The China Price (decline of U.S. manufacturing)

[kostya]

http://biz.yahoo.com/bizwk/041126/b3911401_1.html

BusinessWeek Online
"The China Price"
Friday November 26, 4:00 pm ET
By Pete Engardio and Dexter RobertsWith Brian Bremner in Beijing and bureau reports

From the rich walnut paneling and carved arches to the molded Italian Renaissance patterns on the ceiling, the circa 1925 council chamber room of Akron's municipal hall evokes a time when the America's manufacturing heartland was at the peak of its power. But when the U.S.-China Economic & Security Review Commission, a congressionally appointed panel, convened there on Sept. 23, it was not to discuss power but decline. One after another, economists, union officials, and small manufacturers took the microphone to describe the devastation Chinese competitors are inflicting on U.S. industries, from kitchenware and car tires to electronic circuit boards.
<snip>
"The China price." They are the three scariest words in U.S. industry. In general, it means 30% to 50% less than what you can possibly make something for in the U.S. In the worst cases, it means below your cost of materials. Makers of apparel, footware, electric appliances, and plastics products, which have been shutting U.S. factories for decades, know well the futility of trying to match the China price. It has been a big factor in the loss of 2.7 million manufacturing jobs since 2000. Meanwhile, America's deficit with China keeps soaring to new records. It is likely to pass $150 billion this year.
<snip>
More innovation. Better goods. Lower prices. Newer plants. America will surely continue to benefit from China's expansion. But unless it can deal with the industrial challenge, it will suffer a loss of economic power and influence. Can America afford the China price? It's the question U.S. workers, execs, and policymakers urgently need to ask.

Unlikely that any administration is going to slow this juggernaut. - K

[Maple]

1. But haven't these very same people

been assuring the world for years that free markets and competition were good and healthy things? The only way to run economies in fact?

Well, now they have what they wanted.

[Mackenzie]

2. Look at past experience.

I voted Libertarian in the election. This is because I favor legalizing gay marriage, and medical and recreational marijuana. And because I am against the Patriot Act and the Iraq War. And because I am against corporate welfare. I oppose any restrictions on abortion. I think Bush is an evil scum who got rich off of corporate welfare for his baseball team. And his complete lack of using his veto power so far shows that he is not fiscally conservative at all.

I always feel very happy whenever a Republican tells me that I "wasted" my vote. Their anger at my voting Libertarian is 100% certified genuine proof that I did not "waste" my vote.

I do know a lot about money and economics.

Today, people in the U.S. are worrying about goods that are being imported from China.

20 years ago, people had the exact same worries about imports from Japan. But the world didn't come to an end.

And 200 years ago, 90% of workers in the U.S. were farmers. But today, because of mechanized farm equipment, only 2% of U.S. workers are farmers. Millions of farming jobs have been lost. But the world didn't come to an end.

The fact is that things change.

Well, things change in most countries.

Heh. Take a look at Cuba. Because of that stupid embargo, they're still driving cars from the 1950s. They never had to "worry" about the "problem" of cars being imported from Japan.

The poorest countries in the world are the ones who have done the most to close themselves off to trade. Africa, anyone?

And even a product that says "Made in America" likely contains many parts and raw materials that were imported from other countries.

So this year they're worried about goods being imported from China. Big deal. Next year, they'll be worried about goods from South Korea. And the year after that it will Indonesia.

The fact is that the world is a place with many different cultures, races, skin colors, ethnicities, etc.

Remember 40 years ago how there were millions of people starving in China? Well now, largely because of them selling goods to Americans, they aren't starving anymore. Their population has more than doubled, but now their biggest food problem is obesity from adopting an American style diet of McDonald's, junk food, etc.

The so-called "trade deficit" is not a problem. Every week, I import more goods from the supermarket than I export to it. So what? The "trade deficit" is the same thing as a "capital surplus." It's a complete non-problem.

[bvar22]

6. Your post is amusing.

So what if we have a complete Nuclear Holocaust?

Human Beings probably won't survive, and if some do, they will be hideously deformed and living in caves, but the World won't come to an end.

[Mackenzie]

7. Well then......

I am against nuclear war.

History shows that free trade is the #1 best way to prevent war.

Trade is good. War is dumb.

[bvar22]

8. Free Trade is NOT good for Americans unless the field is level.

The American Worker CANNOT compete with workers in a Communist Country working for Slave Wages without environmental protections or Human Rights protections.

Open your eyes. Look around.

You espouse the same BS that the investor class used to sell this idea. Ross Perot was RIGHT! The PROOF is in front of you.

MILLIONS OF AMERICANS have lost their HealthCare, the ability to pay their house notes, and the ability to tell their children that they will have a better life.

The lofty elite will respond, Well, millions of Chinese are now making a better living....so it balances out.

BULLSHIT!!!! How does that rhetoric help the poor SOB who has to get up in the morning and try to find a job so his children can eat! Multiply by MILLIONS.

These people have not lost their jobs through an evolution of technology. They have lost their jobs through a POLITICAL POLICY that was BOUGHT by the RICH to improve their bottom line. Our Representatives in DC are SUPPOSED to look out for US...not the fucking CHINESE and the 1% of Americans who don't have to work for a living.

Fair Trade NOT Free Trade.
BiLateral trade agreements based on Human, Environmental, and Economic Rights

[Xenus Sister]

11. Silly person, Libertarians don't care about the poor and sick

What are you, crazy? Trying to talk about compassion to a Libertarian? They don't give a flying fuck if Americans starve and go without health care.

Greed is good. Poor people can fuck off and die.

Sheesh!



(edit to change "people" to "Americans")

[Mackenzie]

13. I favor legalizing medical marijuana.

That must mean something!

[Elwood P Dowd]

14. Only a total idiot would post something like this

"The so-called "trade deficit" is not a problem. Every week, I import more goods from the supermarket than I export to it. So what? The "trade deficit" is the same thing as a "capital surplus." It's a complete non-problem."

A more accurate analogy would be, "I'm making $50,000 a year and spending $55,000 a year. It's a complete non-problem. I'm also slowly giving away all my assets and intelligence to cover the losses, but it's a non-problem. Finally, I'm becoming more and more dependent on others who want my job to help me keep my job. It's the new American way. My economics professor told me so."

[Mackenzie]

16. The budget deficit is a real problem. The trade deficit is not.

Spending $55,000 a year when you only make $50,000 a year is a budget deficit, not a trade deficit. It's a real problem. It means you are spending too much money.

Importing goods because it's cheaper than making them yourself is a good idea. Why should I try to manufacture a television set when it's so much easier to pay someone else to make it for me?

[RPM]

17. not entirely dissimilar

if you are spending $55k and bringing in $50k, you have to dip into your assets to the tune of $5k;

if you import $55k and export $50k ($5k trade account deficit), you have to finance the difference of $5k from your reserve account.

(pardon me if i fouled up my terms - its been 8 years since International Economics, but i think i remember enough of it)

Both situations leave one dipping into assets or (gasp - what are we seeing today) writing more debt; Either way - you are out $5k of wealth... not to mention completely fucked if it goes on for long.

[NJCher]

3. but are they making any money?

While long, this article will give you a good idea of what American mfr's are up against with China. Boy, when Perot said "giant sucking sound," I don't think he even envisioned anything this voracious.

There is a paragraph toward the end that leads one to believe that the Chinese may not even be making much money. If this is indeed the case, one has to wonder how long this can go on. Working hard for no money gets old real fast.


Cher

[Mackenzie]

5. Yes.

They were starving 40 years ago.

Today, China's biggest food problem is obesity. They are adopting the "Standard American Diet" (as John Robbins called it in his book "Diet For A New America").

Areas that were covered in mud shacks 40 years ago are now covered in skyscrapers.

They are buying automobiles and microwave ovens and cell phones.

40 years ago, China was a third world country. Today, it is a second world country. In a few decades, it should be a first world country.

[bvar22]

9. 40 years ago, America was a 1st World Country.

Today, America is steadily descending to 2nd World status.
In a few decades, the transformation to 3rd World should be complete.

Authoritarian Government
A very small class of Wealthy elites
No Middle Class
Very large population of uneducated peasant laborers.

[Mackenzie]

12. But Bush is limited to two terms.

So there is hope.

[bvar22]

15. bush* is just their puppet.

The establishment of the Supragovernment began under Raygun. This is an old boys club of the very wealthy owners of Industry, Manufacturing,and Agriculture that rule OUTSIDE of International Boundaries, Laws, and Oversight. They meet in secret and impose their decisions on every country in the World.

Their goal is to Pirvitize EVERYTHING, even the governments. If a country resists, Economic and trade Sanctions are imposed.(See Argentina) If a country still resists, internal coups are financed (see Haiti). If a country still resists, the Military might of developed nations are at their disposal (See Iraq).

Do you know that on Nov 26th, the WTO FINED the USA $150Million/year and imposed Trade Restrictions on the USA???
bush* was groveling at their feet!
The ONLY SUPER POWER in the WORLD groveling at the feet of an organization that dictates to us what we will do and when we will do it!!!!!

These are some POWERFUL dudes that rule outside of International boundaries and ANSWER to NO ONE!
and I don't think they really give a shit about me OR you.

Edited for link:
http://www.cnn.com/2004/US/11/26/wto.sanctions.ap/

[bvar22]

4. "America will surely continue to benefit from China's expansion"

WRONG! I absolutely DISAGREE. The American elite investor class, and only the investor class, will benefit from China's expansion.

The American Working Class may realize some short term benefit from a mild reduction in the cost of consumer products until their savings run out. ALL Working Americans can expect a Nationwide:

1)reduction in wages, both real and inflation adjusted,

2)reduction in benefits,

3)increase in job responsibilities w/o pay increases,

4)increase in TAX liabilities,

5)loss of ability to move UP or SIDEWAYS in their profession,

6)total loss of ability to file grievances,

7)decrease in workplace safety

8) loss of ability to be compensated for job related losses or injuries.


You can SEE this happening already.
Happy with bush* yet? It will get worse.

[Peter Frank]

10. Comminust China is now directing our economy...

...China is quickly becoming the best buyer of our debt (above Japan), and that's O.k. with Bush.

As long as our debt is increased by tax cuts & sold to the highest bidder -- our fate rests in economic powers beyond our control.

Yeah -- Bush is the "national sucurity" president. ...Clinton set the stage.