Destabilizing China
By Leo Brown
[President Obama's Weekly Address]
"Insourcing American Jobs" sounds too nice to be true. When I read the four company profiles of "insourcing" leaders, it's hard to imagine that these hundreds of jobs can make a big-picture dent in the Indian IT complex or Chinese manufacturing. But let your imagination wander for a moment.
The Master Lock story is unique, an oddity, but not irrelevant. In a nutshell, conditions in China that were once ideal for manufacturing have slipped. Labor costs are rising and migrant workers have begun to agitate for better work conditions. Most of the Chinese labor force is undereducated, and a company like Master Lock seeks to hire supervisors with graduate degrees.
How will President Obama save the American economy? The Master Lock story suggests that a destabilized China leads to more "insourcing." Even if all jobs don't come directly home, America would diversify its portfolio by relocating some Chinese manufacturing.
How will President Obama destabilize China? A Facebook Revolution? Of course, some of what happened in 2011 was organic, and I believe most of the protesters were earnest in their actions. But it is abundantly clear that unrest in China would benefit the near-term American economy and boost President Obama politically.
Let your imagination wander. Is President Obama going to stand by and hope that the poor migrant laborers of China come upon enough cash to purchase bandwidth and print pamphlets? Keep in mind that the Chinese would need significantly more funding than your typical revolutionary in order to overcome heavy Internet censorship. Moreover, do you think Washington bureaucrats will wait for the President's approval before they act in the name of democracy, security, and the quest for global influence?
When you write, "unrest in China would benefit the near-term American economy and boost President Obama politically," my first thought was, "Yeah, and maybe slow down the Chinese economy and demand for new coal plants." That led me to search for "china coal plants" and found this fascinatingly relevant article: http://thinkprogress.org/romm/2011/12/21/393761/video-30000-chinese-occupy-coal-plants/?mobile=nc
ReplyDeleteBecause environmental issues require international cooperation, the realm of international politics is no longer a zero sum game. The economies of China and the US are inextricably connected- right now, with poor results for both Chinese and American workers.
A return to localism, initiated by a revolution of social and economic relationships, can reduce the need for global imports/global consumption and result in a better quality of life for people and the planet.
Hi Stevie - it's refreshing to hear someone talking about quality of life in a meaningful, relevant way. So often we get confused and disoriented.
ReplyDeleteHey Leo just read this post. I'd like to point to you towards this White House report; http://www.whitehouse.gov/sites/default/files/investing_in_america_report_final.pdf, retrieved by Wolf Richter who wrote an accompanying article; http://www.testosteronepit.com/home/2012/1/11/when-the-white-house-touts-falling-wages.html.
ReplyDeleteHere's his money line; "Hence, for US manufacturing to be competitive, wages don't need to match Chinese wages, but they need to be closer. That approach in wages has been happening-at a great expense to US workers." And average real earnings show this decline; http://www.econbrowser.com/archives/2005/12/real_earnings.gif. They have been declining since 2005 and the last BLS economic release states that our %change in real wages is -1.5% from November 2010 to November 2011. Richter's point about labor force participation, and also employment to population ratio, is essential to our economic picture.
I'm not sure what recourse we have against this type of seemingly long imposed government policy. But I don't really see insourcing as the solution to our problems, like you I think it seems more like a drop in the ocean. The real marker for our economic malaise is the housing market. There's a huge (and unknown # but honest estimates are in the 7-8-9-10 million range) inventory of houses that have been treading water close to default for years. Some of the owners haven't made a payment in years as well. But the banks and mortgage servicers keep them alive to prop up their balance sheets. During the Great Depression quite a few economists were proponents of the idea to knock down houses and rebuild them to spur the economy. Now this didn't happen and we only the spectacular creative destruction of WWII pulled us out of the ditch. It gave us lasting creation because the manufacturing plants came out of the war with the capacity to produce. I think it would be worth pursuing types of housing manufacturing plants. In China they can basically manufacturing all the levels of hotels away from the worksite, ship them there, and erect 15 story buildings in mere days. Perhaps we could do something like this for our impoverished urban areas in need of housing upgrades... and maybe the plants could be used for other uses after that.
We have been trying to deter China's oil grab in the South China Sea for some time now. There's massive potential for profit in that area. President Obama recently stationed troops in Northern Australia for a bolstered Pacific presence. And we have been backing Assoc. of Southeast Asia countries against China's aggression in the South China Sea. The importance of oil to our global economy has become laughably profound. The EU just rethought its decision to implement our awful economic sanctions on Iran and announced they would postpone the sanctions for 6 months. They must have come to grips with the fact that any small resulting conflict would spike oil prices and lead to a global depression. And that it's an election year in the U.S. doesn't hurt either!
Also I've been trying to get a blog off the ground for awhile now; http://willsalldifferentthings.wordpress.com/. I resolved to try and post more often in the new year. Check it out, perhaps you might see some stuff of interest on there :D.