Thursday, July 31, 2008

Bush Sr's Faustian Bargain with China or How US/China Trade Threatens to Wipe Out the US Middle Class

US/China trade has benefited China and a US elite consisting of about 1 percent of the nation's total population. It should come as no surprise, then, that the origins of US/China Trade are traced to the GOP administration of Richard Nixon. It is to be expected, then, that it was George Bush Sr who laid the groundwork for this sellout of the American middle class. Fact is 'US/China trade' was never intended to benefit the average American tax payer. And it never has!

The date of Nixon's historic China visit is January 26, 1972. The groundwork had already been put into place by Bush; the 'real deals' had most certainly been cut by George Bush Sr who visited the Forbidden City, presumably, in advance of Nixon's highly televised, worldwide media event.

Bush, a former 'Ambassador' as well as a former CIA operative, may have been deemed eminently qualified to make the trip. It was in the Grand Ballroom of the Hyatt Regency in downtown Houston that Bush Sr told me in a brief one-on-one interview how he had been duped into eating dog meat at an official dinner in the Forbidden City. I've often wondered if the US, in the subsequent trade deals, were likewise duped into eating 'aromatic meats', dog meat! I've often wondered if China just outsmarted the Nixon/Bush gang of crooks --or was it a deliberate sell out? Only the Nixon/Bush cabal, their complicit 'material support', and the increasingly tiny elite has benefited. In an era that has been defined by Reaganomics and unfair tax give-aways, only about one percent of the US population has benefited and it has done so at the expense of the remaining 99 percent of the population.

It is clear in retrospect that Nixon/Bush sell-outs to an evil Chinese regime have not benefited the cause of freedom in either China or the US. China now differs from China under Mao by having insulated themselves against a future 'people's revolution' with the creation of a 'conservative' middle class. It is hard to imagine this class coming into being without the trade concessions made that country by Nixon, by Bush, and the markets opened up to them by Wal-Mart. All benign as all this may seem, a terrible price had been paid for it.
CINCINNATI (Reuters) - The US trade deficit with China cost 2.3 million American jobs between 2001 and 2007, the Economic Policy Institute said on Wednesday in a report likely to fuel debate about free trade ahead of November elections.

Even when they found new jobs, workers displaced by job loss to China saw their earnings decrease by an average of $8,146 each year because the new jobs paid less, according to the report, funded in part by labor unions.

"This report is ground breaking because it shows the extent of damage caused by Chinese cheating," said Scott Paul, executive director of the Alliance for American Manufacturing, which helped fund research for the report by EPI, a left-leaning Washington think tank.

"(We hope) it will help to focus the debate on trade to where it needs to be right now with respect to China," Paul said, noting that free trade is shaping up as a major issue in the November presidential election, especially in closely fought battleground states like Ohio.

US manufacturers, labor unions and many lawmakers have long accused China of manipulating its currency to give Chinese companies an unfair advantage in international trade, and are pressing China to continue to allow the yuan to rise against the US dollar to help level the playing field.

--Andrea Hopkins, US-China trade has cost 2.3 million US jobs: report
It may be argued that US consumers have benefited from the lower prices for Chinese manufactured goods found primarily in Wal-Mart. But --at the expense of US manufacturing and jobs? It was a bad bargain! There was a time when shelves were stocked with appliances of American manufacture evidence of a productive population which is now reduced to tele-marketing time share scams for a living. Shopping at Wal-Mart is no longer a free choice! Bush may call that freedom! I call it fraud, slavery, extortion, gangsterism!

The CIA, of which Bush Sr was once director, plays important parts in the government's betrayal of the American middle class. Expert in waging wars by proxy, the CIA has encouraged terrorism, subverting elected governments.
CIA operations follow the same recurring script. First, American business interests abroad are threatened by a popular or democratically elected leader. The people support their leader because he intends to conduct land reform, strengthen unions, redistribute wealth, nationalize foreign-owned industry, and regulate business to protect workers, consumers and the environment. So, on behalf of American business, and often with their help, the CIA mobilizes the opposition. First it identifies right-wing groups within the country (usually the military), and offers them a deal: "We'll put you in power if you maintain a favorable business climate for us." The Agency then hires, trains and works with them to overthrow the existing government (usually a democracy).

--Steve Kangas, A Timeline of CIA Atrocities

Pakistan is a case in point.
Since 9/11, the Bush administration has been propping up Musharraf's military regime with $3.6 billion in economic aid from the US and a US-sponsored consortium, not to mention $900 million in military aid and the postponement of overdue debt repayments totaling $13.5 billion. But now the administration is debating whether Musharraf has become too dependent on Islamic extremist political parties in Pakistan to further US interests, and whether he should be pressured to permit the return of two exiled former prime ministers, Benazir Bhutto and Nawaz Sharif, who have formed an electoral alliance to challenge him in presidential elections scheduled for next year.

--Pakistan: Friend or Foe? The US shouldn't prop up President Musharraf's military regime, Selig S. Harrison

The late Benazir Bhutto revealed the truth before she was brutally gunned down in the streets of Karachi: US policy causes world terrorism. She died before she could tell the rest of the story. See also: Terrorism is worse under GOP regimes.
When the United States aligns with dictatorships and totalitarian regimes, it compromises the basic democratic principles of its foundation -- namely, life, liberty and justice for all. Dictatorships such as Musharraf's suppress individual rights and freedoms and empower the most extreme elements of society. Oppressed citizens, unable to represent themselves through other means, often turn to extremism and religious fundamentalism.

Benazir Bhutto, A False Choice for Pakistan

By now, the point must be clear: no one but an elite one percent of the US population has benefited from the treasonous deals that Nixon and Bush cooked up with Chinese despots, the men who gave to the world a horrible legacy at Tiananmen Square. October 2003 figures from the US Census Bureau make stark reading:
  • Median household incomes are falling
  • The number of Americans without health insurance rose by 5.7 percent to 43.6 million individuals.
  • The number of people living below the poverty line ($18,392 for a family of four) climbed to 12.1 percent — 34.6 million people.
  • Wages make up the majority of income for most American families. As "Downward Mobility," NOW's report on workers and wages illustrates, many American workers are facing corporate efforts to cut pay and benefits, which could lead to more American families struggling to stay out of poverty.
As every decent American has lost faith in the despotic regime inside China, there is almost no one living outside the US who believes in the 'American' ideal. Bush has absolutely ho moral authority from which he might dictate a 'Pax Americana'. Inside the US, our own 'ideals' were disdainfully repudiated by a would-be emperor. The entire world sees this for what it is: a cruel fraud upon the American people and the world.

The average American HAS NOT benefited from US/China 'trade'.
  • In 1960, the wealth gap between the top 20 percent and the bottom 20 percent of Americans was thirty fold. Four decades later it’s more than seventy-five-fold.
  • Either way -- wealth or income – America is more unequal, economists generally agree, than at any time since the start of the Great Depression…
  • And more unequal than any other developed nation today.

Americans HAVE NOT benefited from the rise of leeches like Wal-Mart. Here’s why:
  • Despite bringing in over $378 billion last year, Wal-Mart repeatedly underpays its American workforce. More than 80 wage & hour lawsuits, including a recently certified class action lawsuit in California, are currently pending against the company. Plus, it faces more than 200 discrimination lawsuits for unfair promotion practices, pay discrepancies and other issues, including the nation’s largest workplace gender discrimination lawsuit. By failing to fairly compensate its employees, Wal-Mart cheats states out of income tax revenues.
  • Wal-Mart also pays poorly. While the company seeks to benefit from the government’s rebate payout, Wal-Mart’s low wages means store employees have little or no disposable income to spend to stimulate the economy. Think about what even a small raise for Wal-Mart’s 1 million+ workers would mean nationally, or what it would mean to your city or town if everyone at your local Wal-Mart got a raise.
  • Wal-Mart sources the vast majority of its products from countries overseas, meaning most of the cost of a given Wal-Mart product doesn’t go into the U.S. economy. Rather than boosting the U.S. economy, Wal-Mart has played a major role in exporting U.S. manufacturing jobs to countries with low labor and environmental standards. Meanwhile, the company has embraced unions in its Chinese stores and has negotiated with them to raise Chinese salaries. Apparently, what is good enough for China is not good enough here at home.
  • Wal-Mart underfunds its health care plan and cuts corners whenever possible, forcing many of its employees to postpone care, thus decreasing their productivity and increasing the eventual cost of their treatment. In desperation, many of them rely on state-sponsored care and drain yet more funds from American communities. That means when Wal-Mart employees end up in emergency rooms, it’s U.S. taxpayers who end up footing the bill. If Wal-Mart were truly interested in stimulating the economy, it would begin to adequately fund its health care plan and take care of its own Associates.
  • Wal-Mart routinely dodges state and local taxes, meaning money spent at a Wal-Mart store won’t end up in your community. Wal-Mart actively works to challenge property tax assessments and creates complex real estate arrangements to obscure how much taxes the company owes. When Wal-Mart dodges its tax burden, it takes precious revenues away from cities and states to pay for roads, schools and other services. In turn, individual taxpayers are forced to pay more to make up the difference (which takes more money out of their pockets) or get by with less.

    --The Quaker Agitator, Why Wal-Mart Does Not Strengthen Our Economy
Also see: Wal-Mart is Pure Evil!

Bush's latest approval rating continues the downward trend to about 28%. That Bush still polls above ten percent is inexplicable. It was psychologist Carl Jung who estimated that as much as 30 percent of any population is certifiably psychopathic! Therefore, Bush is losing even the 'crazy' vote on which the GOP has often depended!

Only about 1 percent of the population has benefited from his program of mass murder, corporate crime and aggressive war, and plunder. Bush's true base of about one percent of the population alone have benefited from a war of seemingly endless death and carnage. His vaunted 'surge', was, in fact, a ruthless program of ethnic cleansing, a war crime that will be charged him when he is put on trial, possibly for his life!

China, for the time being, has had an interest in keeping the US ponzi scheme propped up --they sell billions of dollars worth of crap to US citizens via Wal-Mart, the economic Kudzu that ate America.
Between 1989 and 2003, the ever-increasing US trade deficit with China has led to about 1.5 million jobs that either moved overseas or never were created in this country as production shifted to China, according to a report released Jan. 11, 2005, by the US–China Economic and Security Review Commission (USCC), a congressionally appointed panel. The pace of job losses has picked up since China joined the World Trade Organization in 2001, with about one-third of the total, or 500,000, occurring in the past three years.
Lower Wages for US Workers
By supporting foreign-made goods on such a massive scale, the company that trumpets its All-American image is creating incentives for corporations to destroy good jobs in the United States.

By purchasing such a large amount of goods produced in China, Wal-Mart indirectly supports continued workers’ rights abuses by Chinese authorities.

--Wal-Mart's Imports Lead to US Jobs Exports

Meanwhile, the Washington Post reports that Wal-Mart squeezes suppliers for the lowest price. Factories respond with longer hours, lower pay. Wealth, as we have learned the hard way, trickles UP --not down. Robber barons in either the US or China will always make up losses out of your ass. In China, the workers have no choice: China forbids independent trade unions. That is a policy not unlike that of the US GOP and Ronald Reagan, specifically, who is not fondly remembered for his effective War on Labor and his ineffective war on terrorism and drugs.
WASHINGTON (Reuters) - The Bush administration on Monday projected the US budget deficit will soar to a record of nearly half a trillion dollars in fiscal 2009 as a housing-led economic slowdown cuts into government revenues.

The economic and fiscal deterioration will complicate efforts to bring the budget to balance and pose challenges for whoever takes over the White House in January, either Republican Sen. John McCain or Democratic Sen. Barack Obama.

"I believe whoever becomes the next president will have a very, very sobering first week in office," predicted Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.


White House budget chief Jim Nussle cited the government stimulus checks and slower economic growth as primary reasons for larger deficits in 2008 and 2009. "The determination was made that getting the economy back on track was a higher priority than immediate deficit reduction," he told reporters.


The new report said the budget deficit would fall to $178 billion in 2010, and surpluses would emerge in 2012.

However, the deficit projections did not include the full amount of funding for the wars in Iraq and Afghanistan or costly tax law changes, and acknowledged it would be a "challenge" to reach surpluses in 2012.

--Jeremy Pelofsky and David Lawder, White House sees record budget gap in 2009

See: Wal-Mart Warns of Democratic Win

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Anonymous said...

Yet many today seem to look to the 'wise old heads' of the Bush and Reagan years for hope.

Anonymous said...

Excellent use of Durer, by the way!

Unknown said...

workshop said...

Yet many today seem to look to the 'wise old heads' of the Bush and Reagan years for hope.

These 'wise old heads' (read: frauds, murderers, war criminals, and liars) got over confident. This time 'round there is no place they can go, no place they can hide. Even Nazi bastards were tracked down and brought to trial. And we must do an even more thorough job this time around.

Marc McDonald said...

As bad as the U.S. trade deficit is, it's actually much worse than most Americans realize.

The worst part of the trade deficit is NOT the cheap junk that Wal-Mart imports from China and other low-wage nations.

The biggest crisis comes from the products we're importing from HIGH-WAGE nations like Japan and Germany. These are the ultra-high-products that no Third World nation is capable of making.

In fact, what Western economists consistently overlook is the fact that ALL cutting-edge high-tech manufacturing takes place in the industrialized nations of the First World.

Take commercial airliners, for example. Boeing has not lost market share in recent years to some low-wage competitor like China. Rather it has lost market share to Europe's Airbus. (Similarly, Boeing these days isn't outsourcing the most cutting-edge components of its new airliners to some low-wage nation---it's outsourcing them to Japan, home to some of the world's highest wages).

In the heyday of American power, back in the 1950s, our nation totally dominated high-tech manufacturing. As a result, we had a strong and robust trade position with the rest of the world. We also had a strong middle class.

Americans shouldn't worry too much about low-tech goods coming in from China. We ought to worry about things like machine tools, capital equipment, lithographic steppers, aerospace, solar power equipment, and other ultra-high-tech goods that're made in nations like Japan and Germany. (We once dominated all these industries; now we're a has-been).

These are the sorts of difficult-to-make products that have enormous entry barriers to would-be competitors in the Third World.

Note that the likes of Germany and Japan see China these days as an OPPORTUNITY, not as a threat. (Remember, Germany, not China is the world's biggest exporter).

This is because the thousands of new Chinese factories springing up across that nation are being outfitted with high-tech capital and production equipment made in Germany and Japan. It's one reason these nations actually enjoy a trade surplus with China.

What is to be done? A smart, well-planned industrial policy is what the U.S. needs. That's what Europe and East Asian nations have long embraced, despite the lip service they give to "free trade."

America will not be a superpower for long if we have completely lost our manufacturing base. (Actually, we're almost there now; hence our titanic trade deficits).

Marc McDonald

Unknown said...

Marc McDonald said...

In the heyday of American power, back in the 1950s, our nation totally dominated high-tech manufacturing. As a result, we had a strong and robust trade position with the rest of the world. We also had a strong middle class.

While China was the focus of this article, it is absolutely true that over the years of GOP missrule, the US lost its trade position and, I believe, its status as a 'first world', developed nation is already lost.

What is to be done? A smart, well-planned industrial policy is what the U.S. needs. That's what Europe and East Asian nations have long embraced, despite the lip service they give to "free trade."

The US will never have such a policy as long as it indulges the GOP. The China deal is instructive because only China and the tiny US elite have benefited from the deal. That fact AND the fact (as you point out) that other nations have benefited from Chinese trade that arouses my suspicion.

I won't to know WHY other nations have benefited from trade with China but NOT the US. I still want to know what promises Bush made over 'dog meat' inside the Forbidden City.

America will not be a superpower for long if we have completely lost our manufacturing base.

I think our days as a superpower are already over --but that only makes the US more dangerous. In short, about one percent of the population sold out the rest of the country. Many of these folk already have homes and safe havens in other countries. 99 percent of the people of the US may have already been abandoned to their fate.

Unknown said...

The prices keep rising and the wages keep dropping....Great post Len.

Marc McDonald said...

>>I want to know WHY other
>>nations have benefited from
>>trade with China but NOT the US.

I think the reason is because China (along with Japan) is financing our fiscal and trade deficits.

Without hundreds of billions of dollars flowing in from East Asia, the U.S. economy and our dollar would collapse.

The U.S. is a paper tiger and has no clout over China these days on fiscal or trade matters.

As a result, we really have no choice but to tolerate China's policies on trade.

If we ever did implement a trade policy that benefited the American nation, you can bet China would yank the rug out from underneath the Ponzi scheme U.S. economy and we'd instantly be transformed into a destitute Third World nation.

All of this explains the mystery of why China and Japan have consistently funded U.S. deficits over the years. At first glance, they're getting a rotten deal. For example, when they buy up billions of our dollars to prop up our currency, they're taking a beating (as the dollar has consistently declined for years).

But if you look at the long-term East Asian position, the fact that they finance our deficits is actually a big gain for them, as it completely neuters America's ability to respond to this crisis.

Unknown said...

If we ever did implement a trade policy that benefited the American nation, you can bet China would yank the rug out from underneath the Ponzi scheme U.S. economy and we'd instantly be transformed into a destitute Third World nation.

A process that has already begun --thus the weakness of the dollar. Certainly, Bush was depending upon China continuing to keep the dollar propped up. Clearly --if the dollar collapses utterly, even Wal-Mart won't be able to buy their crap in bucks. Americans --reduced to shopping at Wal-Mart --will be completely out of luck. Again, the elites will prosper at the poor's expense. At some point, the scheme will collapse but China will fare better than the US.

All of this explains the mystery of why China and Japan have consistently funded U.S. deficits over the years.

We are the fatted cows, kept afloat for the purpose of buying crap. Banking, itself a Ponzi scheme, kept this whole thing afloat with easy credit (money creation). The trouble is, a nation's currency is not backed by gold. That was a myth even when it was believed the US was on a gold standard. Rather, a nation's currency is backed up by its total productiveness. That our currency is PROPPED up tells me that in 'real terms', the dollar is worthless. China is just the most dramatic example that demonstrates the weakness throughout the American economy.

Zena sez...

The prices keep rising and the wages keep dropping.

I doesn't take a genius to figure out where it will all lead if nothing is done.