Another good piece on why we're getting our asses handed to us. Contrary to what the "blame America first" crowd including many of our captains of industry and politicians tell us, America innovates while China subsidizes. America plays at free trade while China pushes nationalism. The article also makes some really interesting points about the state of our education system:
Innovation and education won't save our economy
By Michael Lind
American multinationals are not shutting factories in the U.S. and transferring production to China because of China’s superior innovation culture or superior educational achievements. Nor are low Chinese wages the major factor. For the most part, multinationals are pressured or bribed by the Chinese dictatorship into producing in China. In some cases, U.S. multinationals are told they must produce inside China in order to have access to China's large and growing consumer market. In other cases, multinationals are bribed to relocate production to China by enormous subsidies from the Chinese government.
According to one trade expert in Washington, who spoke to me on condition of anonymity, Chinese government subsidies to individual American companies can amount to as much as 70 percent of the cost of a product. China’s artificially undervalued currency amounts to a government subsidy to Chinese-based manufacturers of around 30 percent. On top of the currency subsidy, the Chinese dictatorship often offers financial subsidies and gifts of free land and facilities that can amount to as much as 40 percent. China can afford to spend money on this lavish scale because it deliberately suppresses the consumption of its underpaid and unfree workers and controls investment decisions by its banking sector, while accumulating enormous surpluses from its artificially maintained trade deficit with the U.S. In other words, China recycles money spent on imports by American consumers to poach the factories of American producers.
It’s a sad reflection on America’s corporate leaders that instead of being honest with their fellow Americans about the true reasons for offshoring, they tend to blame America first, peddling the insulting story that we Americans are not innovative or educated enough to compete with a poor, dictatorial nation like China. The blame-America-first story is peddled as well by American politicians who receive corporate campaign donations and, after retirement, lucrative corporate board memberships, pundits who get paid on the corporate speaking circuit and academic economists with big corporate consulting contracts. These co-opted opinion leaders join the executives of U.S.-based multinationals in trying to divert the attention of the American people from the mercantilist industrial policies of countries like China that do not practice America’s version of free-market capitalism and have no intention of doing so.
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The good news is things could be changed. The bad news is thanks to Citizens United the monied interests may be too entrenched.
