Greg Autry

Fighting for space, not over it.

WalMart Bends

Following Apple’s plan to move some production to the U.S.A., Walmart announces they will buy more Made in USA. It’s not enough, but it is enough to make it clear that we are winning the battle for the hearts and minds of America and they know it. What they haven’t figured out yet is that the problem is deeper than just products. Its a fundamental ethical dilemma and they can’t go just part way toward reform.

Here’s a really funny and insightful photo of just what’s wrong the China – WalMart situation. This is a photo I took of a WalMart poster showing the managers at their store in Kunming, Yunnan Provence. “Servant Leadership” is not a translation error. It means exactly what it says. You can really tell when you see all the employees lined up at attention in the mornings while the managers yell at them like drill sergeants. That’s not the economy or society we want to be adapting our business to. And it sure as heck isn’t the one we want running the world.

WALMART-Servants - smWe must keep pushing this, because you can either be a “Friend of China” or an American and until the Communist Party is gone, you simply cannot be both.

 

Greg Autry serves as Senior Economist with the American Jobs Alliance, Economist with the Coalition 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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The King of North Korea is Dead

“Kim Jong Il is a great leader of North Korean people, and is a close friend of Chinese people”

Chinese Ministry of Foreign Affairs upon the death of North Korea’s dictator

Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.

– American President John F. Kennedy, Inaugural Address

The crazy king of North Korea is dead and good riddance, but his passing does offer us a moment to consider the long and stormy U.S. – Korean – China relationship.

The cause of 20 million people in greater Seoul living in fear of nuclear annihilation and 30,000 American troops cooling their heels south of the DMV at enormous expense to the U.S. taxpayer is nothing more than the desire of the Chinese leadership that that they continue to do so. Despite Beijing’s vocal protests over the American presence, any time a further draw down (there were once nearly 100,000 Americans there) appears likely the North Korean King would launch some mad and often deadly provocation, like testing a nuke, torpedoing a South Korean ship or shelling Yeonpyeong island. And the North Korean King did nothing without the approval of his Chinese benefactors.

Since the start of the Korean war, China has been intimately involved in its all of the North’s decisions and at times little more than it’s puppet master. If you’d like to learn more about that, Jung Chang and Jon Halliday’s detailed biography of Mao, “Mao: The Unknown Story” provides an excellent summary of those events in 1950.

What is particularly galling for Americans in all this is that most Mainland Chinese completely misunderstand the history that has lead us to this imperfect day. I was in a Shanghai market on May Day a few years ago and a vendor was selling Stalin T-shirts. I asked her if she was serious and she was. In fact, she said “Comrade Stalin was a great friend of the Chinese people.” Many Chinese history texts and many naïve Chinese citizens believe that World War II is a story of China beating off Imperial Japan with Russia’s aid.

Of course the true facts are: (and I state them for my friends in the MSS or any other communist supporters who might actually read my blog).

  1. Japan attacked America at Pearl Harbor, not because it wanted to provoke the most powerful nation on Earth, but because American support for China including a raw materials (notably oil) embargo imposed after the rape of Nanking compelled them to try and remove the US from the Western Pacific. America entered its most costly war because it was a friend of China!
  2. Russia entered the war against Japan on August 8, two days after the U.S. atomic attack on Hiroshima made the outcome certain and fought for only about a week.
  3. Russia occupied great portions of Chinese Manchuria (then the Japanese puppet state of Manchukuo) and Northern Korea along with Japanese territory. Russia tried to keep much of the Chinese land for a decade (see Global Security piece).
  4. During this period, Mao’s Russian friends terrorized and raped the Manchurian populace and looted vast amounts of material.

So now the stage was set for the creation of the most misnamed kingdom of all time, The Democratic People’s Republic of Korea or DPRK. (We strongly suggest this title, like “PRC”, never be used by those who do not wish to be made liars by criminals).

Despite the fact that China owed its very post-war existence to the U.S. (not its fair weather Soviet friends) the communist Chinese were eager to support a North Korean invasion of the South in 1950. When General MacArthur’s brilliant invasion at Incheon led to a complete rout of communist forces Mao sent hundreds of thousands of Chinese soldiers (and his own son) to their death in hopes of killing young American Marines and GIs and enslaving more Koreans into communism.

That was a half century ago, but little has changed. Hu Jintao continues to support the bloody North Korean puppet state at the expense of the Korean people and the American military. This economic disaster of a nation could not survive without Chinese trade and subsidies including vast “gift trains” that ferry personal luxuries to its kings (see page Brett Decker’s and William Tripplett II’s book Bowing to Beijing starting at pg. 63). Tens of millions of North Koreans have suffered for generations – including millions of children starving to death – simply so the Chinese Communist party can keep America off-balance.

 

 

Remember every time you do your Christmas shopping at Wal*Mart’s emporium of Chinese goods or invest in a China mutual fund you’re helping to support that too.

 

 

 

 

 

Greg Autry is the co-author of Death by China and teaches macroeconomics at the Merage School of Business, UC Irvine.  He serves as chief economist for the American Jobs Alliance and writes and speaks on China, space, economics, investing, and business strategy.  For more information, please visit http://www.gregautry.us and follow the author on Facebook.

Black Friday: China, Wal*Mart, the Social Bifurcation Engine and Inevitable Disaster

 

When Black Friday comes I’ll stand down by the door

And catch the grey men when they dive from the fourteenth floor

When Black Friday comes I’ll collect everything I’m owed

And before my friends find out I’ll be on the road

When Black Friday falls you know it’s got to be, don’t let it fall on me

– “Black Friday” by Steely Dan, from Katy Lied (1975)

 

Y = C + I + Xn + G

–       John Maynard Keynes, The General Theory of Employment, Interest and Money

–        

In Keynes’ famous GDP equation the size of nation’s economy is measured by its Consumption (C), Business Investment (I), Net Exports (X), and Government Spending (G). Of these four factors only two really offer an eventual return: Business Investment and positive Net Exports both create new wealth for a nation. Investment results in improved production efficiencies, funds new technologies, and generally raises standards of living in the most efficient way yet discovered. When a nation exports more value in goods and services than it imports it recognizes a profit, like any business and its people reap the dividends (albeit not always equally).

However, when a nation focuses it short-term economic hopes entirely on the importation and consumption of consumer products the net result is spending on dead-end goods that do not contribute to production of wealth and are not exported for profit.  Financing of the associated sustained trade deficit must result in either capital transfer (loss of savings or assets) or debt (borrowing against assets or future earnings), which reduces investment and retards future consumption.

When the inevitable shortfall is filled by government spending directed at increasing consumption rather than investment the process of decline is accelerated. In the aggregate funds can only be expropriated from the more productive sectors and are naturally reallocated to the ones that are most quickly failing. Factories close while housing prices and retail sales artificially sustained. Houses do not produce new wealth; factories produce new wealth by adding labor value to raw material and creating something more valuable than the sum of its parts. Using tax revenues to subsidize the purchases of imported consumer goods simply expands the economic leakage.

The result of all this is simple to predict:

  1. The demand and hence value of domestic labor falls
  2. The demand and hence value of labor in the foreign producer rises
  3. The returns to capital invested aboard rises

Bottom line: America has created a system perfectly designed to kill jobs, reduce middle class wages, and make the top-end of the investor class wealthier.

I call this our “Social Bifurcation Engine” and anytime the economy turns down, our citizens encourage our government (Democrat or Republican) rev this engine up higher and higher in the mistaken belief that it will stimulate the economy into a return to production. However, because of the giant leakage of consumer spending and the accelerated flight of capital investment to China such stimulus is no longer effective. At some point, probably not to long from now, this overworked engine will simply explode in an economic disaster with significant business and political consequences.

This is not an indictment of capitalism nor of appropriate government investment in things like infrastructure or R&D, it is an indictment of political naivety and CEO stupidity.

Now, if you wanted to make this scenario even worse, assume that your “trading partner” – the one who is making all the money off this – understands how this works and intentionally suppresses the cost of labor in its own nation by repressing worker’s rights, and ignoring safety and environmental regulations that have enormous health consequences because they don’t value individuals. In other words, “China.” These factors all prevent the natural balancing mechanism that would check the death spiral of American wages by reducing the incentives for U.S. capital to flee to Shanghai.

When the Boys from Beijing beat striking workers with batons, poison Chinese kids with their unbreathable air, and slowly kill the elderly in their “cancer villages” they don’t do it without reason. They do it because they know the never ending trade deficits are undermining the American and European economies and that the Social Bifurcation Engine will eventually undermine the political stability of their enemy. The domestic collateral damage in China is simply a necessary and acceptable cost in their quest to stamp out liberal democracy and export their brand of National Socialism with Chinese characteristics to the world.

Understanding that the existence of a healthy and wealthy America has long driven Chinese yearnings for political reform – witness the Goddess of Liberty at Tiananmen in 1989 – Hu Jintao and co. know that in the end their unpleasant system cannot survive while democracy prospers.

The men who rule China have carefully crafted and sold the world a Big Lie whereby they convince the West that the policy of engagement will lead to Chinese political reform and eventually to shared prosperity through trade. Obviously there is no empirical evidence for either of these outcomes after three decades of experimentation. We have simply created a stronger, more repressive communist China and a weaker, bifurcated America. For God’s sake, it’s time to stop!

You can start by skipping your Black Friday shopping trip to the Great Wall of Mart and instead invest your money in America by buying a U.S. made good or service from a local firm. Or you can save your money for the real Black Friday that is sure to come if nobody else heeds this call.

Greg Autry is the co-author of Death by China.  He teaches macroeconomics at the Merage School of Business, UC Irvine.  He writes and speaks on China, space, economics, investing, and business strategy.  For more information, please visit http://www.gregautry.us and follow the author on Facebook and Twitter.

 

We have forgotten the lessons of Tiananmen

 

We have forgotten the lessons of Tiananmen

 

 

From the San Diego Union Tribune, June 16, 2011

http://www.signonsandiego.com/news/2011/jun/16/we-have-forgotten-the-lessons-of-tiananmen/

 

 

Twenty-two years ago, millions of people gathered in public places across China to demand the respect of their government. As thousands jammed into Beijing’s Tiananmen Square, one of us was there in the crowd as the other watched fascinated from the other side of the world. Unknown to each other at the time, we were connected by the common exhilaration of the moment as free people stood up to claim both their natural rights and a nation’s rightful place in the world order. It should have been a glorious moment as well as a new basis for a true partnership with China’s natural ally, the United States.

Of course, we all know what did happen that June 4. Though one of us was lucky enough to just miss the gunfire by returning to lead protests in Changsha and the other remained safely behind a television screen in America, we shared the horror, disgust and disillusionment of that day. We wept, shook our heads, cried out, “Why?” and reached the same, frankly obvious conclusion: The Chinese Communist Party is a murderous regime that couldn’t be trusted and America’s policy of engagement had failed.

History tells us that engagement with totalitarians has been a proven dead end since Napoleon used the 1801 Treaty of Amiens to consolidate his regime of fear and to prepare for war, and the lesson for democracies has been the same from Hitler to Gadhafi: Bad guys don’t change and they do not honor agreements.

Two decades of failure since have made clear that fake smiles aside, Hu Jintao and Wen Jiabao are no different from the rest of history’s rogue’s gallery. It’s no surprise that China’s dictators continue to lie, cheat and steal their way through domestic politics, international affairs and business engagements.

What is surprising is that America’s business leaders, politicians and pundits continue to pander to this particular group of thugs against all reason. Decades after Tiananmen, we ask those Americans just how many artists, peacemakers and religious practitioners must China lock up before America opens its sleepy eyes? How many millions of women need be subjected to forced reproductive control? How many executions must there be? To what degree must China’s cities, rivers and seas be polluted by a perverted state capitalism that keeps Communists in power?

If human rights no longer carries weight with America’s free traders, then we ask how many American jobs need to be sacrificed to China’s blatantly manipulated currency, sad labor conditions and abuse of World Trade Organization rules? How many American firms need to be destroyed by intellectual property theft, forced technology transfer, “partnership” requirements, tariffs and export restrictions? How badly do our most promising new companies, like Facebook and Google, have to be cheated by market-restricting censorship and government-backed cyber attacks?

Before he was oddly silenced, Jeff Immelt, the CEO of General Electric, commented to the Financial Times, “I really worry about China. I’m not sure that in the end they want any of us to win, or any of us to be successful.” Of course they don’t. Why would a government whose very name – “The People’s Republic” – is a lie and that uses its own constitution – which guarantees freedom of speech, religion, and assembly – as a doormat honor any partnership with your company or America – the embodiment of the principles it despises?

Finally, if you find repression and economic warfare an unwelcome distraction from consumption of cheap goods, please consider this before you fill your shopping cart: China is building a massive, high-tech military force that grows faster than its breakneck gross domestic product. A rising armada of naval power, missiles, stealth aircraft and space weaponry is aimed squarely at our allies in Asia, U.S. armed forces and the heartland of America. Is this the kind of regime we should be doing business with?

Over the years we have become very familiar with the argument that U.S. policy should remain forever frozen regardless of how outrageous Beijing’s behavior becomes, because any action in support of our principles would either prove futile or worse, resulting in economic retribution. The former argument may be true, but has not altered our approach toward China’s good friends in Iran, Zimbabwe or Sudan, while the latter simply makes it clear that we are falling into the Communist Party’s web of intimidation. That is exactly the reason we must make a stand sooner rather than later.

—————–

Autry is the co-author of “Death by China” and teaches macroeconomics at UC Irvine. Tang was a student leader in China in 1989, still works for Chinese democracy, and is the co-author of “My Two Chinas: The Memoirs of Chinese Counter-Revolutionary.”

Counter-Revolution!

And this I believe: that the free, exploring mind of the individual human is the most valuable thing in the world. And this I would fight for: the freedom of the mind to take any direction it wishes, undirected. And this I must fight against: any idea, religion, or government, which limits or destroys the individual. This is what I am and what I am about. I can understand why a system built on a pattern must try to destroy the free mind, for that is one thing, which can by inspection destroy such a system. Surely I can understand this, and I hate it and I will fight against it to preserve the one thing that separates us from the uncreative beasts. If the glory can be killed, we are lost.

 

– John Stienbeck, (East of Eden)

 

Sunday evening, the day before Memorial Day, I’m flying over the Land of the Free with a perspective that renders our nation’s flaws invisible. We are heading West and I’m looking down at deep snow on the Rockies; a late spring thaw feeds the Colorado River as it begins its long trip South to the Sea of Cortez. There is a vast flat layer of clouds ahead, stretching out over Arizona, all brilliantly lit with the golden glow of another perfect sunset over the beaches of my native California. It is a fittingly glorious return from a weekend in the presence of inspirational greatness.

I had been invited, by my friend Tang Baiqiao (My Two Chinas) to spend two days crammed into an unremarkable, hot, and crowded conference room in a small hotel in the Flushing neighborhood of Queens. I was there to speak to a group that by Sunday afternoon had agreed to name itself the China Democratic Revolution Federation.

My hosts were a group of Chinese men and women from a variety of backgrounds that shared a long and hard-earned resentment against the regime in Beijing. They had gathered to commemorate the Centenary of China’s lost democratic revolution and hold an annual observation of the June 4 tragedy in Tiananmen Square.

Many Americans are sadly ignorant of the story of China’s 1911 revolt that buried the corpse of the corrupt Qing dynasty. The democratic movement was led with high expectations by the brilliant Sun Yat Sen. A new China had woken from its long opium coma and was prepared to boldly step forward and take its rightful place among the ranks of great progressive nations. Tragically, Sun’s embryonic republic was trampled by warlords, Japanese invaders, and finally stolen by Mao’s gang of Communist thugs.

The stuffy room in Queens was packed with businessmen, lawyers, waiters, and artists. They were Buddhists, Christians and non-believers. They’d come out of Hunnan and Yunnan and fled Beijing and Shanghai to settle in California, Georgia, Alabama, and New York. I encountered a collection of disparate souls who had fled from a vast and diverse nation and had been scattered across another. And yet, their differences were invisible. Although many of them had not met before, they were at once a family, united by decades of suffering and resigned to years of hard work ahead. Work in bringing down the criminal government that rules their homeland. This remorseless regime has recently accelerated what is already the world’s biggest campaign of repression against the mind and spirit of humankind. This ratcheting up of arrests has pulled in thousands of citizens and a few notables like world renowned artist Ai WeiWei.

What was to be a most insightful weekend began with a ride from JFK in the company of Guo Baosheng ,a Christian minister in San Francisco who had been jailed for years in the 1990s for advocating human rights and fled to America after having his “unauthorized church” closed by the Chinese police.

During much of the conference translation was provided for me by two Falun Gong practitioners – a practice horribly repressed in China – have dedicated themselves to curing the moral cancer of Marxism one soul at a time via their work running the “Global Service Center for Quitting the Communist Party.”

I met several souls who lived through the horrors of June 4 and had a most interesting interview with Yan Xiong. Yan was a young man, just days shy of graduation, who made repeated trips through the hail of AK-47 fire hauling the bleeding bodies of fellow Beijing University students from the streets around Tianamen to the hospital on a rickety bicycle. It was a day he still remembers as though it were yesterday. The reward China offered for his heroism under fire was nearly two years in a prison camp – much of it in solitary confinement or shackles, everyday of it of it on the edge of starvation. Yet, as if to prove Nietzsche right, Yan emerged strong and is now a Captain in the US Army! He is serving as a chaplain at the Warrant Officer Career College at Fort Rucker, Alabama after completing a tour of duty in Iraq.

After the public meeting broke late Saturday, we all headed out for dinner in the Little Shanghai that Flushing has become. I sat with a journalist, an attorney, and Huang Xiang, a quiet and introspective poet and artist, who after the meal and more than a few toasts stood to deliver a frighteningly animated rendition of his poem “Wild Beasts” – the story of a powerful, wild animal captured, tortured, and destroyed, but stubbornly free until the bitter end. His long, grey hair flew about as he stomped around the Beijing Duck Restaurant like a visitor from “Where the Wild Things Are” and his smiling eyes sparkled as he snarled the ending line, “Even though barely a bone is left, I want this detestable age to choke on me.” After this, the sister-in-law of Ai WeiWei stopped by to offer her regards.

The next day we returned to the practice of democracy and honed a plan of action to recapture the world’s attention that has so selfishly turned its gaze from victims of Tiananmen to the shelves of WalMart. You will be hearing from them and it will be time for us all to sit down and take a moment to listen to what they have to say and for Americans to remember that our founding fathers not only gifted us with liberty but also burdened us with the responsibility to defend it!

Will we join the Americans before us who sacrificed to end slavery, fight fascism, secure Civil Rights, and bring down the Soviet’s Evil Empire? Or, will we sell out my Chinese friends to “Save Money, Live Better” at WalMart and trade other people’s liberty – and someday our own –  for access to a “huge market?”

Make your decision carefully, but stop pleading ignorance.

 

–       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