Sally Stateworker: Hey Ferd, did you watch ABC News with Diane Sawyer last night? She was talking about how China’s going to be the next superpower.
Ferdinand Bardamu: No, they aren’t.
S: But their economy is growing and they make all of the stuff we buy. And the average Chinese saves more money than the average American.
F: Yeah, and unless someone BUYS that stuff, it’s useless. Who’s going to buy China’s stuff?
S: We DO! Almost everything you and I own was made in China.
F: Yeah, but you and I are civil servants with incomes in the mid-five figures. If you were to be fired tomorrow, would you keep buying stuff at the rate you do now?
S: No, I’d cut back.
F: Yes, you would, and so would most people. Now, the U.S. is in the middle of a recession with no end in sight, meaning that people will spend less on things they don’t need. The Chinese economy is dependent on us buying their stuff. What happens when we don’t do that anymore?
S: Can’t the Chinese export their stuff somewhere else?
F: Yeah, right. The U.S. is the third most populous country in the world, behind China and India. There isn’t another single nation that is both wealthy and large enough to keep them afloat.
S: What about buying their own products?
F: You mentioned before that the Chinese on average save more than Americans. You think they’re going to stop doing that to buy useless junk like we do? It’s our spendthrift ways that make it possible for them to save and save.
S: …I’m still worried. The people Diane Sawyer interviewed seemed pretty convincing.
F: I’m sure they were also convincing thirty years ago when they predicted that the Japanese would take over the world. Remind me again how that worked out?
Disclaimer: The above conversation didn’t really happen, but was inspired by some recent office small-talk. I learned long ago that trying to educate the stupidity out of your co-workers is an exercise in futility. But even morons have their uses.
Also, am I the only one out there who really can’t stand Diane Sawyer? Every time I see her with that phony “I feel your pain” expression on her face and her eyes looking like she’s ready to start crying on command, I get the urge to slap her across the face.
{ 34 comments… read them below or add one }
China sells to a lot of countries.
http://www.uschina.org/statistics/tradetable.html
See Tables 4 and 5.
It looks to me like the USA market is just 5.6% of China’s export market.
So if the whole USA vanished tomorrow, China would have about 94% of its export market.
The Chinese government is not unaware of their dependence on exports, and has already made moves to shift the Chinese economy towards greater consumption. Eventually their economy will be driven primarily by internal consumption and trade with India. Trade with the US, Europe and Japan will just be gravy.
The flaw in your analysis is the assumption that the Chinese savings rate is somehow a fixed quality of the Chinese psychological makeup. It is not. It is a government policy, only possible because the Chinese government controls all capital flows into and out of the country. RMB is not freely traded like dollars and pounds. The RMB trade mus go through the Chinese government, and the government keeps a chunk of all export payments, which it invests in US Treasuries and MBSs to keep the RMB artificially low. How else do you think they have been able to acquire trillions in T-bills? Taxation? Don’t make me chortle.
Chinese producers are essentially paid X cents on the dollar for their exports, with the government keeping the balance. If China wanted to pay its exporters X+10 cents on the dollar, or 100%, it would be a trivial policy change. The savings rate of the Chinese government alone, including SOEs, is >20% of GDP annual, but it doesn’t have to do that.
Further, the personal savings rate in China has been high because the population is aging and because of the one-child policy. Chinese rice farmers and factory workers know there will be only one grandchild for every four grandparents, and that they will not be able to pay for the grandparents’ retirement or otherwise support them. As the current working population moves into retirement they will switch from savings to consumption. Meanwhile, China is also slowly getting rid of the one-child policy, which will reduce the incentive to save cash (childern are an alternative investment).
Lastly, savins rates are high in China (government, firm and household) because returns on investments (mostly in infrastructure) are equally high. As these markets mature returns will fall, and savings (even in private firms) will consequently also fall. And consumption will thus increase.
But most people don’t get it.. especially the CONservative ones. Consumption, not production drives the world.
and don’t believe chinese or any other countries self reported statistics. They are lies.
The real problem with increasing chinese consumption is that NO east-asian culture has ever demonstrated any behavior other than zero sum mercantilism. Even japan, which had the best chance to break that mould, did not.
For all their so called ethnic homogeneity, east-asian cultures are intrinsically low-trust cultures who use high degrees of formalism/ ritualism to function.
‘NO east-asian culture has ever demonstrated any behavior other than zero sum mercantilism’
I get the feeling that you’ve never been to Asia. It’s a big, big place, with a lot of people and a lot of history.
Saying, “No East Asian culture has EVER done X” is a good way to troll a historian into proving you wrong.
This post is typically america-centric. There’s a bigger world out there than a lot of Americans want to admit, and it’s about to get a lot bigger.
There is a good thread over at MarketTicker on China. Read it, especially the poster named ‘Ben’.
Good quote:
“For most of the past 6,000 years, India and China combined have been 70%+ of total planetary GDP. Some claim that’s for 9 of the past 10 millenia. The past 500 years are an outlier, a blip.”
Forgot the link:
http://tickerforum.org/cgi-ticker/akcs-www?post=172681&page=1
3dpd,
Name ONE east-asian culture/ country whose prosperity is based on its own consumption.
Hmmmm,
To quote:
“F: Yeah, but you and I are civil servants with incomes in the mid-five figures. If you were to be fired tomorrow, would you keep buying stuff at the rate you do now?”
“Civil Servant” is little more than a nice term for “Public Employee”, which by any definition means “non-producer.” A mid-five figure income for what?
[Writing this blog, holmes. - ed.]
If recollection serves me correctly, the arduous “sweat on the brow” task assigned to this “servant” by the state agency under which he (and Sally I presume) is the “testing” of applicants to become state-paid “non-producers.”
[I do that once a month. My day job (where this conversation would have occurred) is for me to know and you to not know.]
And now a lecture on “economic illiteracy” from an individual who has inferred in prior articles that he is mired in Student Loan debt due to his borrowing of monies to pay for college so that he could become a State-Paid” testing facilitator?
[So, getting a well-paid job is not economically sound? For me, anyway. I couldn't care less about how my occupation affects the rest of you.]
Am I missing something here?
Hardly. What we have before us is a clear example of cognitive dissonance as well as a complete misunderstanding of economics. The Chinese produce tangible products while in general terms, the U.S. no longer does. What are our major exports to the Chinese? Scrap metal and waste paper.
[Annnnd what would happen if people stopped BUYING those products?]
The “Powers That Be” decided that the United States should shift away from a “Manufacturing Economy” to a “Service Economy” during the mid-1990′s – Clinton’s “New Economy.” But it wasn’t really Clinton – it was those who run Goldman-Sachs which commands that well-documented incestuous revolving door that inserts Goldman’s “Best and Brightest” into the high offices of the Treasury Department. You know, Ferd, the real “Establishment” that was discussed during the “Boomer” barbeque you held the other day. The “Establishment” that you cannot vote out of office, even if the voting age wasn’t lowered to 18 until 1971.
It’s simply “there”, like the Borg in Star Trek. From Goldman and those behind it’s curtain come national policy – bought and paid for.
Let us use a little example from Hollywood rather than dig up links to the plentitude of graphs which would undoubtedly support my assertion, a movie titled “The Deer Hunter.” What we have in that movie are a bunch of male “Boomers” who didn’t “dodge the draft” and are employed in a Steel Mill of all places. You know Ferd – one of those dirty, filthy, dangerous, but reasonably well-paying enterprises that actually produce something tangible.
You can rent it on Netflix.
[Using a work of FICTION to prove your point? Fail.]
Back in the 1970′s and 1980′s we produced tangible items domestically, even the shirts on our backs and the shoes on our feet. And I will guarantee all out there that not a person employed as a producer in those now disappeared manufacturing industries voted for either their jobs or the capital infrastructure required to produce those “value added” products to be off-shored. Not a one. Yes people, those were “Boomers” involved in manufacturing things. Google up some graphs before you conclude that Ferdies nickel-plated solution is in order.
I may add that these are the same people of the same generation who supported legislation that would raise F.I.C.A. taxes on themselves in the mid-1980′s so that Social Security would have the money in its accounts so it would be fiscally viable when they retired. They voted for the increase, but could not prevent “Public Servants” from raiding that fund to spend it as they wished on whatever those “Servants” deemed of greater importance. It is almost impossible to stop a thief who holds the reigns of power.
Don’t take me wrong here. I sincerely believe that it may well take Ferd’s nickel-plated solution to actually straighten this mess out, but the problem we have here is confusion caused by the old “Let’s you and him fight” situation. And even though a few lines from that old “Traffic” song, “Low Spark of High-Heeled Boys” is in order here, say for example “the man was shot dead by a gun that didn’t make any noise”, we’ve got to re-examine that “Let’s you and him fight” problem.
Let’s say we let Ferd off the hook even though he went off to college, got buried in debt, and ended up being a critically important, government paid non-producer. Like so many women, he’s really “not that kind of slut” even though his micro-economic choice about how he chose to pay for his degree is a tad suspect. Some might even say getting neck-deep in debt to get a college degree and then getting a job as a non-producing “civil servant” is the act of a moron, but hell, I don’t want to point fingers here. I’m too nice a guy for that.
[I know you're envious that someone is enjoying a better standard of living than you for much less effort. But hey, the knowledge that you held true to your libertarian principles should be comforting while you cook your daily ration of canned frank and beans on an upside-down steam iron in your basement.]
Based upon the most recent columns, I’ve concluded that what we have here in front of us is just flat-out confusion. “It’s the “Boomers who done all this to us!” “It’s the Greatest Generation!” It’s Generation Alphabet Soup whose at fault!” But we’re all missing the point because of one critically important factor – none of us are the”enemy”, in spite of Pogo’s argument that we are.
Nothing happens in a vacuum or by accident, whether it is a shift in economic particulars or tidal changes in social behaviors. Either someone or some group of people with “the power”, be it direct or tangentially influential is always behind change. The flock is moved by its shepherds, even if the flock is unaware and remains unaware that such is the case. If the shepherds are actually “wolves in sheep’s clothing”, well, that spells trouble.
If we take a moment to scroll down both sides of Ferd’s page, we find links galore that allow us to go mining for intellectual gold. And from those links come other links, and somewhere in that maze one can find the path that leads us all out to the other side, the place where the real enemy is. That enemy wants us to fight with each other: men v. women, race v. race, right v. left, low class v. upper class v. middle class v. no class. The “educated” v. the non. Everyone against everyone else because that little act keeps us so engaged with who they tell us is our enemy that we never have the time to ascertain who the enemy really is. Wolves and sheep. The wolf is telling the sheep that the problems are all caused by the other sheep, and we believe him.
I don’t want to go all Ron White here, but it’s starting to look like “You can’t fix stupid.”
A “Service Economy” (The “New Economy” ) is guaranteed to be non-competitive against those which actually produce, regardless of what the wolf says. The most successful thieves are always the best dressed, regardless of what the wolf says. The vast majority of government employees are worthless, regardless of what the wolf says. Money made up out of thin air, whether it rolls off a printing press or is nothing more than a bookkeeping entry is worthless, regardless of what the wolf says. The wolf has maneuvered the flock into the corner of pasture, regardless of what the wolf says.
During William Jefferson Clinton’s inaugural speech given in January of 1993, he praised a professor he had for several courses while matriculating through Georgetown University, one Carrol Quigley. The good professor wrote a book back in 1966 titled “Tragedy and Hope”, the tome being a mere 1,348 pages long. If you are curious about who the true Alpha’s are in the packs of wolves which prey upon us (not the Roissy lower-case “alpha’s”, but the truly successful ones), I’d suggest that you pick up their trail starting with page one. Added to that is the following piece of advice: A good hunter knows the habits and behaviors of his quarry – his modus operandi. Patton read Rommel’s book, remember? Since money supposedly makes the world go round and the wolves control what passes for money, digesting the works of G. Edward Griffin on the subject is in order.
We perish for lack of knowledge.
[Don't forget your tinfoil hat, chump!]
Who will buy their stuff? The Chinese will. China is 3 America-sized nations in one. The Asian Tiger will roar this century and White Nationalists will be humiliated.
We ignore these truths at our own peril.
“The men the American people admire most extravagantly are the greatest liars; the men they detest most violently are those who try to tell them the truth.” — H.L. Mencken
Pick up a copy of “Snakes in Suits” by Dr’s Robert Hare and Paul Babiak. We enthusiastically elect psychopaths to office and the mid-to top levels of both the government and corporate bureaucracies are dominated by them.
Wolves.
‘Name ONE east-asian culture/ country whose prosperity is based on its own consumption.’
A *historian* would probably say the Song Dynasty, circa 1023 A.D.
But *I* am not a historian, or otherwise I would have written “troll me” in my earlier comment.
Go troll actual trained historians, I have people lined up around the block waiting to troll me…
Ferd,
I watched one installment of that series. I marveled at Diane Sawyer’s condescension as she visited with Chinese peasants.
Personally, I don’t think that China will rival the U.S. in any meaningful way in the near future. They have many issues to deal with that they just haven’t grown into yet.
First, as economies grow and per capita GDP and income increase, priorties shift. This is the economic determinism argument that Sawyer and others completely ignore.
As China produces more and people are finally able to feed their families at least meager portions, focus will shift from production to things like the environment, inequality, overall quality of life, leisure, freedom, and international problems with Tibet, Nepal, India, Taiwan, Hong Kong, etc.
Obviously, they cannot continue to increase production at 10% per year; at some point resources become crowded and economic production becomes more cumbersome. But Sawyer et al pretend as if it is a forgone conclusion that China will grow at that high rate until they catch the U.S.
All of those infrastructural issues I mentioned above will come back to bite China at some point, and it will greatly slow production. As China the country becomes more equitable to the rest of the world, individuals in the country become much less so.
Do you think a country already steeped in Marxism/Maoism doesn’t have the tools for radicalism in place that will inevitably slow down the economy as values of the masses shift from “hard work” to “social good”? The same process occured in this country after the Civil War.
To grow, China, as it has already started doing, will relax their totalitarian regime to allow economic and personal freedom. As liberty increases, dissent increases as well. Dissenters will leverage this new freedom to make their own gains as politicians and activists. they will only succeed, much like Union bosses, when their constituency succeeds as well. And for that constituency to succeed, GDP will be diverted and “social issues” will take a little chunk of change out of the till. We all know the process because it has happened here. There is no reason to think that China won’t go through the same growing pains.
John should have a blog. Sounds like the stuff Matt Taibbi has been writing about in regards to the economy.
Ferds,
Why the US will still be the only superpower in 2030. This is the article that will silence those types of debate.
But I later added the caveat that this is contingent on an ORDERLY unwinding of The Misandry Bubble. A chaotic and turbulent unwinding could lead to a rescind of my prediction of US superpowerdom in 2030.
Yeah, nobody wants us civil servants until suddenly they need government services. Or rely on someone to keep order. Or need safety regulations. Or the thousand things public servants do to allow other people to act tough about how they are the only producers.
TFH,
You provide a lot of good explanations for why China won’t supercede the U.S. any time soon. One which I would expand on comes from George Friedman’s “The Next 100 Years” which I’m sure you’re familiar with since he’s also a futurist.
The U.S. is in a position unlike any other nation – including China. We have access to the two largest bodies of water – the Atlantic and Pacific oceans. This affords us not only military strength but also economic strength. Those are inextricably tied together, and they are the most important pieces of the puzzle. We can trade with both sides of the world very easily. If China is to make any great leap in the future, it will inevitably step on a few toes. Having a swift and large scale fleet is ultimately a huge bargaining chip. That is a hegemonic strategy for the U.S. to engage in, but we should remember that China would seek to do the same thing. If we’re in a hegemonic world, why not try to be the power that fares best in such condition. What are your thoughts on Friedman’s assertion? I understand you glossed over that in your piece because it is a somewhat obvious benefit for the U.S.
As for some other “barriers to superpowerdom” that you cite, I agree that they provide the U.S. with an advantage and a head start and they maintain the aura of the U.S. being the only superpower in the world. That branding is a powerful force in and of itself. But I wonder how important those are to maintaining America’s advantage. I think economics and military strategy are far and away the most important parts to this equation. After all, if China were able to wrangle up enough money they could virtually buy out many American brands and rebrand them in a more global fashion. Those barriers would be realtively easily dismantled and refabricated.
David:
Why not admit that as a government employee you are sucking off the government tit? Perhaps your job does provide some value, but if you are grossly overpaid for your production then you are still sucking at it a little bit which is still sucking. And it is a foregone conclusion that, as a government employee, you are being overpaid for your work.
My question is, is there any shame in that game?
While I am not in favor of runaway government spending or many positions in the gov’t bureacracy, I find it hard to criticize individuals who take jobs that are offered to them.
Personally, I would take a government job if I could find a good one, but I’d understand that I was leeching off of taxpayer money. I’d also realize that if I didn’t do the job someone else would. I also like to think that I’d stand up for principle in the voting booth by being in favor of minimizing government employment. It is also my understanding that this is Ferdinand’s position as well.
Chuck,
America’s advantages are certainly shrinking. But as China will soon find, the upper rungs of the superpower ladder get a lot tougher to climb.
Problems facing America :
a) Misandry.
b) Lack of political will to make course corrections in an ‘ounce of prevention is worth a pound of cure’ way.
Problems facing China :
a) Gender imbalance
b) Average age higher than America
c) Pressures for political freedom bubbling up from time to time.
China doesn’t understand marketing and branding quite yet, so if they bought out US brands, those brands would merely diminish in importance, and America would create new ones. This could slowly change, but is not there yet.
The biggest factor is that given China’s population, their economy will become bigger than the US even if their per-capita becomes as high as Mexico. So it will be a bigger economy than the US while still being much poorer per capita.
No other country is worth mentioning. The EU is not a country. India is too far behind.
David,
While some civil servants do essential work, I think we all agree that non-defense government spending should become the same percentage of GDP as it was in 1960, which is about half of what it is now.
Not many people would claim that the government improves their lives to a greater degree than in 1960.
So lay off the useless half of civil servants, and keep the useful half. The budget deficit will turn to a surplus.
This may be relevant to the topic.
For those doubting FB, here is veteran hedge fund manager Jim Chanos on China:
http://www.youtube.com/watch?v=99HNFCn5RP8
Empty cities, next to old ones? Check. Real estate bubble? Check. Manufacturing bubble? Check. Resource dependent? Check. Manpower constraints? Check.
There were STRIKES in China at places like Honda Lock. Not only were they tolerated, they were possible because China has run out of young people. Meanwhile domestic consumption is limited by average per capita income of about $2,000, compared to the US at $35,000. For every percentage point of consumer spending the US increases or decreases, that amounts to about $1 trillion in global trade. China cannot (like Japan before it) stimulate internal investment even though it wants to, desperately.
Because its people are too poor. Repeat: TOO POOR. Same goes for Brazil (driven by commodities exported to China), South Africa (see Brazil), most of Latin America, and so on. Japan and Germany have rich but small populations that don’t spend much because of high taxes and regulation. Australia is too small population wise. When the US consumption nose dived in early 2009, more than 700 factories in China shut down. China is completely dependent on US exports, without us they would face massive shut downs of factories and thus hundreds of million unemployed (without unemployment benefits, health care, school for their kids, tied to employment). A recipe for revolution and they know it.
As Chanos points out, at some point you cannot throw capital investment at a nation and keep getting the same return. You must transition to a higher-skilled workforce with more skills and value-added products. China unlike Japan and Germany, cannot do this because it is too big, too desperately poor in the West, and faces the problem of scale: even their best people struggle to manage a nation so big and corrupt, from top to bottom. China has nothing like Sony, or Honda, or Nikon, or Seiko, or Toyota. Their basic science is a joke, a plagiarism factory nothing more. Nothing original came out of China.
Meanwhile they have a hyper-aggressive populace, addicted to online gaming (a shocking thing, really) in the cities and with massive gender imbalance coloring an ill-concealed rage. Color a Muslim insurgency in the West, domestic Hui Muslims in the East, a massive problem with sex trafficking, and corruption, and you have a time-bomb.
A double dip recession in the US could break China. Seriously. Already inflation there is getting out of hand.
“The Chinese produce tangible products while in general terms, the U.S. no longer does.”
In general terms, the US remains the largest manufacturing nation:
http://investing.curiouscatblog.net/2009/10/13/data-on-the-largest-manufacturing-countries-in-2008/
Is kinda depressing that half of the comments in here are American men defending the power of the “Chinese Empire”
Ferd as editor: “I couldn’t care less about how my occupation affects the rest of you.”
Talk about a walking contradiction! A mere few days back you penned a diatribe about the selfishness of the “Boomers” and now you pen that little gem and assume it to be some sort of a defense? Talk about a window into the soul! If that statement is not a perfect example of absolute hypocrisy, none exists.
You must really be a “special little snowflake” to be able to express that sort of sentiment with a straight face. An man with honor and integrity would most certainly care how his occupation affects others. In your case, that question has now been answered.
You go on to assert that my using of “The Deer Hunter” is a “fail” when it comes to proving my point. Rather than genuflect and beg for an apology for such an egregious error, I’ll just substitute the movie “Rudy” as a cinematic example for you as an “audio-visual aid” to show that indeed “Boomers” did in fact work in steel foundries. That true tale is contemporary in time with the fiction portrayed in “The Deer Hunter”, and you can rent it from Netflix as well. That way you can take the truth sitting down. After all, you were a but a babe in swaddling clothes when that era of history was unfolding.
You then accuse me of envy. Envy is a sin, Ferd, and the last thing I am is envious of you. In but a few short comments you established yourself as a “special little snowflake” and then went on and employed the use of “shaming language.” I’m beginning to wonder if your photograph is really that of a woman dressed up in drag.
Ferdie, I’ve been self-employed my entire adult life and actually have done something that you never will – create and maintain well-paying jobs in the private sector. If we are going to go all “girlie” here with the one upwomanship, to reduce the square footage of my “free and clear” abode to equal the square footage of your apartment, I’d have bulldoze off over two-thirds of it, and that’s assuming you’ve got at least 1000 square feet to roam around in. My yard alone encompasses two and a half acres of the twenty that surround my home, shop, family chapel, and the barns for my horses and for the small livestock that my four children raised and continue to do so as 4-H projects. Our 60″, 31 horsepower diesel Gravely “outfront” zero-turn lawnmower probably cost more than the car you are driving, assuming you own one.
Would you feel better if I sold off my two 3/4 ton Dodge Diesels and the Chevrolet 1-ton 4X4? That I tell my physically beautiful and Proverbs 31-type wife of thirty years that we should rid ourselves of her Cadillac? Should we instruct our eldest son to drop out of Law School? Shall we tell our daughter to return her B.A. “Magna Cum Laude” degree to Elmhurst? Demand that our third child and second son that even though he is now halfway through his Junior Year that he too should forego his degree in computer engineering and quit college? And alas, what of our youngest lad who is but 14 and sees the future with the strength and vigor of a man you shall never be? Should we collectively disregard the long years of hard work and sacrifice and instead learn to prepare meals on imported clothes irons to build up your fragile, government-supported ego?
Perhaps I should also rip out the hydroelectric system that powers our property that we designed and built with our own hands and jump back into the comforts of the Ferdie Matrix. Yes Ferd, we live “off the grid”. Doubt me? Google Xantex inverters, Xantrex charge controllers, Harris Hydro turbines, and Hup batteries. I certainly don’t want to sound like a pompous jerk here, but our hydroelectric system most likely cost more than you make in a year and we wrote a check for it. You know Ferd, “private sector profits.” And “Ooooh!”, all that self-produced electricity coordinates so nicely with my “tinfoil hat” and designer aluminum foil handbag.
But I’ve got to give credit where credit is due, and Ferd, you really got me on this one. I am wholly ashamed and must admit that it never crossed my mind that some people may actually cook their meals with an imported clothes iron. I suppose necessity is the mother of multiple use, and your statement that these simple resistance load devices are utilized in such an ingenious fashion clearly demonstrates that you have real street smarts. Perhaps they are basement smarts, but never-the-less, I am duly impressed. Did you come about this tidbit of cultural behavior through the observation of the act being performed by others, or are you speaking from long years of personal experience? Is your government job that of a social worker whose field duties called for your presence in a subterranean dwelling where this was observed? Whatever or wherever, if my family ever ends up in one of America’s urban hellholes, I’ll keep your experiences and suggestions in mind.
Now if we scroll up a bit and click on the link that “Tarl” provided, we find a set of data that would clearly suggest that the good old U.S.A. does indeed lead the world in manufacturing. And one of the first questions by a reader in reference to said data was, and to paraphrase here, “How much of the listed manufacturing is military in nature?” Good question and not answered. As a case in point, those 112 million per copy F-35′s go a long way in bumping up the gross dollar figure of our grand manufacturing sector. I bought a model of one for our youngest son a couple of years back – Made In China.
Another commenter to your article mentioned that we shouldn’t trust figures from the Chinese on the nature of their trade. Hell, I agree. By the same token one must remember that the Bush II administration actually (Google it) tried to argue that the monies generated from the production of “Fast Food” should be included in manufacturing sector. Their argument was that if you take an “All Beef Patty, Lettuce, blah, blah, and put it on a Sesame Seed Bun”, in fact something has been manufactured. And no, this grand idea to use “Big Macs”, “Supreme Pizza’s”, and the latest M.S.G. saturated offering from Kentucky Fried Arteries to bump up the figures in our disappearing manufacturing sector wasn’t a spoof in “The Onion.” No sir. It was an idea from a “Public Servant” that made it all the way up to the top.
This fish is rotting from both ends.
Based on this one example (let alone the thousands of others, most of which are never made known) of the federal government massaging data, why should an intelligent person actually believe the “data” that the federal government produces? Pardon the pun, but we haven’t got a clue as to what the ingredients are they used to “manufacture” them. Worse yet, they may have borrowed Ferd’s clothes iron to cook them. You’ve got to cook pork all the way through to kill off the trichinosis, and Ferd’s rangetop just isn’t going to get the job done.
“Would you like mayonnaise on that?”
No free lunch, baby. No free lunch.
[A 1,000+ word rant in response to my needling? Apparently, all the "private sector profits" in the world can't assuage your raging insecurity. Spanked! - ed.]
About using fiction to prove one’s point: I think anyone with IQ above 95 knows that fictitious examples are not data.
When reasonably intelligent people use fiction in an argument, they intend for it to serve as a conceptual model, sort of like New Testament parables or the Niels Bohr model of the atom, and not as evidence of anything.
Another fine example of “Public Servants” at “work”: http://www.nypost.com/p/news/local/nyc_subway_signal_inspections_falsified_ZUVA7DheupaPwrjF5yoO4M
There are NO countrywide winners in a fiat debt backed by debt monetary system.
We are going to have to have a “re-set” at some point in the future because obviously the current course can’t be sustained. The only winners are the tiny percentage of oligarchs that plunder nations wealth world wide.
I don’t buy into these false “us vs them ” or ” left vs right” paradigms.
Maybe the course in the future is not a straight line but a perplexing meandering rat’s nest .. of regional alliances and shifting loyalties.
Only armchair generals want war .. as I’ve travelled the world most folks are just folks with no particular love or hate of anywhere else .. and it’s getting increasingly harder to sway and hype them with jingoism into conflict.
John,
I see you focusing on two things which aren’t really central to Ferdinand’s argument. First, you focus on his government employment as if that make him unqualified to make a simple statement regarding the economic prosperity of China. Second, you cite your own successes as evidence that you know what you’re talking about. I don’t care if you fuel your house on your own feces, that isn’t really germane to the argument here.
First, you should realize that China will follow the path towards service-orientation just like every other first-world country. This is an inevitable outgrowth of economic maturation. Nations don’t often make top-down decisions as to whether they’ll focus on manufacturing versus service. Per capita income, returns to labor, and productivity rates determine those shifts. You seem to expect that China focus on manufacturing ad infinitum and that they will benefit from the positive externalities that manufacturing brings to an economy. But once they reach a certain threshold, they will trade off manufacturing for service. You have a naive view on economic development if you believe otherwise.
And your argument that “powers that be” determined this is ridiculous. Do you think that various and disparate manufacturing firms just listened to Bob Rubin and the boys at Goldman Sachs – irrespective of their financial statemetns – in order to focus on service? No, it was a natural economic progression. If there was a mass movement towards investing in service rather than manufacturing, it was because those were more profitable endeavors. Manufacturing labor became cheap and was easily offshored. American workers found jobs in IT, health, legal, research, financial services, and other fields. And if you believe in that conspiracy theory, isn’t it just as likely that there will be a Chinese version of Bob Rubin and Goldman Sachs that will instigate the same process?
Don’t let the big buildings in Shanghai fool you. China is where America was in 1910. They will close that 100 year gap to some extent, but when they start getting to “America 1965″ they will hit the same wall we did. But by then we will be “American 2025″ which gives us a 60 year head start. China will be mired in environmental issues and equality issues. Workers will clamor for freedom. Their children will rebel against the establishment. They will have more children out of wedlock. Western society will influence them to their detriment. Tradition and discipline will be lost.
Ferd -
You’re a smart guy, and in general terms I enjoy reading your thoughts. On that “tinfoil hat” thing, Google up an article titled “The Gospel of Consumption and the Future We Left Behind” that was published in the July ’08 issue of Omni Magazine. And yes, it’s related to the China question because it focuses entirely on how consumptive psychology was literally created in this country back in the 1920′s and what it has led to today. It is a very instructive read.
I’m certain that after consuming that little morsel, you may well change your thinking a tad on how a select few consciously manipulate the social behavior and psychology of the whole. Your studies on feminism surely must have led you to the early seminal moments where certain individuals and particular groups chose to push the “Second Wave” forward and “normalize” the abnormal psychology behind it.
Now, on to the redheads!
Sorry, Lefties, but military procurement is an insignificant fraction of the US economy. It’s not even that large a portion of the defense budget. Operations, maintenance, and personnel eat up most of the defense budget, while procurement (buying equipment) is only about 20% of the defense budget.
Population of Japan: 126 million
Population of China: 1.3 billion
Most of China’s exports consist of assembled products made from components produced in more advanced industrial countries (Japan, South Korea, Germany, etc.) making their net exports only 8% of economic output.
A loss of export demand would not result in a loss of the enormous industrial base China has developed, and as China is a state-dominated economy reorienting production toward internal consumption would be a much simpler affair than in market-dominated economies, wherein unprofitable economic sectors are often simply abandoned (electronics in the United States, shipbuilding in Britain, etc.)
While China faces problems in its continued rise (massive property bubble, angry sexless young men, resource scarcity, etc.), dependency on the US market counts as a minor one. The European Union, a larger economy than the US and a far larger manufacturer (making its trade with China more sustainable than Sino-American trade, which is based on American promises to pay), has already emerged as a larger trade partner to China than the United States. China needs only reach one quarter of US per capita GDP to surpass us in absolute GDP, and given that it passed us this year in manufacturing output and total energy consumption I don’t think that’s an unreasonable target.
Who is the economic illiterate?
‘Who is the economic illiterate?’
Clearly Ferd is an economic illiterate who projects his subconscious feelings of inadequacy onto others.
Here’s my take on Ferd. Whenever he gets pissed off at some public figure, he’s covering up his feelings of inadequacy.
Example:
http://www.inmalafide.com/2010/11/15/the-passion-of-joel-johnson-or-its-time-to-start-the-intifada-against-nerdiness/
Ferd wants to portray himself as a tough-guy jock who pushes nerds into lockers because Ferd feels like a nerd getting pushed into a locker.
Ferd wants to moan about unskilled feminist moochers because Ferd feels like an unskilled moocher.
Etc.
China has four big state banks and can issue Yuans debt free. The U.S. by contrast issues its money with debt attached. In effect, most of the Yuans circulating are real money, not debt money as in the U.S. If each dollar has to drag around debt, that is a hidden tax. The cost of capital for housing is about 78%, and the overall cost of capital in the U.S. is about 50%. We Americans have to shoulder a large burden relative to State Banking (Chartalist) money such as that of China. China simply prints debt free yuans and trades them out for dollars that enter their economy. The difference in the money system is the key difference in the two economies. Debt/Credit money like Federal Reserve Notes are crowded out by real money. Real money exists as a medium for settling transactions. Debt Money is a promise to pay something else – like the bankers who created the debt money. The U.S. citizen is bent over trying to shoulder the burden of wealth transfer to the creators of their money. That is why financial pariah capitalism of the West is losing to state capitalism of China. Chartalist state money has an inherent advantage because it conforms to reality. Money is a fiat (Law) of the State. Our credit/debt instruments as it has become known to the West, masquerade as money. The privately controlled central bankers of the west, who issue credit money to their host governments, are up against a power they cannot handle. Reality must trump fiction, or in this case the fiction of the big lie that underlies our debt money system.
Hitler used Chartalist money, and between 1930 and 1938 took Germany from being the poorest in Europe to the richest in only 8 years. Germany prosecuted WW2 without gold based fiat (debt bearing) money. A relatively small German population held off the combined might of much of the world. Hitler used to laugh at the gold based debt money of the west. Fascist states like Nazi Germany, and now China, coupled with a superior chartalist money systems, cannot be easily defeated. They do not subject their working populations to wealth transfer usury. Therefore the costs of goods, services and transactions do not have hidden costs imbedded. There is a monetary reason why China can produce $70 bicycles and still make a profit. All the concern about knowledge transfer and other economic dislocations can be traced directly to the difference in money systems. Knowledge transfer is not monetized on accounting ledgers, but accountants do see the imbedded costs of usury. Wall Street transfers our jobs and then crows about what a good job they are doing. After all, that is what the numbers say they should do. It cost less to do it over there…for some reason.
Our dollar as a reserve currency means that tariffs must be low. We have to accept imports in order to export dollars. Foreigners receive dollars that they can then use to buy commodities and oil on the world market. This means that our dollar always has demand upward pressure on it, which is a disadvantage for main street manufacturing vs foreign competition. Wall Street and the banking class like dollars as reserve, because they can create money at will and it must be accepted worldwide.
Since tariffs are held low, then it is a no brainer for wall street to finance the export of whole industries. American labor is then under attack by the buried debt of our credit money system, and is also under attack by dollar as reserve. American labor has the further indignity of suffering high immigration rates of low cost low skilled labor. This is to compete with foreign concerns that are in a race to the bottom, exporting to the U.S. to acquire dollars. Foreigners also need dollars held as reserves in their banks in order to prevent Wall Street and other Financiers from doing Bear raids against their currencies.
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