Greg Autry

Fighting for space, not over it.

Picking Apples on the Road to Serfdom

photo credit: Greg Autry

photo credit: Greg Autry

An article on HuffPo reports that taxes on the wealthy have reached a 30 year high while the middle class and poor are now paying diddly squat (that’s a technical term in economics). Tax inequality is no less immoral that income inequality and punishing the most successful for their very success while disincentivizing production is a non-sustainable model, no matter how smugly satisfying it may seem. Talent and capital invariably flee such a regime – see Cuba, Soviet Europe, Argentina, etc.

While the left anxiously ruminates about equality, the right is obsessed with growth at any cost. Equality without growth is equality in poverty. See Lady Thatcher’s powerful argument on that point. However, growth without equality invariably leads to resentment, in a democracy that means welfare and populist demagoguery which kills the growth. This is followed by the rise of an idiot like Hugo Chavez and deepening poverty. Two voyages to the same terrible destination.

Ironically, its the capitalist, captains of industry that charted our course to socialist misery by creating a society that would make Karl Marx salivate – one in which returns to capital are ever increasing and returns to labor dwindle. Stocks roar and wages fall. It’s full speed ahead for the 1%; America’s future and American values be damned! Let the rest of us save up our pennies and send our kids to Stanford so they can ALL design the next iPhone – sure.

The path to both sustainable growth and increased social equality will NOT be found in taxes and transfer payments. The solution both the left and right must embrace is the creation of a policy environment that that motivates businesses to invest in America and to hire American workers. We must do that even if it is a bit less efficient than our current model of funding Chinese communism in exchange for raping their environment and borrowing their slave labor. This means instituting a more competitive tax and regulatory environment, but doing so with an absolute refusal to join a “race to the bottom” in civilized standards of living for our citizens.

Consider Apple’s $140billion+ cash hoard. Most of it is overseas avoiding the US corporate tax (highest in the world). Very little of what is in the US is invested in creating good American jobs (sorry dudes in blue shirts). Our current political plan appears to be: tax the hell out of Apple and its wealthy shareholders and give that money to the chronically unemployed so they can sit at home and play video games on their Chinese made iPads.

Instead, we could abandon harsh ideology and simply make it fairly painful for Apple to invest further in China by penalizing them for the very benefits they gain via China’s illegal subsidies, currency manipulation, and environmental abuse. We should also throw in the cost of defending ourselves from the Chinese hacking, countering China’s massive military build up and dealing with the escalating regional tension in Asia that Apple is indirectly funding.

I propose that we cut Apple’s domestic taxes and then forward the bill for extended unemployment payments, our West Coast missile defense system, and Obama’s “Asian Pivot” directly to CEO, Tim Cook – with postage due.

Greg Autry serves as Senior Economist with the American Jobs Alliance, Economist with theCoalition for a Prosperous America and is co-author (with Peter Navarro) of Death by China: Confronting the Dragon – a Global Call to Action. He blogs regularly at: http://www.gregautry.us/blog  and on the Huffington Post.

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Blog Moved – Welcome

As the Death by China Movie promotion ramps up, the Death by China website will be refocused for the film. My blog has moved here, where I’ll continue addressing Communist China’s rising threat and growing influence in America and around the world.

Thanks for following me here and please click on the update page to join my mailing list.

– Greg Autry

Memo to Apple CEO: Stop trashing the environment for profit

 

 

In another installment of what Nightline missed in their “exclusive” Foxconn City visit we look at the unsavory way the Chinese Communist Party uses environmental abuse as an economic weapon against the West.

We’ve said before, Apple does indeed make insanely great products. This blog is written on a Mac and the video below was edited on one. Taiwanese-managed Foxconn manufacturers them to a standard far above the normal crap we get from communist China. We have a great deal of respect for Apple’s brilliant business strategy and the business acumen of Hon Hai’s (Foxconn) inspirational founder, Terry Guo. That said, all is not well in the Middle Kingdom.

Foxconn and Apple have chosen to operate inside this Orwellian gulag of a nation in order to increase their short term profits. The fact that Apple and Foxconn folks sincerely care about the environment makes it all the worse, because by doing business in communist China they fund, empower and legitimize a system that is inherently evil. Clearly neither of these firms gives a damn about the unemployed and underemployed American workers (and Taiwanese ones) who cannot compete against a country whose brutal rulers secretly advocate environmental abuse while running a big lie propaganda campaign to paint themselves green. While they are far from alone and far from the most culpable Cook and Guo are the visible leaders in the global race to the bottom of environmental standards.

Check this out:

 

httpv://youtu.be/US5OJV5juOo

Or watch the video on our YouTube Channel

 

If you don’t like what you’ve just seen and heard, please forward it to anyone you know at Apple as well as to your US Congressperson and Senator. Do it over and over again until they finally get it. If you own Apple stock (like I do) please send a note to CEO Tim Cook telling him that you’d sleep better at night if you weren’t contributing to the destruction of the Earth and if your neighbors had jobs.

– Greg Autry teaches Macroeconomics at the Merage School of Business, UC Irvine and is co-author with Peter Navarro of “Death by China” and serves as senior economist for the American Jobs Alliance.

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China’s Silent Spring is an Economic Weapon

 

 

Communize costs and privatize profits-but don’t tell anyone. This has been a formula for success for centuries.

– Garret Hardin[1]

 

 

 

 

 

Of all the myriad sins committed by the Chinese Communist Party, its wholesale rape of China’s natural environment and complete toxification of its urban landscape is often the most puzzling to Westerners who focus on economic gains. Why, on Earth should anyone care – except those left-wingnut tree huggers – what happens to the Yangtze river dolphin or to the kids in Beijing? Well, let me offer an explanation that even the most free-range capitalist can put his arms around.

First, a couple of facts:

The health costs of China’s rampant pollution binge amount to 4.8% of China’s GDP and the total costs are 5.8% of GDP according to a report from the World Bank.[1]

700,000 Chinese die each year from polluted air and water according to a report from the World Health Organization.[2]

Lee Liu, of the University of Central Missouri documenting China’s infamous “Cancer Villages” reports that, “China appears to have produced more cancer clusters in a few decades than the rest of the world ever had.” [3]

We could go on about species loss, desertification, and more but the question is why would anyone allow this sort of damage to their economy and their people if it weren’t a necessary choice? The answer to this question, like so many others in China, is: it keeps the Communist Party in power. The World Bank and WHO reports have been suppressed in China to prevent “Civil Unrest” (the PRC scare words for revolt against the party).

What Westerners cannot put their heads around is the topsy-turvy relationship between economics and politics in Communist China. We are used to a system where the goal of politics should be the bettering of life for the citizens. In China, the bettering the life of citizens is simply a political tool – along with censorship, labor camps, and torture – for maintaining order. GDP growth is a goal ONLY because it can be used to justify the continued rule of the Boys from Beijing; not because of any benefit it offers actual Chinese.

So just how does a country with an inefficient and astoundingly corrupt, centrally planned economy manage 10% year over year growth? By cheating of course! There are several ways to cheat on todays GDP and most involve pushing costs – notably negative economic externalities – off the national P&L, usually by moving them to the future.[4] China uses a variety of cheats not the least or which is virtually enslaving a large portion of its rural poor in the plantation like factories that enable Wal-Mart’s price matching strategy. When you drill down, the environmental issue is actually no different.

For instance, if China can’t make steel as efficiently as America – the fact is that it cannot – and if its low labor cost isn’t an advantage – the total labor per ton is less than the shipping per ton – how about just using a lot of the world’s dirtiest coal and dumping all your mill waste right into the Yangtze river – birds, people, and dolphins be damned! Might as well rename the province from 四川 to 死川![5]

I’m not just passing on the hysterical reporting of some NGO, anybody who has breathed the air in Beijing and come home sick (I have more than once) knows what’s going down and anyone who travels out of the cities and opens their eyes will see it there too. Consider this series of photos I shot on a 2007 Yangtze cruise:

The first picture shows some coal bins along the river that are used to load the thousands of barges

 

 

 

 

 

 

 

 

 

 

that service the endless power plants and mills (second photo) which pump God knows what into the oddly green and sterile waters of China’s formerly great river.

 

 

 

 

 

 

 

This third photo shows where one of these bins collapsed and dumped its load into the river.

 

 

 

 

 

 

 

The forth shows the “Repair Job” – honest to God – in progress. I can hardly wait to see the “environmental remediation plan!”

 

 

 

 

 

 

 

Alas, some poor woman downstream trying to earn her keep fishing in the cesspool that was once the majestic Three Gorges.

 

Obviously, all interspecies ethics aside, if you destroy your fishing grounds and plunder your agricultural and urban water supply you are going to incur real, hard economic losses in the future. But, hey cancer takes a while and you can still sell whatever fish you can raise in this florescent green ooze to the Americans for a few more short-term GDP points.

 

 

 

 

Those all-important GDP points make party bosses happy because they keep Chinese busy and restless Chinese have a tendency to toss out their rulers – a fact which keeps Wen Jiabao up at night. If citizens die in the future or become extremely ill, at least they aren’t protesting and besides the Chinese government doesn’t really provide healthcare for anyone outside the government.[6]

Running this game is not only destroying China’s once beautiful landscape, but it also creates competitive pressures that are leading the world in yet another Chinese race to the bottom. China directly exports their Dickensian environmental ethic in the extraction of African and Latin American resources acquired by their SOEs and indirectly by driving out of business American and other Western firms that are required to compete without killing their neighbors. While using this invisible hand of communist coercion against defenseless Chinese and others (for instance by gutting Tibet or damming of the Mekong river that feeds Vietnam) the Boys from Beijing are still able to cloak themselves in a mantle of “free trade” while actually communizing all the costs of their fraudulent and unsustainable economic “boom.”

A perfect example of this is the business of rare earth elements. Just a decade ago, about 80% of rare earths came from the US, specifically Molycorp’s Mountain Pass mine in California. Now, California might rightly be called the home of excessive environmental regulation, but Molycorp was supplying the world without poisoning its neighbors. The central planners in Beijing decided to corner the market in rare earths, because among other things they are critical to most high tech military hardware. China embarked on a scorched Earth policy in Sichuan province and its captive state of Mongolia using a massively destructive acid leaching process to extract things like Yttrium from the clay. Thousands of acres of pristine forest and farmland have been rendered unrecoverably toxic, while China rapidly cornered 97% of world production – shutting down Mountain Pass in the process. Upon doing so, China promptly claimed monopoly-pricing power and implemented illegal (violation of the WTO rules they signed on to) export restrictions to raise world prices on these metals up to 1000% in just two-years![7] So what if several thousand farmers go belly up or die in places nobody ever looks at? How’s that for “free trade?”

Now, if China’s pollution victims had any say in the choices being made it might be a different story, but until that day the multinational firms extracting cost savings through China’s coercion of its population are not simply “choosing to exercise their best economic option in a free market” anymore than is the businessman who “chooses” to develop a relationship with the local mob to clear out his competitors and intimidate his employees. The manufacturers and big retailers are simply co-conspirators in denial and it is no wonder they and their captive pundits run screaming “save free trade!” whenever criticism of their fascist friends comes to the fore. That too is unsustainable as more Chinese are beginning to bravely push back on their oppressors and average Americans are starting to notice that under this so-called “free trade” regime, they may be saving money but they sure as hell are not living better.

– Greg Autry teaches Macroeconomics at the Merage School of Business, UC Irvine and is co-author (with Peter Navarro) of the new book “Death by China” www.gregautry.us


[4] For instance, the US borrows money from China it can probably never repay to keep its anemic economy on its last legs (a looming diaster that Beijing happily accommodates for obvious reasons to be discussed in a future posting).

[5] A little Chinese pun here.  Si-chaun (四川) means “4 rivers” while substituting 死 for the first character (Sǐ) makes it “death river” with a very similar pronunciation.

[6] Although, of course they falsly claim to insure a significant portion of the population. A topic for a future posting.

[7] They’ve also demonstrated the ability to extort policy changes from other nations with this monopoly when they halted shipment of rare earths to Japan until that nation relented in a maritime dispute.

 



 

The Sins of Our Fathers

 

 

“No country, including the United States is perfect on the human rights issue.”

– Zhang Zhijun, Chinese Executive Vice Foreign Minister

 

I’d like to thank Mr. Zhang for taking some time during recent – and pointless – US-China Strategic Economic Dialog meetings in Washington to remind us of America’s short-comings. While I’m at it, let me give a big shout-out to Vice Premier Wang Qishan for his constructive comment, on the Charlie Rose show, that Americans are “very simple people” who can’t be expected to really understand how great China is. Reacting to valid criticisms by turning on their hosts is typical of the new Chinese approach to diplomacy. It’s an in-your-face defensive mechanism that has been emboldened by a particularly smug breed of American media apologists.

 

Now, to be honest, if these comments had come from someone other than cronies from a criminal regime, they could be the basis for some honest introspection. That is, as long as that someone wasn’t just a crony of these cronies. We often hear the same sort of drivel repeated by the American business leaders who live off the slops of China’s fascist setup and academic free trade pundits who probably picked it up from some Party member during their last sumptuous feast in Shanghai. It’s a familiar refrain to anyone who has called for a serious inspection of our dysfunctional and disastrous China policy.

 

Call out Beijing on environmental degradation and you’ll hear “America (or Europe) polluted their cities and land during their industrial development. It’s simply part of progress.”

 

Mention human rights and you’ll surely be reminded of America’s struggle with civil rights.

 

Bring up workers’ rights or safety and you’ll hear all about 19th century child labor sweatshops and probably the story of the triangle shirt factory fire 100 years ago.

 

If you mention China’s brutality against Tibetans, Mongolians, and Uighars you’ll get the  lecture on America’s battle with it’s indigenous population a hundred and fifty years ago.

 

Express dismay over China’s exploitation of Africa and Latin America and you’ll be surely reminded of the grim history of Western colonialism.

 

Show your disgust at the industrial production of cancer in China and you’ll be told about America’s cigarette firms promoting smoking in the last century.

 

OK, thanks for the guilt trip. Well deserved and guilty as charged! Let me get it all out: America institutionalized slavery. The US government ran a virtual campaign of genocide against Native Americans in the 19th century – some of whom were my ancestors. The skies in LA, when I grew up in the 70s were awful and the Cuyahoga River did catch fire. US national guardsmen once gunned down four student protestors at Kent State University. Our shining city on a hill tried it’s hand at colonialism in the Philippines and supported dreadfully repressive regimes around the world in pursuit of geopolitical and economic advantage.

 

All you fifty-centers* and communist apologists masquerading as free-marketeers please feel free to continue this US-bashing rant for me in the comments section. Knock yourselves out in the noble quest to justify authoritarianism. It won’t make a difference because as Secretary of State Clinton so wisely commented about the Chinese leadership recently, “they are trying to stop history, which is a fools errand.”

 

What Hu Jintao, Chinese nationalists living in Internet cafes, and American editorialists seem to miss in this silly argument of moral equivalence is that everyone in the world knows about all of this because in America we don’t hide the truth or lock up those who speak it. We air our laundry for all to see. Hell, we make best selling novels, movies, and TV miniseries about this stuff. When America makes a mistake it calls itself out on it, puts an end to it, and will not accept it’s repetition – at home or abroad. That’s why America is really the home of the brave and why China’s great and powerful dictators are mere cowards by comparison.

 

The fact is, that not only did America go through a lot of pain and suffering to demonstrate what should not be done, we’ve also provided the world a very clear path on how to avoid these problems. For instance, the air of Beijing does not need to be noxious, because America has developed and tested pollution control mechanisms for autos and factories. The thugs living off that poor city’s residents don’t care about their future lung cancer deaths and America’s corporate and media sycophants pretend it’s an inevitable sign of progress. So everyone laughs about the pollution and looks the other way because fixing it would undermine the ill-gotten competitive advantage that sucks the jobs out of Detroit and St. Louis to boost quarterly profits in Shanghai and on Wall Street. America’s investment in doing the right things is not only dismissed as somehow inapplicable to China, it is used as an economic weapon against our workers. The apologist pundits offer little comfort by explaining that our growing misery is simply part of the mysterious workings of “free” markets – something that “simple” Americans are too stupid to really understand.

 

As for the rest of the litany, I’m not even going to dignify questions of why China shouldn’t be allowed to enslave Tibet, exploit their workers, or rape Africa with replies. If you seriously want to make those arguments, you need a whole lot more help than I can provide.

 

The trouble with totalitarians is they don’t need to learn from the mistakes of others because they simply don’t have to. Fear is their crowd control mechanism but it is just not a good educational system. Which is why, today, repression in Beijing is as bad as it has been in twenty years and artists, protestors, and nobel prize winners are filling the reeducation camps. It’s why nothing is really changing in Chinese politics and selling out America’s economy in hopes that “engagement” would civilize The Boys from Beijing was a fool’s errand. It has simply empowered those who cover their current sins by pointing at past records of others.

 

The Chinese Communist Party is essentially incapable of imagining anything beyond copying what others have done and doing it BIGGER. That means more pollution, more repression, and more colonialism.

 

 

So, before you come to me with anymore of that nonsense about “China is just doing what we did . . .” be prepared to tell me why it is necessary or ethical to repeat every mistake we’ve made.

 

“You can always count on the Americans to do the right thing, after they’ve tried everything else.”

– Winston Churchill

 

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*The fifty-centers are semi-amateur Internet censors who get some support from the Chinese government to identify web content unfriendly to China (domestic and abroad) and overwhelm it – usually with silly patriotic posts, but sometimes with pretty educated assaults. For instance, they will flood amazon.com with negative reviews of our book or any other that is critical to China and then spend the time to vote any negative review as “helpful” many hundreds of times,