Looking at China

Two books, reviewed by Robert Skidelsky in the New York Review of Books...

Three Billion New Capitalists: The Great Shift of Wealth and Power to the East
by Clyde Prestowitz
China, Inc.: How the Rise of the Next Superpower Challenges America and the World
by Ted C. Fishman

If the theses of these two books is anything close to reality, Americans living in an isolationist bubble are in for a jolt. We don't know anyone like that, do we? Right.

Snips from the review...

Focus on China is overdue. For the last quarter of a century its economy has been growing by over 9 percent a year, increasing eightfold. ...China's population is officially estimated at 1.3 billion, but is probably larger—one fifth of all the people in the world. This makes its rise much more important than that, say, of Japan in the 1960s. From the economic point of view its cheap labor is much more abundant, so its cost advantage will not quickly be eliminated. ...economics and politics cannot be so easily separated. China is both an engine of globalization and a rising military power, a "Wal-Mart with an army."

In Russia, Mikhail Gorbachev destroyed Communist Party rule in a failed effort to create a "humane" communism; in China Deng saved Communist rule by embracing capitalism. ...Mao Zedong...has even been rebranded to serve business needs as a kind of Chinese Colonel Sanders, advertising food products outside the restaurants in Hunan, his home province. There has been no official repudiation of Mao's legacy, even one like the limited denunciation of Stalinism which Khrushchev undertook in 1956.

Optimists say that democracy will come incrementally, starting with provincial elections, as the middle class grows. [This is a pernicious deception, I'm afraid. When I was looking into the dust-up of Authorities vs. Yahoo I came across a reference that indicates that the Chinese authorities are very capable of using technology to their advantage, not the other way around.]

Clyde Prestowitz's ...thesis, chattily if not wittily expressed, is that the virtually endless supply of labor in China and India, combined with the negation of time and distance by the Internet and global air delivery, portend the ruin of American manufacturing and a long-term decline in American living standards. Already America is living beyond its means...China produces two thirds of the world's photocopiers, shoes, toys, and microwave ovens, half of its DVD players, digital cameras, cement, and textiles, 40 percent of its socks, one third of its DVD-ROM drives and desktop computers, a fourth of its mobile telephones, TV sets, steel, car stereos, and so on. It exports 30 percent of the world's electronic goods. In Prestowitz's fevered imagination the United States is the Dr. Frankenstein who raised the monster destined to devour it.

The US government helped Asia's rise by embracing a laissez-faire ideology and floating the dollar. As a White House economic adviser quipped: "Potato chips, computer chips, what's the difference? They're all chips."...Prestowitz says that the United States must abandon laissez-faire. It must renounce its crazy ambition to flood the world with dollars and instead develop a more limited dollar sphere consisting of the North American Free Trade area plus its trade with Japan. "For the United States, this deal would marry Japan's surpluses with US deficits and create a dollar zone in trade balance with the rest of the world. It would also serve to keep Japan in the US orbit and prevent it from slipping into China's."... rejects the free trade model of globalization as harmful to US interests. He is a modern mercantilist: trade freely with your friends, and strategically with everyone else.

China, writes Fishman, "is an infinite jumble of hybrid businesses" that "conflate the sectors, often in impossibly complex, opaque ways." Almost all business "is conducted by words, handshakes, and occasionally by written but extralegal contracts."... forced demolitions and evictions to make way for new buildings and hydroelectric projects; of female workers exploited in textile and electronic factories who dream of returning to their villages; of the encroaching deserts; of pollution so intense that the "Asian Brown Cloud" wafts over to the Pacific coast of the US; of China's great road- and railway-building program; of the spread of HIV, the abortion of unwanted girls, and much else. But his central theme is the same as Prestowitz's: countless US businesses are being hammered by the low "China price," which includes counterfeiting and piracy. Jobs for many more millions of US workers will disappear. Nothing, he believes, will stop the Chinese juggernaut, for China is already building "the critical masses of companies that catalyze the creative ferment that leads to rapid innovation."

What we have here, as the old phrase says, is a failure to communicate. Unfortunately, that failure is polluted by a corresponding failure on the part of US leadership to even find agreement on what should be done. Our politicians are focused on getting votes, our business leaders on getting profits, our missionaries on converting the heathen, and our consumers on getting the lowest price on everything. The voices sounding a wake-up call are few and far between, marginalized, unfortunately, by a cloud of individual interests.

Again, thanks to ThreeQuarks for the link.