strategy"? Please define your terms before you construct a straw man.
"Go to those countries in Europe that thoroughly reject this model, e.g., Germany, Denmark, and you will visit countries that are doing profoundly better than our country."
I am curious what your source on that is. But if those countries appear to be doing relatively much better, then it is likely because (1) the historic U.S. trend is an ever-tightening grip on trade, and (2) those other govts have not "squandered" such massiv
#3 Posted by Dan A., CJR on Sun 16 Jan 2011 at 06:28 AM
You repeat the conventional wisdom that the exchange rate between the renminbi and the dollar makes our exports half again as expensive as they should be and imply the U.S. would enjoy an export boom if only this is changed. But if you look at the record, the Chinese allowed the renminbi to increase in value by 21% from 2005 to 2008. but our trade imbalance with China was worse at the end of the appreciation than it was at the beginning. The fact is labor costs are rising dramatically in China and many of those jobs will soon be moving to Vietnam and Bangladesh. Will we then wring our hands about Vietnam's industrial policy? We need to sell things that are not exchange rate and low wage dependent. Germany is the world's largest exporter but manages to do this with a very high exchange rate and very high labor costs. But it is far up the quality scale, with which China can't compete. German companies don;t spend their time whining about he value of the euro.
#4 Posted by Charles Wallace, CJR on Sun 16 Jan 2011 at 08:41 AM
You all forget that they are communists.
Dan A you first
To say that the US is a mercantalist country would be to mean that they run trade surpluses and account balances at postive. In which the US does not, so the US is not a mertcantalist country. As we do not protect against communits companies taking our jobs, or importing at unfair political, civil and economic strategies, just to allow the true neo mercantalist China, German to conquer the world via trade surplus, currency surplus and the rest. I suggest you take economics class again Dan.
You next statment completely refutes your first. That the US has made it so expensive. As the only reason why it is so expensive to create jobs is because we are competeting with neo-mercantalist countries that produce at an uncompetitive rate.
The rest seems to be on poing though.
Stewy Nus
The reason we can't afford resources or upstart costs anymore is because we have a government who is allowing the neo-mercantalist to come in with their Soverign Wealth funds and buy up our market share for our companies which then makes it so uncompetitive for smaller business to start up, as foreign heavy weights just come right in and take up market shares that would have been left for the smaller business or medium business. Which in turn drives wages down as and prices down. However, when a wage price and quality of life actuation is done the products are cheaper because the US is losing positive capital inflows. As imports are used to compete for the market shares we used to have. Thus causing more domestic jobs to be lost as those soverign foreign wealth funds by overseas cheaper products in groves. This then means our capital is constanting being driven out the US via imports and then by interest payments along with the loss of production taxes and income taxes. While our debt grows and our employment deficit widens.
Germany is doing better than our country becaues they have less competition laws on the books because they are a transitioning communist country. They still allow banks to own business, which can constantly recapatlize their business which compete unfarily with free enterprises, along with that they also like the Chinese Communist have high SOE rates of business and centralized strategies.
Dan for a man that asks someone to define their terms you should use actual facts to back up your claims, or you just sound pompous and anusy
"(1) the historic U.S. trend is an ever-tightening grip on trade, and (2) those other govts have not "squandered" such massive portions of their so-called GDP on things that are destructive and counterproductive: WMDs, foreign aid, imperialism, etc"
The history of the US trend is not ever tightenging for geese sakes do you not know anything. Since 1980 our trade deficit has grown so says the Trade Census. China has squandered more on WMD's foreign aid and imperalism in their short time as a transitioning country than the US has since China has started transitioning. For example, WMD's China has the world's biggest stock pile of high technological weapons, foreing aid, China for geese sakes is giving us foreign aid by buying our stocks and bonds to the tune of trillions. Which does not mention that China is the biggest aid and provider for the world's biggest untapped resource market, Africa. Imperalism, you sound more pompous as you go on. First you ask someone to define a word then you say that the US spends money on imperalism. Let me define that for you Dan:
"the policy of so uniting the separate parts of an empire with separate governments as to secure for certain purposes a single state." The idea of a one world order, one world currency and one world government is a communist idea, do your research on who wants a one world currency international currency to create a one world power. Along with tha further imperalism means. I do not remeber the last time the US
#5 Posted by Rider I , CJR on Wed 19 Jan 2011 at 01:29 AM
"To say that the US is a mercantalist country would be to mean that they run trade surpluses and account balances at postive. In which the US does not, so the US is not a mertcantalist country. . . . I suggest you take economics class again Dan."
And I suggest you read my post again. I wrote: "The U.S. govt has been a mercantilist/protectionist racket . . ."
Mercantilism, roughly put, is when a govt limits or restricts imports, thus typically assuring "surpluses" for favored industry, bureaucrats, et al., at the expense of virtually everyone else in both countries (and elsewhere).
"You next statment completely refutes your first."
Nope. Protectionist tariffs and regulations are tools of the mercantilist. No contradiction there.
"China has the world's biggest stock pile of high technological weapons, foreing aid, China for geese sakes is giving us foreign aid by buying our stocks and bonds to the tune of trillions."
Really? What is their military spending relative to GDP or domestic spending? And how does that compare to the U.S. figures? You also ignore that (1) the U.S. govt is the largest debtor in the history of the world, (2) China is the U.S. govt's creditor, and (3) on balance, the Chinese actually invest and build while the U.S. spends and destroys. And your insistence on denying the reality of U.S. military and "diplomatic" empire (e.g., 700+ bases in 130+ countries; innumerable puppet regimes; etc.) — by comparing China's foreign entanglement to that of the U.S. govt — is ineffective argumentation bordering on pathetic. And nowhere did I say that the Chinese govt is not militaristic or mercantilistic; though you imply that I did. You haven't challenged my point that the Chinese trend is toward economic freedom while the U.S. trend is in the opposite direction; calling the Chinese communists is no refutation.
"I do not remeber the last time the US tried to bully a peacefull country like Tiabet, Japan, Vietnam or Thailand over land they own because China is bigger and they want to own that land for resources."
No. You simply don't remember U.S. officials telling the truth as to why they commit aggressive economic and military war against the Iraq, Vietnam, Afghanistan, El Salvador, or every country where the U.S. govt basically installed and controlled a puppet regime. Your key flaw here seems to be an assumption that U.S. officials are telling the Gospel when they say they are "spreading freedom and democracy" and "liberating" the same people they mass-murder, occupy, and rule via proxy.
"Iraq does more resource deals with China and Russia than they do with the US, minerals and petrol."
If that is the case, then you have just made my point for me: unlike the U.S. govt, the Chinese govt is not blowing up oil fields and infrastructure; by comparison, the Chinese are saving, investing, and producing.
I prefer not to engage in ad hominem as you have, but I must say you seem more like a U.S. govt propagandist, or a bitter and vengeful Chinese dissident. In any case, you'd do well to discover the non-govt-approved (i.e., honest, historically accurate, etc.) meaning of mercantilism.
#6 Posted by Dan A., CJR on Wed 19 Jan 2011 at 12:15 PM