China was once a closed society, isolated by their communist leaders. In 1972, President Nixon met with Moa Tse-Tung and started the current period of openness. This benefited both the United States and China. We needed cheaper goods; they had an impoverished and captive workforce that worked for pennies per hour. We could sell them high tech products and they could sell us shoes and textiles. Many of our factories shut down as production moved to China and other countries. Gradually, Chinese manufacturers moved up market, resulting in televisions and computer manufacturing moving overseas. This process continued until most American factories were shuttered. Just drive though the rust belt cities of Rochester, Syracuse, Buffalo, Akron, Pittsburgh, Bethlehem and you will see the impact of closed factories. You will see the abandoned ruins that once housed manufacturing giants.
When you go into Wal-Mart, try to find something made in the United States. Most of the products are now made in China, with a few made in other countries. Is it any wonder that our middle class has been decimated? Without factories, we lost valuable jobs that provided our workers with a decent income. They transformed from workers pumping money into the economy and into the treasury into welfare recipients and early retirees, pinching their pennies to scrape out a living. Our economy was tied to their prosperity. When American companies discarded these hard working citizens, our economy crashed.
So what does this mean to us? First, China finances the excesses of our government by purchasing treasury bills. They currently hold about one trillion dollars of our debt obligations. They are buying our debt in large but declining amounts. Last year they bought $10 billion a month. Now they are down to $8.2 billion a month. http://news.malaysia.msn.com/business/article.aspx?cp-documentid=4151671.
I am not an economist but I understand the impact of rising debt on the economy. Some of us remember the rampant inflation in December of 1980 when interest rates were over 20 percent (http://research.stlouisfed.org/fred2/data/PRIME.txt). We were in debt and no one wanted to lend to us. As a result, we had to pay more for the funds we dearly needed. With China now holding our debt, they control our government. If they decide to stop buying our treasury bills, the Federal Reserve will step in to "buy" the debt, effectively monetizing it. Printing money only leads to inflation. China can cripple us not with missiles but by withholding their purchases of our debt. Since we as a country are living beyond our means, we are beholden to and bow down to those countries that finance our excesses.
So will China stop buying our debt? As the numbers indicated above, they are buying less. They have internal problems that need to be addressed, which may affect the sale of our treasuries. (http://www.telegraph.co.uk/finance/china-business/7851504/Chinas-chief-a...). They are also buying up oil companies and stockpiling minerals to ensure constant supply and stable pricing.
We gave China our factories. We gave them our jobs. We gave them our debt. Now they control much of our economy. I believe that China is the greatest threat we face. If their economy stalls, it could send the United States into another recession. If China chooses to pull the plug on us, we no longer have the manufacturing capability to produce electronics, clothing or even the parts that go into American made cars. The United States cannot be free as long as another country can control our economy and supplies of essential products. It is time to take back America.
To quote Lau Tzu, "A journey of a thousand miles must begin with a single step." We can start repatriating our industry and our jobs, one company at a time. BigToys Inc. used to manufacture in China. Now under new ownership, it is making higher quality merchandise, less expensively right here in the United States. (http://www.forbes.com/forbes/2010/0628/entrepreneurs-bigtoys-manufacturi...). If this one company can do it without any federal funding, what could we do if we really wanted to reinvigorate our manufacturing? Made in America can be achieved. Here is how I suggest we do it:
We give over $900 million in foreign aid to Russia and the former members of the Soviet bloc. Yet Russia continues to spy on us. Today, as I write this article, 10 alleged Russian spies were arrested for espionage here in the good old USA. I say, cut the foreign aid to the old Soviet Bloc and use the money to fund competitive factories in Michigan, Pennsylvania and Ohio. We can use the jobs, and Intel Corp can use chips. How about using the $900 million we are giving to the old Soviets each year and build a state of the art computer processor factory right here in the United States? Intel or Dell could pay for the factory over the next 30 years from the profits made by American workers, manufacturing an American designed chip, in an American factory.
Imagine what would happen if we took our entire foreign aid budget for just one year and spent it here, building state-of-the-art factories? We take Americans off unemployment and welfare, retrain them and put them back to work. Our politicians should be suggesting this not a humble writer. Have the politicians given up on the American people? Well I have not and I will not!
Independence Day is Sunday. Our founding fathers created a country like no other, with freedom and justice for all. They did not bow down to before King George III, of England. We should not bow down to any other nation. This Independence Day, please pray for our nation and our leaders. Pray that they recognize the dangers of foreign powers controlling our economy and our jobs. Let us return to the glory days when Made in America stood for quality. We can do this one factory at a time, one industry at a time, and yes, one job at a time.
©2010 Gordon Smith - All Rights Reserved
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There should be a new label... Made in China... Profited by American Corporations. I love the propaganda that "Made in China" means all the money in profits goes to China as well. Does a Detroit auto worker get to keep the profits from the car he or she makes? Made in China only means labored in China. The price paid by the consumer only at most goes to pay China is 10%. So the rest goes to American hands or what ever other foreign corporation is exploiting cheap labor in China. So in fact the vasy majority of products shipped to the US from China is American and other countries. Can any of you name a Chinese brand? No, because not many truely Chinese companies sell in the US and keep the profits like Japanese or EUropean companies do when they sell in the US. Of course some people won't acknowledege this because it is what it is... propaganda. Also when you outsource, you outsource your pollution in something only you profit from. So all those pollution figures for each country is propaganda as well.
It's a shame that Americans these days and their politicians just want to play victim and nothing is ever wrong in their part especially how you can villify American corporations so easily but when another country is involved all of the sudden these very same American corporations are just another victim of what ever country Americans are mad at.
Here's another piece of propaganda that China won't buy US. China is only allowed to buy from the US that it can make itself and at a cheaper cost. China is not allowed to buy what it wants from the US because the government wants to prevent China from getting what it can't make for itself to keep China from being high tech. That's not capitalism. So if you want China to buy American you're going have to let China buy what it wants. That's called capitalism. If you choose not to, then the trade imbalance is your fault.
Quit arrogantly thinking as usual that everyone in the world has to bow down to the US. The world is changing and mainly because the greed on Wall Street put the US in this situation not some other country you use just to rally people behind your political agenda. If Americans continue to play the victim when your not and try to blame others instead of the greed from your own in Washington and Wall Street, you're never going to figure out anything then and you're on the road to conflict with other countries. Why? Because again you believe in the propaganda that you can beat anyone militarily? If it's so easy then why don't you just go and do it then? You making excuses why you haven't? Then you're what's wrong with America and just living by a fantasy.
I like you patriotic thinking, but the way you write is a complete crap. You have no clue what you are talking about to say the least. Let's say, I walk down the street and you approach me and give a $100 bill. The next day your wife got mad, accusing me of accepting the money. You are just that crying bitch. Did anyone from China come over here to close down factories and fire everyone? Would Chinese products got on the store shelves here themselves? You see what I am getting? Why can't you talk straight, pointing the finger at someone who are doing the deeds? Instead, you are accusing those who are working hard and the efficiant one-party system. One of the big news this week was the death while working of the 92-year old senator. I am pretty sure he was a wonderful human being everything. But, am I the only one seeing the problem? This country is run by someone as old as dinersour. He should have enjoyed his retire life long time ago. The two-party system sounds great on paper, but in reality, nothing gets down.
By the way, I would like to give you some homework. Your next research project will be on currency. We have bunch of idiotic senators promoting weaker dollar against Chinese yuan. We Americans always want to travel around the world, feeling able to afford anything. That is our pride. But those senators are defeating American dreams. What you need to find out in your research is what would happen if the exchange rate becomes $1 to one yuan. That is actually China's goal. We are playing right into China's hand.