Has trade with China hurt or help the US?
Three points need to be understood to explain this.
Question 1: From the early 1900’s to around 1976, The US was the worlds factory. Why did the US dismantle its manufacturing and send it to China? What changed in 1976?
Part 1: China’s push
From 1949, to 1976, the number one issue of the Chinese communist party was feeding and employing its 100’s of millions of people. After trying communism for two decades and failing, a man named Deng Xiaoping, a leader of the CCP, initiated reforms to create a mercantilist society with some markets, with the government still taking ownership in the critical industries, subsidizing them with government investment with the end goal not of creating capitalist companies, but maximum employment.
Around the same time Nixon met with the CCP, to normalize relations.
This is key. This was not a poor nation opening itself up to trade. If that was the case, China would never have became what it did. There are plenty of poor countries with millions of cheap laborers.
The key is the mercantilist element. A corporation that is owned by its country with unlimited government funding with the sole goal of maximum employment.
Part 2: US free trade retardation
That was only one side of the coin. The nail in the coffin was free trade. Since the 1950’s, the competence of the US government has generally been in decline. It’s worst incompetence is in free trade. Free trade is supposed to be companies competing with other companies across the world to produce the lowest prices.
But when U.S. Steel competes with Baowu steel, its not free trade. It’s a privately owned (all though traded publicly) company competing with the entire Chinese government. Baowu could take losses without end. To the CCP, Baowu losing market share is the equivalent of increasing starvation and unemployment.
Part 3: China’s assault on our IP.
China is the worlds thief, stealing IP from our companies, spying, hacking (remember, they are the ones behind the equifax breach). The US is the leading innovator in the world, and gets no benefit of it because China steals without regard to international law.
The US, is a “free trade” economy, putting its companies against the Goliath of the Chinese communist party and losing.
Question 2: Why do we even need these jobs? Why do we need factories?
Part 1: Real wage growth
From the early 1900’s to around 1976, The US was the worlds factory. When Apple started making computers, they made them here in California. When you have a factory, you don’t just need assembly workers, you create an entire set of jobs. Accountants, engineers, product designers, marketers etc. When you have a restaurant all you need are a couple of high school drop outs. When you have a manufacturing economy, you have built in incentives for higher value degrees.
Look at economies where manufacturing is a leading sector of economy, and look at the % of grads graduating with engineering degrees (Germany, China etc). Now look at the US in the 1950s-1970’s vs today.
While previously 1900-1976, wages and standard of living was on a ceaseless rise. Now, real American wages have been flat for the last 40 years. Housing, education, and all other costs have increased, while the american worker is poorer than ever. Where before most people would buy a house out of college, now most millennials are basically serfs, who will never own a house and are becoming communist in droves.
Look at this chart of real wage growth. What happened in the 1970s? Dengs Reforms and the opening of China!
If us business owners do not start combating China, along with the smart people in office like Peter Navarro. Mark my words, millennials will be the most communist generation in history, and they wont be going to increase your taxes. They will be going for your assets.
Free trade has created a very raw deal for the average American, they think this is capitalism, when it reality its an crony capitalism where policy makers push “”””free trade”””” while off shoring jobs.
Part 2: Security
There aren’t just economic costs to allowing China’s trade war on us to continue. Two sectors are of critical importance:
Question 3: How do we get them back?
Do not fail for the “jobs will never comeback” meme. The data shows otherwise. And after implementing protectionist policies, they will come back.
Three points need to be understood to explain this.
- Why did Jobs leave?
- Why do we need them?
- How do we get them back?
Question 1: From the early 1900’s to around 1976, The US was the worlds factory. Why did the US dismantle its manufacturing and send it to China? What changed in 1976?
Part 1: China’s push
From 1949, to 1976, the number one issue of the Chinese communist party was feeding and employing its 100’s of millions of people. After trying communism for two decades and failing, a man named Deng Xiaoping, a leader of the CCP, initiated reforms to create a mercantilist society with some markets, with the government still taking ownership in the critical industries, subsidizing them with government investment with the end goal not of creating capitalist companies, but maximum employment.
Around the same time Nixon met with the CCP, to normalize relations.
This is key. This was not a poor nation opening itself up to trade. If that was the case, China would never have became what it did. There are plenty of poor countries with millions of cheap laborers.
The key is the mercantilist element. A corporation that is owned by its country with unlimited government funding with the sole goal of maximum employment.
Part 2: US free trade retardation
That was only one side of the coin. The nail in the coffin was free trade. Since the 1950’s, the competence of the US government has generally been in decline. It’s worst incompetence is in free trade. Free trade is supposed to be companies competing with other companies across the world to produce the lowest prices.
But when U.S. Steel competes with Baowu steel, its not free trade. It’s a privately owned (all though traded publicly) company competing with the entire Chinese government. Baowu could take losses without end. To the CCP, Baowu losing market share is the equivalent of increasing starvation and unemployment.
Part 3: China’s assault on our IP.
China is the worlds thief, stealing IP from our companies, spying, hacking (remember, they are the ones behind the equifax breach). The US is the leading innovator in the world, and gets no benefit of it because China steals without regard to international law.
The US, is a “free trade” economy, putting its companies against the Goliath of the Chinese communist party and losing.
Question 2: Why do we even need these jobs? Why do we need factories?
Part 1: Real wage growth
From the early 1900’s to around 1976, The US was the worlds factory. When Apple started making computers, they made them here in California. When you have a factory, you don’t just need assembly workers, you create an entire set of jobs. Accountants, engineers, product designers, marketers etc. When you have a restaurant all you need are a couple of high school drop outs. When you have a manufacturing economy, you have built in incentives for higher value degrees.
Look at economies where manufacturing is a leading sector of economy, and look at the % of grads graduating with engineering degrees (Germany, China etc). Now look at the US in the 1950s-1970’s vs today.
While previously 1900-1976, wages and standard of living was on a ceaseless rise. Now, real American wages have been flat for the last 40 years. Housing, education, and all other costs have increased, while the american worker is poorer than ever. Where before most people would buy a house out of college, now most millennials are basically serfs, who will never own a house and are becoming communist in droves.
Look at this chart of real wage growth. What happened in the 1970s? Dengs Reforms and the opening of China!
If us business owners do not start combating China, along with the smart people in office like Peter Navarro. Mark my words, millennials will be the most communist generation in history, and they wont be going to increase your taxes. They will be going for your assets.
Free trade has created a very raw deal for the average American, they think this is capitalism, when it reality its an crony capitalism where policy makers push “”””free trade”””” while off shoring jobs.
Part 2: Security
There aren’t just economic costs to allowing China’s trade war on us to continue. Two sectors are of critical importance:
- Rare earth minerals: China has a stranglehold on the entire world tech economy. They have gutted and impoverished competition in this market with dumping prices to the point they are 90% of the world supply chain. This is extremely dangerous
- Drugs: 90% of drugs are made in China. Penicillin isn’t even made in the USA now. China could cut us off in an emergency and kill us.
Question 3: How do we get them back?
- End “””free trade”””, remove China’s PNTR status immediately. Tariff every single good from China that comes from a subsidized source and enact REAL free trade. Companies can compete with companies, but any state owned company is tariffed to oblivion. Do NOT listen to “””economist”””. They will say this will hurt “”American companies””””. They are right. This will hurt Wall Street backed corps who sold their souls to China, and have no problem with wages being crushed and China sucking the wealth out of the US. But when they say this remember two things 1) to look at that graph of real wages^ and ask yourself, how bad does it have to get to realize before we could have a serious discussion about “”””free trade””” and 2) since Trump has started tariffs, real wage growth has increased 3% in the US.
- Mandate production of critical materials in the USA. 100% of drugs should be made here. Open up Mountain Pass and invest in it heavily, to bring back 100% of rare earth ores here in USA.
Do not fail for the “jobs will never comeback” meme. The data shows otherwise. And after implementing protectionist policies, they will come back.
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