Tag Archives: Death by China

David Kilgour – Reluctantly for Romney

Greg Autry - Jennifer Zeng - David Kilgour

Greg Autry, Jennifer Zheng (former Chinese labor camp and torture victim, author of Witnessing History and star of Free China), and Hon. David Kilgour at Parliament on Friday 11/2/2012 before the Death by China showing.

 Today’s guest post is by the Honorable David Kilgour, former Canadian Member of Parliament, former Secretary of State for Asia, and a Nobel Peace Prize Nominee. David and I had the opportunity to discuss many things in Ottawa this weekend and we spent a lot of time on the American election. As a thoughtful moderate and a fan of Mr. Obama concerned about human rights in China and jobs in North America, he was torn. His thoughtful insights are reflected here.

RELUCTANTLY FOR ROMNEY – by the Hon. David Kilgour

From all indications, most Canadians would vote to re-elect Obama president tomorrow if we could, just as we would have done in 2008. One opinion survey four years ago indicated that as many as 92 per cent of us favoured Obama-Biden over McCain-Palin. The pre-election endorsements of Obama by Colin Powell, Michael Bloomberg and the Economist magazine, all of whom might have been expected to endorse Romney, will make the comfortable choice even easier for many Canadians.

There are many qualities we like in Obama, including his intelligence, compassion, surmounting of early upbringing obstacles, and his family. Both his books, Audacity of Hope and Dreams from my Father, are compelling.  In short, many Canadians continue to have confidence in the president and to extend him the benefit of various doubts since he moved to the White House.

Mitt Romney, despite having a family cottage in Canada and thus more direct exposure to our country as a youth, is harder for many of us to identify with. He epitomizes the much-criticized 1% in a difficult economic period for many across America, Canada and the world.  He is also obliged to accommodate the Tea Party faction in the Republican party, essentially contemporary political Know Nothings, who have made it difficult for him to be what he undoubtedly is: a Massachusetts moderate.

The New York Times columnist, David Brooks, recently offered some interesting predictions about the kind of administrations each candidate would offer.

Obama would probably seek to enact the sensible program he recently laid out in an interview: recreate the budget deal of two years ago ($2.50 of spending cuts for every $1 in tax increases); cuts in corporate taxes as part of business reform ; attempted immigration reform; implement Obamacare; increase spending on infrastructure. The rest would be about smaller items, such as more math and science teachers and increased foreign affairs initiatives to build a legacy.

Romney would begin with the conviction that the status quo is unsustainable: the mounting debt is ruining America and “byzantine tax and regulatory regimes are stifling innovation and growth.” Under a Romney administration, Brooks thinks the federal government would spend about 21 per cent of the G.D.P. instead of about 24 per cent.  Importantly, Romney would respect the main lesson of the election campaign: moderation wins. Among other lessons, this means he’d have to increase taxes on the rich, reduce his tax-cut promises and abandon the draconian spending reductions in his running mate Paul Ryan`s budget proposals.

In short, for Brooks, an Obama win probably “means small-bore stasis; if Romney wins, we`re more likely to get bipartisan reform…He`s more likely to get big stuff done”.

While foreign policy is one of Obama’s perceived advantages over Romney, he has certainly fumbled some major issues abroad, including climate change and the Doha Round of world trade negotiations. Whether Romney or anyone could have done better internationally as president is an open question, especially during a global economic crisis and the rise of new players on the world stage.

Among Obama`s accomplishments are his ending of George Bush’s “global war on terror”, removing American soldiers from Iraq, and his handling of the Arab Spring in some countries. On other issues–Iran, Afghanistan, Russia, Pakistan, North Korea, the Israeli-Palestinian conflict come readily to mind — there have been few strategic gains.

There is enormous but little-focused-upon-by-the-media concern about China and the continuing loss of manufacturing jobs across the United States. As a consequence, only about nine percent of Americans now work in the sector, when probably at least one quarter are needed for a successful modern economy. It is disingenuous for Obama and business CEOs to brag that America exported $100 billion last year to China when it imported almost $400 billion. Beijing cheats on most of its World Trade Organization commitments, but its continuing manipulation of its currency is doubtless the most destructive in terms of good jobs disappearing in America, Canada and all countries trading with China. Romney is right about the urgent need to declare China a ‘currency manipulator’ and to add 20, 30 or whatever percentage the tampering is determined to be to the price of every import from China.

On reversing the problems affecting America, Canada and so many economies, which candidate is better equipped? Martin Wolf, one of the world’s leading financial columnists, identifies some clues. At the end of Obama’s first year in office, the world was on a path very similar to the calamitous one taken in the 1930s, but managed to adopt policy responses that included expansive monetary and fiscal policy and support to the financial sector.

Wolf believes that a debt crisis inside the U.S. and a meltdown of the Eurozone are today the most likely triggers for another major crisis. He adds that there is no consensus today on what is the “right macro policy-that is the right monetary policy, the right fiscal policy, and the right policy on dealing with debt overhangs.” Whichever candidate has convinced more Americans that he can restore the American economy and get back to reasonable employment levels and growth is likely to win tomorrow.

Very reluctantly, and primarily because of Obama’s weak stand on jobs/China, I’d vote for Romney.


You can find David Kilgour on the web at: http://www.david-kilgour.com


Follow Greg Autry on Facebook at: http://www.facebook.com/gregwautry

Join the mailing list at: http://www.gregautry.us/updates 

Bob Hall Reviews Death by China Reviews

A guest posting from Bob Hall on our film reviewers:

Everyone, no matter what their circumstances, has more money than time.

(They just don’t know it yet.)

When people tell me about a movie they’ve seen, I always want to know how it was worth their time.  The best movies, I think, can change our lives.  This, I think, must be a good use of time.

Death by China—one of the best movies I’ve ever seen—is a good use of time.


Know, now, that this is coming from an experienced movie snob.  Back in another life—back when I thought I had time—I could drink coffee and discuss art cinema with the best of them.

(Now that I think about it: I would love to see one of those old Dave Kehr Chicago Reader reviews—on Cassavetes’s Love Streams would be perfect.)

This in mind, I hope it makes sense to hear that Death by China left me more inclined to review the reviewers than to review the film.

The longer you’ve followed the issues, the more you’ll agree with me.  I wouldn’t fault a reviewer for criticizing a film’s lighting or pacing.  This is a specialized part of their paychecks.  But when a movie and director meet a higher purpose: if the critics aren’t up to meeting at the same level, they can get in over their heads—and get their characters tested right quick.

For some lively examples, look at:


The Death by China audience rating is currently 80%—not bad, really, considering that Cassavetes’s masterpiece is 88%—but the Death by China critics’ rating is 30%.

This, I will argue, is a clear-cut case of killing the messenger.  Movie critics are specialists who understand movies better than they understand China and trade deficits.  These critics are basically, unwittingly, blaming their ignorance on film director Peter Navarro.  I agree that Death by China is outrageous and extreme, but this is only because our relationship with China is outrageous and extreme.  Navarro understands our relationship with China as well as anybody.  He’s simply presenting the facts and telling a story that needs to be told.  If anything, I’d say he’s still understating things a bit—deliberately, perhaps, in attempt to reach a larger audience.

(Of course, I live with this stuff every day, so I think almost everybody understates the dangers.)

If I were you, I’d go see Death by China as soon as possible and consider it time well invested.  It’s fascinating and informative—even entertaining in its own unpredictable way.

To say this movie has the power to change our lives is to damn with faint praise.  This movie has the power to save the world and the lives of our children.

Mostly, though:

This movie can give us time.


follow Bob at: http://www.facebook.com/BobHall2012Campaign 


Death by China Screening – Cinema City, Anaheim, Sep. 28

I will be hosting a special screening of Death by China in Anaheim, CA this Friday at 9:00PM.

Cinema City, Imperial Highway and La Palama.

Tickets on Fandango – recommended as we did sell out in Pasadena.

The film will be introduced by Congressman Dana Rohrbacher and we will have a lively panel Q&A after with:


Pema Dolkar – Representing the Tibetan Community

Kai Chen – Former star forward on the China National Basketball Team and freedom advocate

Chriss Street – Chairman of the American Exceptionalism Institute and Co-host of The Inside Education Radio Talk Show

Dr. Dana Churchill – Doctors Against Forced Organ Harvesting

Shizhong Chen – President of the Concience foundation, advocate for human rights

Maxine Russell – Fighting for justice in the case of her son’s murder 

Nancy Tran – TNT Radio, representing the Vietnamese community

Stan Yang – President of FAPA, representing the Taiwanese community

Download PDF of flyer for printing



Why Obama is on the Offense In Ohio

What to know why President Obama has just gone on the offensive on China trade policy?   See the results of this just released Zogby poll commissioned by Death By China Productions.  The poll shows Obama faces a huge “soft on China” gap relative to Mitt Romney in the key swing state of Ohio – and some very interesting findings as well.


New Zogby Poll in Crucial Ohio Swing State


  • Obama and Romney in Statistical Dead Heat
  • Obama Faces Large “Soft on China” Gap
  • The Best Jobs Program is Trade Reform With China
  • Ohioans Overwhelming Support a Boycott of Made in China.


President Obama may have opened a lead in national polls, but it remains a statistical dead heat in the crucial swing state of Ohio.  In the latest Zogby Poll of 601 likely voters conducted by JZ Analytics, President Obama’s lead of 45%.3 to 43.2% over Mitt Romney is well within the statistical margin of error.


Candidates take note:  An overwhelming majority of Ohioans — 80% — agree that “the single most important issue in the 2012 Presidential race is jobs.


50% of Ohio respondents believe that the best jobs program for America is “cracking down on China’s unfair trade practices like currency manipulation, illegal export subsidies, and counterfeiting and piracy” while only 22% favor more government stimulus; and these results are consistent across liberals, moderates, and conservatives.


This finding is particularly bad news for President Obama as he faces a double digit “soft on China gap” relative to his opponent.  Fully 43% of Ohioans believe Mitt Romney is more likely to crack down on China’s unfair trade practices compared to only 30% for Obama.  Among independents where the largest bloc of undecided votes remains, this gap holds at 35% to 26% in favor of Romney.  (This finding may also help explain why Obama has recently ratcheted up his tough on China messaging.)


56% of respondents also believe “Americans should boycott Made in China products because of China’s unfair trade practices and human rights abuses” while only 19% are against the boycott.  This result is consistent across party affiliation, indicating the issue of China is an American issue, not a partisan issue.


If Obama is to win in the crucial swing state of Ohio – and thereby likely win the election — he would do well to try to close his very large “soft on China” gap not by attacking Romney for being soft on China – Ohioans won’t believe that.  Rather, Obama should carry the slogan “the best jobs program is trade reform with China” and lay out very specific policy actions that will curb China’s cheating.


For his part, Romney would do well to further press his “tough on China” advantage in Ohio by extending his campaign talking points significantly beyond his promise to brand China a currency manipulator on his first day in office.  Clearly, China’s cheating is a flashpoint for Ohio voters who have seen whole factories uprooted and replanted in China.


The Zogby Poll was commissioned by the filmmaker of Death By China Peter Navarro to benchmark attitudes of Ohioans on the China question.  Navarro is traveling throughout the state showing the film and conducting town hall meetings, with stops in Youngstown, Akron, Dayton, Cleveland, Cincinnati, Columbus, Toledo, Mansfield, Portsmouth, Sandusky, Athens, and Findlay.

Free China: The Courage to Believe – a most important film

The practice of “Truth, compassion, and tolerance” is not an activity that a civilized nation responds to with torture. China today is an uncivilized country. From a Chinese perspective this is the gravest national insult and I would not make such a statement without purpose or cause.

My purpose is to turn around our failed engagement failed policy with communist China. Since the massacre at Tiananmen Square this policy has been an unjustifiable disaster. Millions of American jobs have vanished while millions of Chinese live like slaves. The despotic Chinese regime has been enriched, empowered and emboldened. Censorship and repression has escalated and the goose-stepping People’s Liberation Army is on the verge of provoking war with nearly every one of China’s neighbors. The details of all that are found in my book with Peter Navarro, Death by China and Navarro’s film based on it. But the more important question might be “Why has China consistently responded to American engagement with lying, cheating, stealing and threatening?”

A powerful new film, Free China: The Courage to Believe directed by Michael Perlman and produced by Kean Wong provides the evidence that backs up my charge and addresses the root cause of China’s uncivilized behavior.

Free China opens by showing how Mao Tse Tung and his sociopathic, communist followers intentionally and systematically attacked the moral foundations of ancient China. Mao’s movements, purges and pogroms including the infamous “cultural revolution” were aimed at the very soul of China. Their goal has been nothing less than to replace centuries of Taoist, Buddhist, and Confucian thought with the amoral philosophy and disastrous economics of a drunken German and his mad Russian protégés.[1]

Inside China, this has been manifest in the brutality, murder and repression that is so elegantly portrayed in Free China. This English language film (with Chinese subtitles) is intensely personal look at a dream of a free China through the story of two courageous practitioners  of Falun Gong.

Falun Gong, is a moral philosophy that arose in reaction to the communist depravations and seeks “truth, compassion, and tolerance” and advocates for the restoration of China’s historical values. While the communist regime has attacked every source of ethical standards from Tibetan Buddhism to American Evangelical “house churches”, it has been the practitioners of Falun Gong that have led the resistance and suffered the cost. They have conducted their peaceful civil disobedience with resolve that would make Gandhi and Martin Luther King proud.

Like many others, our film’s protagonists, Jennifer Zeng and Dr. Charles Lee end up in Chinese prison camps where they are subject to depravation, torture, political thought control and enslavement. We are lucky to have them alive so they can share both these horrors and their valor with us. As the film tells us, so many more have not been so fortunate. They’ve been starved, beaten to death, mentally broken and even used as involuntary organ donors.

Like Mr. Pearlman’s other work, Tibet: Beyond Fear, this film is beautifully shot and edited. Zeng and Lee are genuine and powerful. Additionally, two of the West’s great voices for human dignity, Canada’s David Kilgour and American Congressman Chris Smith, offer poignant contributions. Free China is a compelling and heart-wrenching look at a human tragedy in progress that America continues to ignore only at our own peril. Please see this film and share it with as many others as you can. Free China should give Americans the courage to stand with the bravest of the Chinese people so that China may reassume its place as a great and civilized nation.


Free China is showing Wednesday September 12 at the Los Feliz 3 Cinemas in Los Angeles. I hope to see you there! Additional information and pre-orders for the DVD are at: http://freechinamovie.com


Greg Autry serves as Senior Economist with the American Jobs Alliance and is the co-author of the book Death by China. He also served as a producer on the Death by China documentary film  directed by Peter Navarro and narrated by Martin Sheen.

Please follow Greg on Facebook at: http://www.facebook.com/gregwautry

and sign up for email updates at: http://www.gregautry.us/updates

[1] In the 1980s China’s rulers combined the very worst ideas of socialism with a poisonous corruption of capitalism to establish a new and utterly amoral brand of “state capitalism.”

Ricardo, Part Deux

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.

– SunTzu

In my previous post, On UFOs, Unicorns, Bigfoot, and Comparative Advantage, I examined the real world outcomes of the free trade paradigm and its theoretical origin: David Ricardo’s theory of Comparative Advantage. The evidence showed that countries that talk “free trade” but actually combine aggressive trade with an active industrial policy win in the global economy. Nations like Japan, South Korea, and Taiwan targeted U.S. industries and focused on developing technology, acquiring capital, and building infrastructure. In dosing so they created new wealth and rapidly developed a thriving middle class. This is a good thing – when it isn’t used to support a totalitarian state.

Countries that actually drink the “free trade” Kool-Aid and open their markets and transfer their capital and technology to their competitors spiral downward economically and suffer from growing economic stratification – think post-Victorian Britain, and the U.S. and Canada today. This is not a good thing for anyone.

Now to be clear, I do not dispute the simple elegance of Ricardo’s theory. I teach it all the time and it is a brilliant little demonstration of a fundamental economic truth that Adam Smith originally outlined – specialization can benefit everyone. However, the real world is immensely more complex than Ricardo’s little two country, two product model allows for and the advantages of Comparative Advantage are easily overwhelmed by many other things that actual nations can do to each other in trade.

Let’s first consider the theory. There is some simple math, which you can find described nicely here if you are interested. It’s not difficult and I’ve found that even MBA students J can be trained to regurgitate it in fifteen minutes. However, I’ll try to explain it in English:

Firstly, some countries have an “Absolute Advantage” in the production of something. For instance, Saudi Arabia has absolute advantage in oil production – they have boatloads of high quality oil that is easily and cheaply extracted. The U.S. has absolute advantage in the production of foodstuffs – with vast tracts of flat land, water and sunshine. Not surprisingly, the Saudis sell us some oil and we sell them some corn.[1]

Secondly, some countries don’t produce any important commodity at the absolute lowest price. Should they just give up and die? Of course not! They will have a “comparative advantage” in something. Let me explain that. While other countries out-produce them in several things those countries cannot do all these things at once. So the nation that is not best at anything still has a reason to do something, if only so that that the better endowed country can focus its people on its very most profitable output. This more blessed nation incurs an “opportunity cost” when making anything that is less profitable than its best product. That said having Absolute advantage sure doesn’t hurt and it does give a nation more options and higher relative income.

As an analogy, imagine you’re a Medical Doctor with a family practice in a small town. You have a nurse, a receptionist, an accountant, and a janitor. Now, frankly you’re perfectly capable of doing nursing better, answering the phone, doing your books, and even cleaning your own toilets. However, you happily pay less skilled folks to do these things in order to maximize your time spent doing your most profitable work – billing the hell out of insurance companies and Medicare. The janitor has a job because the opportunity cost of MDs cleaning toilets is too high. That said, the MD, with his absolute advantage, is will still always be the wealthiest.

The simple (too simple) trade example Ricardo chose was the production cost of English wool cloth and wine versus that of its trading partner Portugal. Portugal held absolute advantage in both due to the benefits of its climate and labor rates. However, Portugal’s opportunity cost of giving up wine production to make wool was higher than the profits from the wool. Wine was always more profitable. Meanwhile, England’s disadvantage in cloth production was much smaller than its disadvantage in wine. Consequently everyone was better off if Portugal gave up its Merino flocks and England abandoned its fog shrouded vineyards.  English consumers benefited from cheaper Portuguese products, so England should drop all tariffs against imports from Portugal and wait for the market to respond. Portugal would wisely give up its sheep and send more cheap wine to English consumers! [2]

So where is the problem? There are several big holes and bad assumptions in Ricardo’s theory and my colleague at the Coalition for a Prosperous America, Ian Fletcher has nailed several of them in The Theory That’s Killing America’s Economy and several books including Free Trade Doesn’t Work. I’m going to focus on some points that are specific to China:

Scale and Excess Capacity. Ricardo’s theory is based on the assumption of opportunity cost –that a country must give up producing something in order to compete in production of another global commodity. China essentially has no opportunity cost in labor. Decades of horrible governance in China have left China with vast surplus capacity of labor. They have hundreds of millions of people working in medieval conditions. I’ve seen these folks literally pushing plows behind oxen, picking rice by hand, and separating grain with hand mills. U.S. farmers using GPS enabled super-combines, genetically engineered crops, and chemical fertilizers and pesticides and are thousands of times more efficient than their Chinese counterparts. Simply by advancing their feudal agricultural system a little bit at a time China has been able to move hundreds of millions more off the farms and into factories. Regardless of their heart-wrenching “one child” policy and talk about short-term labor costs, China can keep this up for a very long time.

China can make all the wool and all the wine or to update Ricardo they now make all the clothes and all the computers. And if we continue dumb trade, they will soon make all the cars and all the planes over the next decade or so. As their labor pool tightens they need only expropriate more of the production technology we developed to compete with them. We will not catch up in our lifetimes and by then it will too late for the West, anyhow.

Strategy. Ricardo’s theory is tactical and cross-sectional. It considers only what choices a country can make at a specific moment in time, given an unchangeable set of production possibilities. Consider the game of Blackjack. If you have a 15 and the dealer is showing a 4, you’re likely to “hold” and let the dealer draw a high card and bust. That’s the correct tactical response. However, if you’ve been watching the deck and know most of the face cards are buried you might do something very different.  China is counting the cards. That’s strategy.

Ricardo assumed that absolute advantages were based on thing like climate and natural resources, things that were either not transferable or that no sane nation would sell to foreigners.  Today, the most important sources of national competitive advantage are capital and intellectual property. American money has been flying across the Pacific ocean as fast as Wall Street can ship it. Our invaluable technologies, many developed through government funded R&D are being eagerly handed over by short sighted multinational corporations like General Electric or stolen by China’s legions of spies and hackers.

As to natural resources, smart countries like China never sell any of them while dumb countries like Canada are eagerly pitching their national treasures to China. Smart countries think strategically and longitudinally (over time). When America, Europe and Canada have been deindustrialized, China will recognize monopoly rents on just about everything.

Using our MD office analogy, imagine that the nurse you’re paying so well is using all of her paycheck to go to medical school with the specific plan of opening a competing practice across the street with the help of your accountant. Not such a good deal. That’s the difference between strategy and tactics. Strategy wins in the long.

Currency. Ricardo used a generic value of input, “labor”, though clearly he understood there was land, capital and other inputs into the mix. He also essentially presumed products were traded in this universal unit of pre-defined value. According to economist David Hume, currency prices should reflect the actual value of resources though an adjustment process he called the Gold Specie Flow Mechanism. In the real world, trade is conducted with pieces of paper that have no intrinsic value. If these pieces of paper are not traded at market prices – if the exchange rate is manipulated by one side to its favor – then Ricardo’s theory is sitting on shaky ground. It’s like tilting the whole trade playing field on its side. China knows this and Chinese leaders openly discuss adjusting manipulating Yuan/Dollar market to maintain jobs in China.

National Security. Being able to independently feed your people and provide energy for domestic industry has serious security implications, so the Saudis would be smart to maintain domestic food supplies and the U.S. has an interest in staying in the oil business. The second best option is to keep your supply chain of critical inputs politically diversified. Keeping the ability to make steel, motors, electronics, and airplanes is pretty important if your “trading partner” is conducting the biggest military build up since World War II. Enough said.

Human Ability and Social Bifurcation. Ricardo’s theory assumes all people are interchangeable cogs that can simply be diverted to the source of comparative advantage. Almost all human beings are capable of assembling an iPhone, very few of them could ever design one. Millions of American’s are not going to “gain new skills” and all start designing iPhones.

As I’ve mentioned many times in this blog the current trade regime increases the returns to capital invested abroad and represses the value of domestic labor. Consequently unemployment and under-employment are skyrocketing in the U.S.  If we count unemployment the same way we used to, America is suffering with a rate well over 20%. If we add in the former factory foremen and engineers now working at Home Depot and Wal-Mart, our unemployment + underemployment rate is easily tipping 40%. That’s not even considering all those twenty-five year old community college students still living with mom and dad, our rapidly growing prison population, and unemployed illegal aliens. Eventually these millions of displaced folks are going to find a populist demagogue who promises to take care of them. Who cares if America get a “net benefit” from trade if the final result is either a permanent welfare state or civil unrest? The rulers of China know this is happening to America – wonder why they always smile?

Externalities and Resources. China also has lower opportunity costs in resources because they are willing to brutalize their environment to achieve short-term absolute advantages in extraction. Nobody in Zhongnanhai really cares if most of China’s GDP growth is lost to future pollution and health problems if they can put another nail in the coffin of a Western industry.

Further, they are rapidly expanding their resource pool by buying up resources around the world (though they NEVER sell any of their own.) This has allowed them to pollute Africa and exploit Africans Chinese style. Soon they will be using Brazil as a source of advantage over the U.S. and Europe. Ricardo never really considered that Portugal would sell Portugal to England. Today nations like Canada are transferring their sources[3] of absolute advantage to China in exchange for short-term income – essentially selling out their children’s future to keep this generation’s party going.

The next time some amateur economist pulls out “Ricardo’s Theory of Comparative Advantage”, ask him to actually explain it. If he actually can, then please email him this post or buy him Ian’s books and then ask him to explain it again. If he still doesn’t get it, it is likely that he just doesn’t want to.

Greg Autry serves as Senior Economist with the American Jobs Alliance and is the co-author of the book Death by China, now a documentary film directed by Peter Navarro and narrated by Martin Sheen.

Please follow Greg on Facebook at: http://www.facebook.com/gregwautry

and sign up for email updates at: http://www.gregautry.us/updates

[1] However, in the more complex real world it is important to understand that the Saudi’s actually sell more of this oil to Europe and we buy more from Mexico and Canada. The Saudi Price, though, sets the global market and the availability of supply there keeps Canadian prices down regardless of where we get ours.

[2] David Ricardo sold this to the British Parliament around 1830. Two hundred years later, Portugal is still a top wool producer and England is still irrelevant in wine.

[3] In fact, Nexen is also handing China access to British resources in the North Sea and U.S. leases Gulf of Mexico as well.

A Thoughtful Piece by my Friend, the Honorable David Kilgour


     Hon. David Kilgour

  Rayburn House Building, Capitol Hill


19 July 2012

China has given much to the world during five millennia. My own respect for its people grew during several visits to the country; it was an honour to represent some Canadians of origin in the Middle Kingdom for many years in Parliament.


Democratic governments and their peoples, legislators and civil societies should be as actively engaged as feasible during the current leadership transition. Democracy with Chinese features is probably closer than many think.  We should never forget in this that the values we seek to encourage are universal ones, including dignity for all, the rule of law, multi-party democracy, corporate social responsibility and the need for good jobs for everyone, including Americans and Canadians. (A useful handbook on democracy development by the Council for a Community of Democracies can be accessed at http://www.diplomatshandbook.org.)


To illustrate the difficulties of such engagement with Beijing, take the case of Bo Xilai, whom many democratic governments and business people courted even after it was clear that he was on his way out of the Party. Canada’s prime minister met with him in Chongqing city on Feb. 11, nine days after his former police chief, Wang Lijun, sought refuge in the U.S. consulate in Chengdu. Bo and Wang had earlier been among the most brutal persecutors of Falun Gong practitioners.


Premier Wen Jiabao was so troubled by Wang’s conduct that his rhetorical question to Party members appears to have been leaked from a closed meeting on March 14, “Without anaesthetic, the live harvesting of human organs and selling them for money-is this something that a human could do?” Wen also used the many lawsuits launched against Bo in 13 countries for his role in organ pillaging  to have him removed as Commerce Minister in 2007.


Bo, Wang and others were members of former president Jiang Zemin’s faction in the Party, who rose because they supported Jiang’s brutal persecution of Falun Gong ongoing from mid-1999 to the present day. Your State Department, for example, has known about the pillaging of organs from Falun Gong at least since 2006, but only in May, 2012 acknowledged the well-documented crime against humanity in its human rights country reports.  Democratic governments should be supporting Wen and reform-minded party members on this and a host of governance issues.





  Political Maoism Ending?


Jung Chang and Jon Holliday end their 2006 biography, Mao, The Unknown Story, by stating, “Today, Mao‘s portrait and corpse still dominate Tiananmen Square in the heart of the Chinese capital.  The current Communist regime

declares itself to be Mao’s heir and fiercely perpetuates the myth of Mao.” Many historians include him with Stalin and Hitler as the three worst mass murderers of the 20th century.  Chang-Holliday note, “In all, well over 70 million Chinese perished under Mao’s rule in peacetime.”

The methods of Mao did not perish with him in 1976. In 2003, for example, the Party sought to hide the impact of the deadly SARS virus. Only when a doctor  sent to foreign media the actual numbers of Beijing residents struck by SARS did the party-state launch quarantine measures. The same indifference to the public good recurred in 2008 over the Sanlu dairy tainted milk supply scandal, which caused sickness or death to some 300,000 Chinese babies. There is a myriad of other examples.


The Party still uses overwhelming force to suppress voices advocating the rule of law. One is Gao Zhisheng, a thrice Nobel Peace Prize-nominated lawyer.  A decade ago, he was named one of China’s top ten lawyers.  Party wrath was released when he decided to defend Falun Gong. It began with the removal of his permit to practise law, an attempt on his life, a police attack on his family, and a cessation of his income. It intensified when Gao responded by launching nationwide hunger strikes calling for equal dignity for all. One of his communiques described more than 50 days of torture in prison.


Trials in China are theatres.  The deciding ‘judges’ usually don’t even hear evidence given in ‘courts’. Canadian Clive Ansley, who practised law in Shanghai for 13 years, explains the fate of Gao and so many others by observing: “There is a … saying amongst Chinese lawyers and judges who truly believe in the Rule of Law…(which) illustrates the futility of attempting to ‘assist China in improving its legal system’ by training judges. It is: ‘Those who hear the case do not make the judgment; those who make the judgment have not heard the case’….  Nothing which has transpired in the ‘courtroom’ has any impact on the ‘judgment’


Tibet and Dalai Lama


Another important instance of misgovernance is Tibet and the Dalai Lama. As the spiritual leader of Tibetans, an honourary Canadian citizen, and respected world leader, His Holiness is a new government in Beijing’s best hope for a peaceful resolution of the Tibet issue. Advocating Tibetan autonomy under Chinese rule, he disavows violence, does not favour secession and has this year turned over the political role to democratically-elected men and women. When His Holiness



spoke to a large audience in Ottawa earlier this year, he indicated that he felt the Chinese people generally would accept a degree of autonomy for Tibet if aware

that this is all that is being sought. He also mentioned the tragic loss of now almost 30 Tibetan lives to self-immolation.

Natural Environment


Three decades of ‘anything goes’ economics have done major harm to the Chinese people, the natural environment, neighbours and the world as a whole. Consider:


  • Nearly half a billion Chinese citizens now lack access to safe drinking water; many factories continue to dump waste into surface water.


  • A World Bank study done with China’s environmental agency in 2007 found that pollution was causing 750,000 premature deaths a year.


  • Coal now provides about two-thirds of China’s energy and it already burns more of it than Europe, Japan and the U.S. combined.  Emissions from Chinese coal plants are now reaching well beyond China’s borders, yet the Party has failed to achieve anything substantive concerning the protection of water, air and soil.  Many experts conclude appears that China cannot go green without political change.

Public Health/Safety Nets


The state of public health across China today is highly worrisome. There is no health system for rural people and those not on state payrolls. Under the new privatized model, doctors, hospitals and pharmacies were made ‘profit centres’ and expected to finance their activities through patient fees. Less than a fifth of Chinese workers have pensions; even less are covered by unemployment insurance. The party-state meanwhile sits on trillions of dollars in foreign exchange holdings.

‘Ponzi Capitalism’

Jonathan Manthorpe, long a close observer of China, wrote last year in the Vancouver Sun,


What one is seeing in China is variations of what can only be called a Ponzi scheme.  A local government, without a functioning system for raising tax revenue—and… riddled with corruption…sells development land to garner cash… (first getting) rid of (farmers) living on the land… The land will then be sold to a development company … owned by the local government…(T)he municipality has the power to instruct banks to lend the development company the money for the sale.  So the local government gets its cash, the municipally-owned company gets to build a speculative residential or industrial complex, and all seems well.


A related item on the housing bubble appeared in the Financial Times. In the coastal city of Wenzhou, luxury apartments are to be built for as much as 70,000

Yuan ($11,000) a square metre, which is about twice the annual income of the average resident. To finance a 150 square metre apartment in the building would consume every penny of a typical resident’s income for 350 years.

A Way Forward


There were 180,000 “mass incidents” in China in 2010, everything from strikes to riots and demonstrations, twice as many as in 2006.  The regime continues to rely on repression and brutality to maintain itself in power. Universal values must be asserted continuously in dealings with Beijing.


There are lessons to be applied in China from the non-violent civic resistance which has occurred in many nations. Each was different in terms of boycotts,

mass protests, strikes and civil disobedience.  In all, authoritarian rulers were delegitimized and abandoned by their sources of support.


An interesting post- Taiwan election (Jan 2012) piece appeared in the New York Times. It noted that the Chinese party-state news agency, Xinhua, avoided the words “president” and “democracy”, presenting the election as a merely local one. A businessman from China who had observed the election, however, noted, “This is an amazing idea, to be able to choose the people who represent you. I think democracy will come to China. It’s only a matter of time.”


A democratic China would not murder Falun Gong citizens in forced labour camps or engage in any of the other acts of gross misgovernance discussed above.




Democratic governments and their business communities should examine why they are supporting the violation of so many universal values in seeking to increase trade with China. For years, this has resulted mostly in our jobs being outsourced to China and continuous increases in our bi-lateral trade deficits. Do those in our business communities overinvested in China feel no responsibility to the employment needs of fellow citizens? Are the rest of us too focused on access to inexpensive consumer goods and essentially ignoring the human, social and natural environment costs paid by Chinese nationals to produce them?


Peter Navarro, a professor at the University of California, asserts that consumer markets worldwide have been “conquered” by China largely through cheating.  Navarro has various proposals intended to ensure that trade becomes fair. Specifically, he says all trading nations should:


• define currency manipulation as an illegal export subsidy and add it to other subsidies when calculating anti-dumping and countervail penalties;


• ban the use of forced labour effectively-not merely on paper as now- and provide decent wages and working conditions for all;


• apply provisions for protection of the natural environment in all trade agreements in order to reverse the ‘race to the environmental bottom’ in China and elsewhere.


The party-state in Beijing is making major changes in its senior personnel. Those appointed should seek dignity for all Chinese if they wish to achieve sustainable prosperity at home. Its current roles in Syria, Iran, Nepal, North Korea, Sudan, Taiwan, Zimbabwe and elsewhere will also require significant reform if the new government’s goal is to build international harmony with justice for all.


The people of China want the same things as the rest of us: respect, education, safety and security, good jobs, the rule of law, democratic governance and a sustainable natural environment. If the party-state ends its violations of human dignity at home and abroad and begins to treat all members of the human family in a justly, the new century can bring harmony for China and the world.


Thank you.



David Kilgour is a retired Member of the Canadian Parliament, former Canadian Secretary of State for Asia, a Nominee for the Nobel Peace Prize, and an unwavering voice in support of truth and human rights in many arenas. 


What you See is, What you Get: On UFOs, Unicorns, Bigfoot, and Comparative Advantage

Sometimes I think it’s a sin, when I fell like I winnin’, but I’m losin’ again.

–       Gordon Lightfoot, Sundown

As a lecturer and a PhD student, I’ve taught David Ricardo’s theory of Comparative Advantage to hundreds of MBA students. This is the brilliant little economic model that demonstrates how when each nation focuses their resources on the work they are best at – even if they are not better than all others – production will be maximized and consumers will benefit. In its pure, abstract form, Comparative Advantage represents an unarguable truth. There is a beautiful, transcendental moment when a business student suddenly “gets” the simple mathematical model and sees the nearly magical benefits Ricardo’s model offers to “all trading nations.” It’s comparable to the experience of an undergrad sociology student encountering Karl Marx for the first time. Suddenly the world is brilliantly clear and the solutions are so simple, if only everyone could be compelled to embrace them.

As different as Ricardianism is from Marxism, the two economic theories share a common theme – they sound swell, but fail completely when faced with the reality of human behavior. The problem is that both of these grand ideas require that individuals or nations, respectively, repress their natural inclination to act in a self-interested manner, for the promise of a mutual beneficial outcome.

In the real world, we know this promise never works. Letting individuals pursue their own, inefficient, unplanned, selfish economic courses actually works out better than getting smart folks to organize them for the greater good – the free market has trumped socialism in every sad empirical test of Marx’s dream.

The ideology derived from Comparative Advantage that has erroneously been labeled “Free Trade” actually involves the same logic as socialism – that free nations subsume their national desires for control of their jobs and strategic resources to a greater global interest, which promises to benefit their consumers as well. Even more curiously, the strongest supporters of individual freedom are the first to villainize anyone who suggest “protecting” a domestic market for the benefit of their nation. They then invariably drag out the ghost of David Ricardo to explain to us simpletons that becoming the world’s trade bitch will be good for us. China’s 25% tariff on U.S. cars vs. our 2.5% tariff on their imports is no problem because American consumers benefit from low prices when American producers shut down!

However, the empirical evidence is again, perfectly clear: nations that pursue the acquisition of technology and capital, fight for high-value manufacturing jobs, and seek smart trade advantages increase their national wealth and individual prosperity. Naïve countries that actually practice, “free trade” spiral into decline and unemployment. There is no better example of this than 19th century Britain, the first nation to embrace Ricardo’s crazy idea.

After the brilliant theoretician sold Parliament on his simplistic theory, the UK went on a free trade frenzy. During the next century the United States, operated on Hamilton’s “American System” featuring very high tariffs, and an active industrial policy geared toward rewarding production, building infrastructure and developing markets. America gutted England’s manufacturing base. Despite controlling a third of the world’s resources Britain entered a slow decline. Only those Brits involved in investing capital elsewhere gained real wealth. Building a welfare state became unavoidable to avoid revolt. Meanwhile, the U.S. developed a vibrant middle class and rose to global prominence.

However, in the last century smart leaders in Japan, Korea, Taiwan and others have followed the American System to perfection, while giving “free trade” the appropriate lip service for a senile America. The results were absolutely predictable to anyone with common sense.

In most ways, China’s rise has been no exception. It isn’t that the Communist Party has been run by brilliant new thinkers (the last really new thing out of China was probably gunpowder), it is simply that they steal good ideas and have belatedly copied a proven economic formula. China’s leaders have followed a policy of pure self-interest while mumbling all the right words in public as they dance their way through the free trade tango with skill. If they’d actually had good sense they would have done this fifty years earlier and spared the Chinese people decades of misery.

The exception with China is, of course, that the Communists never have any concern for personal misery. Their goal is nothing but building greater power for those at the top of the Communist Party dog pile and economic planning is just a tool to achieve that. That’s why handing over the torch of global leadership this time is a very different thing than it was with the UK-U.S. transition last century. Supporting the U.S. to Communist China power transfer is tantamount to endorsing a new Dark Ages for humanity.

In my next posting, I’ll address the theoretical weaknesses that cause comparative advantage to backfire in the real world. In the meantime, understand that counter-intuitive economic theories are always the rage with academics and pundits that need to sound cleverer than the average citizen. Remember, these are the folks that sold us the “we can borrow and spend our way to prosperity” theory under the label of Keynesianism. When something looks like economic slight of hand to you it probably is; and whenever you encounter an ideology-driven economic theory fiercely supported by a cadre of closed-minded, true believers run!

Empirical evidence should trump theory. When medical researchers see that an experimental treatment appears to be actually killing their patients they halt the research and re-evaluate, regardless of how good the thing looked on paper. This common sense protocol should apply to U.S. economic policy – where we only have one patient. If the theory is obviously not delivering economic benefits STOP! Instead, while we congratulate our self on the victory of free trade our trade deficit soars, unemployment skyrockets, GDP plummets, and a staggering debt accumulate. The true believers tell us to close our eyes and stay on course, because the enormous Chinese market is just about / very soon / any day now going to usher in a new generation of prosperity. Sure, right.

In my next post, I’ll address the theoretical problems with Comparative Advantage.


Greg Autry serves as Senior Economist with the American Jobs Alliance and is the co-author of the book Death by China, now a documentary film directed by Peter Navarro and narrated by Martin Sheen.

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The Chinese Dress Code

Yesterday, the Wall Street Journal ran an apologist editorial on the front page of the Marketplace section entitled Does it Matter China Made the U.S. Olympic Uniforms?  This sanctimonious piece by John Bussey condemned Senator Harry Reid and Rep. John Boehner for questioning the Olympic Committees outsourcing of more U.S. jobs. The Senator and Congressman were right-on. It does matter. It matters quite a bit.

It matters because the Olympics is a show and everything about it is politically symbolic. At its best Olympic symbolism is about bringing together diverse people from around the globe to compete on a fair playing field, founded on the democratic traditions of ancient Greece. At its worst, the symbolism glorifies a totalitarian regime as in Hitler’s 1936 Nazi pageant and Hu Jintao’s 2008 Communist blow out.

While that over-the-top Chinese carnival offend the senses, under its saccharine coating lurked the usual Communist grime. With the world carefully distracted by astounding fireworks displays, the repression of the Falun Gong, the razing of Christian churches, the brutalization of peaceful Tibet, and organ harvesting for profit continued unabated.

Thousands of Beijingers were forced to relocate to build the Olympic facilities. The month before the spectacle, I took this picture. Here you see the last home still standing; its owner having plastered every wall with Communist flags and portraits of the Chinese Communist Pantheon in hopes of keeping the bulldozers at bay. That brave man understood the power of symbolism.

Meanwhile, the broadcast media, papers, and Internet were more restricted than ever and political protests were still aggressively squashed – despite a very public promise made to the international community that turned out to be just another convenient Chinese Communist lie.

Beijing also a high bar for cheating, typical for a government that has never recognized any rule of law beyond what power can get away with. Watching twelve-year-old girls used as props to boost the commie medal count was as symbolic as it gets. The Chinese government even forged passports to keep the charade going. After the Olympics ended, it was even reveled that a Chinese government run hacking ring had infiltrated the I.O.C., the World Anti-Doping Agency, and a number of national Olympic committees. This, like the Tiananmen massacre, should have told us something about how far China can be trusted in trade and military agreements – not one bit.

So what does a naïve American Olympic Committee do? Buy Chinese uniforms! And what does the co-opted U.S. media do? Tell us it doesn’t matter! If China lies, cheats, steals its way through the Olympics, why would the WSJ expect China to adhere to WTO rules? In reality that paper, like most of business press and lobby groups, simply doesn’t care about honesty in trade, because the multinational firms that support these institutions profit immensely from China’s cheating and abusive labor practices.

The Journal and their sold-out buddies at the U.S. Chamber of Commerce tell us that lost American jobs are OK, because we are all benefiting from the unseen miracle of Ricardian comparative advantage. Now, that’s a insidious abuse of economic theory that will require a whole ‘nother post to unravel, but let’s just say if you can’t see it, it probably doesn’t exist. During thirty years of empirical testing of that theory with China, American incomes and unemployment have risen in lockstep with our growing Chinese trade deficit. That is not a coincidence.

The Journal also dredges up a discredited report from two European economists at the Federal Reserve (see my piece here) as a further distraction. That report brutally twists trade data to, again, convince you of something that disagrees with your own vision: that only a tiny portion of our purchases are going to China. The bottom line is that China’s imports to the U.S. always outstrip our exports and the growing difference is now about $300Billion a year! That is an economic leakage that now accounts for nearly 2% of our GDP. If American had 2% more GDP, we’d be on easy street.

Reading the Journal article I choked on the line, “The Chinese are really good at producing low-cost uniforms.” A remarkably arrogant quip, since these little Ralph Lauren pretties cost $2,000 a piece. Maybe that’s cheap by Wall Street standards.  Its all part of turning a pump that brings in short term Wall Street profits in exchange for the transfer of our capital and technology to a regime that is both the largest abuser or human rights and America’s rising geopolitical enemy.  How dumb is that?

The good news is that in London, the demonstration of a free people celebrating both a culture and a government worthy of their pride will wash away the soot of Beijing. It’s too bad that America’s athletes won’t get clean uniforms for the games, it’s even worse when our free press dismisses legitimate concern for our unemployed and the prosecuted people of China as symbolic grandstanding.

Greg Autry serves as Senior Economist with the American Jobs Alliance and is the co-author of the book Death by China, now a documentary film directed by Peter Navarro and narrated by Martin Sheen.

Please follow Greg on Facebook at: http://www.facebook.com/gregwautry

and sign up for email updates at: http://www.gregautry.us/updates

Tiananmen Remembered, Again


In remembrance of the anniversary of the massacre in Tiananmen on 6/4, China’s  9/11, inflicted on the people by those who claim to lead them I’m reposting this piece I wrote with Tang Baiqiao.

We have forgotten the lessons of Tiananmen

From the San Diego Union Tribune, June 16, 2011


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.”