April 28, 2008
Elaine Meinel Supkis
The utter imbecility of the US media when it comes to 'free trade' is illustrated in Sunday's New York Times editorial. The Times supports bad trade deals as enthusiastically as they support bad wars. Right now, they are fearful a Democratic candidate might stop destroying our domestic economy. So they are warning them both to support 'free trade' or they will be smeared, attacked and destroyed by the US media owners. Who happen to be people who are working day and night to destroy our nation's sovereignty. Also, we get to talk about Japan, China and how the dynamics of international trade and finance are now changing gears. The US is eventually going to fade as the world's most important destination for exports. This will be due to us going bankrupt.
EDITORIAL
Is Trade the Problem?
Americans are angry about trade, and a lot of politicians — especially the two Democratic presidential candidates — are eager to capitalize on it. The country would be far better served by a serious, dare we say fact-based, discussion of what is causing the dislocations in American workers’ lives, how much trade is to blame and what government can do to help.
*snip*
Still, critics’ charges that trade is to blame are misguided. While trade can hurt some workers, most economists believe it plays a modest role compared with other forces in the economy, including advances in technology, the decline of trade unions and mushrooming executive pay. Many Americans benefit from freer trade, whether they are buying cheaper imports or exporting products.Consider the four million manufacturing jobs lost over the last decade. That number is daunting — and the human pain behind it very real. But in most years the United States generates more jobs than it loses.
Suppose the critics are right and all those workers were displaced by cheap imports and factories moving overseas. Those lost manufacturing jobs — an average of 400,000 a year — amount to less than 3 percent of the 15 million jobs lost each year across the economy. Meanwhile, about 17 million jobs were created annually, which is why the unemployment rate at the end of 2007 was not much different than it was at the end of 1997.
Like all the stupid articles ground out by the editorial staff at the NYT, this one loves to quote statistics like crazy while leaving out the most vital statistics. This is malicious and deliberate. One can speculate why these people are so bent on destroying our nation. But the fact is, this sort of irresponsible editorial is treasonous. Boosting the present trade system while totally ignoring the trade deficit numbers is fraud. It is criminal. And they know perfectly well that the trade deficit is dangerous and has been dangerous for a number of years. And there is a direct connection between this and our present economic collapse.
Just as most media never mention the effects of the Japanese carry trade on inflation and the massive rise in global debt, the media refuses to mention the US trade deficit. Nor do they compare it to anything. It is bigger than nearly all the trade deficits in the world put together! Just as our budget deficits are gigantic. When talking about wars, we must always mention the budget deficits. But these war mongering newspapers don't do that, either. Nor do our politicians. Even if Caligula returns with chests filled with sea shells, the Senate cheers.
Back to the NTY editors: they featured this article on their editorial page. So we must assume that the owners of the NYT thought this was very important. Note how this guy [who is Jewish] won't tell us what jobs have replaced unionized manufacturing jobs. He does admit the pay is worse for most union workers when they either lose jobs OR THE UNION ACCEPTS PAY CUTS. Across the board, union pay has collapsed along with non-union pay. And it is obvious to anyone with a brain that the replacement jobs are mostly 'service' jobs or are connected to finance or real estate, both of which are collapsing.
There is a growing inequity in pay. From 1976 to 2006, the average salary of workers in the bottom 90 percent of the income distribution — nearly everybody — rose by only 2.3 percent, to $38,800, tax data show. Among the top 10 percent, average salaries rose 57 percent, to $195,000. While there are still high-paying jobs out there, more and more they are reserved for workers with high levels of education. Between 2000 and 2006, the only workers who saw an increase in take-home pay were those with doctorates or professional degrees.No matter how hard economists look for trade’s fingerprints on these inequities, they find it plays only a bit part.
So the collapse in wages is due to magic? Or whimsy? Note also how the owner of the Times leaves out any mention of offshoring white collar jobs as well as blue collar jobs. Nor does he mention the importation of workers who have only one function: to drop the wages of native workers. Nor does he talk about illegal aliens dropping wages. During the housing boom, the wages of carpenters and other building trades FELL, not rose! Now, they are all out of work.
As for the jobs for PhDs: these are increasingly hard to get due to the high cost of college education. And again, the editorial makes no mention of the collapse in bank funds for going to school this fall. As our banking system collapses, it is life and death to connect this to the trade deficit. As I keep saying for years, we always have to keep in mind, all the many systems and how they interact. This is extremely important. Yet I almost never see this in the mainstream press. The only media that has a general view that covers all the bases is Bloomberg News which is internationalist. They are the BBC of economics reporting. And one can look to the right side of the web page to see real-time data in commodities, stocks, bonds, etc. A very useful tool.
Now, let's visit our trade rivals and learn how they view trade:
Kyocera Mita To Move Copier, Printer Output To China
OSAKA (Nikkei)--Kyocera Mita Corp. plans to shift most of its domestic production of copiers and printers to China, hoping to reduce manufacturing costs and enhance its competitiveness.
To keep the yen weak and to keep trade advantage and to grow market share, all alien concepts to Americans, the Japanese have to pretend there is no inflation. But of course, inflation is raging in Japan. So now, Japan will have to rapidly deindustrialize. This was not their intention. But economic forces will make this happen no matter what. So Japan now moves even more manufacturing to other Asian nations. As they do this, they strengthen their rivals for dominance and power. They, like the Americans, think that since they employ people, they can control things in other nations. Only they are trying this in communist nations that have fought wars and revolutions and are very, very nationalist. These nations all recognize that the only way they can modernize is to get the capitalist countries to install factories in their worker's 'paradises' and then take over! This is no secret.
Eventually, Japan will be as unindustrial as England and the US. Germany fears this greatly and is fighting it off as much as possible. We shall see if they succeed where the other G7 are failing.
From a 2002 report by Tomoo Marukawa
TOWARDS A STRATEGIC REALIGNMENT OF PRODUCTION NETWORKS:
JAPANESE ELECTRONICS COMPANIES IN CHINAThe figures for other Japanese electronics companies are shown in Table 3. From this table, we can see that all nine companies have more production facilities in China than in any other host country in East Asia. The production sites in China are concentrated in Shanghai, Jiangsu, Guangdong, Beijing and Liaoning.
I like showing raw data. If we look at this list from 2002, we can see how the Japanese have had to use China and Southeast Asia as their profit generators. A lot of early China to US trade was really JAPANESE corporations importing from China to the US! Of course, breaking down trade data this way is far beyond the abilities of US economics writers. When I used to waste time arguing on other people's economic blogs, they all told me to go to hell when I talked about Japan. 'Japan is in a depression!' they said. The complexity of world trade means we MUST look at a lot of raw data to really understand what is going on.
Much of the trade commentary from some of the Asian newspapers is very good, by the way. This is because they are quite aware of all this. But we will NEVER see a peep about this matter here in the US. A lot of data is hidden from view or ignored. This is why we are losing the trade wars. And it is a competition akin to war! The Asian players are very aware of this! The 2002 year data from the Japanese government concerning trade with China recognizes that the diplomatic problems created by the Yasukuni Shrine visits by Koizumi hammered Japanese businesses hard. Now, Japan has kissed and made up with China.
To illustrate how intelligent Asian commentary is, concerning trade, here is a typical example from this week:
Jirou Terajima gives an interesting overview of socio-economic statistics for 2007, with a mind to what can be expected in 2008 (Sekai, March edition).(1) Material (a) and Human Logistics (b)
(a) The proportion of Japan’s total trade composed of imports and exports from/to the United States fell to 16.1% from 17.5% the previous year (2006). Trade with China accounted for 17.7%, exceeding America’s share for the first time since the post-war occupation.
*snip*
(b) Equally striking changes are evident in statistics for flows of people, too. In 2006, the number of Japanese travelling to America totalled 3,670,000, to China 3,770,000 : numbers of Japanese travelling to China exceeded those travelling to America for the first time since the war. In 2007, Americans accounted for 820,000 of foreign visitors to Japan, significantly less than the (over) 3,000,000 who came to Japan from China.
*snip*
(3) What has caused Japan to ’shrivel’?Under the banner of ‘economic stimulation’, Japan has maintained - for 12 successive years - a ’super-low interest rate policy’, with the bank discount rate breaking the 1% line. The Bank of Japan last year abandoned its zero interest rate , upping it to 0.25% in February last year (2007); it now stands at 0.5%. The Federal Bank of America’s ‘FF’ rate reached a peak of 5.25% in June 2006, but has been cut 4 times since the sub-prime debacle broke in August last year and was set at 3.5% at the end of January this year (2008). So, the interest rate gap between Japan and America has narrowed, but a 3% difference still exists. When you consider that the European rate stands around the 4% level and Australia 6%, the Japanese level is conspicuously low.
I recommend reading the entire article. He talks about currency wars, the problems of having a too-low interest rate in Japan and other issues. I agree with nearly everything he says. China has now displaced the USA as Japan's main destination for trade. This is VERY SIGNIFICANT. Like all historic moments, this one signals the end of an era and the beginning of a new system. One that we will not like. Mr. Terajima notes that the Chinese, who have a stronger and stronger yuan, are flying to Japan to go shopping and get good deals. Just as Australians are doing. He realizes this is due to Japan's bizarre valuation of the yen.
Something has definitely changed. China always kept the yuan in harmony with the US dollar and the Japanese yen. But now they are not. I suspect this is due to the dying dollar driving up global food and fuel prices. China figures they are still exporting a lot of goods so it is OK for the time being to allow Japan and the US to have fake monetary values. This is because the Chinese leaders figure, 'Let them both go broke trying to buy oil'. The only question is, how long will the people of Japan and the US put up with huge food and fuel price inflation? The Chinese are keen about this issue, they know that unhappy peasants equal hell on wheels for any rulers. But the US and Japan's rulers think they can do this with impunity. So we will find out if there really is a breaking point for the troubled but totally passive populations of Japan and the US.
By the way, I found this Japanese government web page that is full of charts, graphs and information. Only the English parts stop in 2005! After this, it is only in Japanese. Alas, I don't read Japanese well. But here is some examples of older data:
Japan External Trade Organization:
1. Imports and Exports Both Reach New HighsExports in 2005 rose 5.9% to $598.2 billion and imports jumped 14.1% to $518.6 billion, both new records for the third straight year (Fig. 1). Export growth, however, was significantly slower than its 20.3% pace in 2004, while imports climbed by double digits as oil prices soared. The trade surplus fell $30.8 billion to $79.6 billion, the first decline in four years.
By volume, exports rose 0.8% and imports 2.9%, both increases for the fourth straight year, although at slower paces than in 2004. Export volume in the first half showed the first year-on-year decline since the second quarter of 2002, but growth returned in the second half, aided by the weaker yen. Quarterly year-on-year growth rates were -1.9%, -1.1%, 0.9% and 5.1%, respectively. Import volume climbed 2.9%, down from 7.0% in 2004, but still representing solid growth.
So, in 2005, the agency in charge of tracking exports sounds a warning about oil. Now, food is joining oil as a problem. No wonder this isn't being translated! They don't want us to see how degraded everything is getting. Germany, holding the world's strongest currency, has seen their export profits soar t #1, surpassing Japan easily! But there is trouble lurking. The yen is dropping like a rock against the euro. We are seeing some strange things here. As I said two years ago, the worlds #1 and #2 economies, Japan and the US, cannot both be running the same 'dropping currency' scheme at the same time without deforming world financial and trade markets. We are now seeing a nearly total collapse in half of the world's banking systems due to this madness. And the cure?
Drop the value of the yen, restart the flood of Funny Money™ an increase global inflation! Eventually, if the yen is too weak to buy oil except at $200 a barrel, the Japanese will have to change gears. Already, I might suggest, it is too late for them. They goofed. When harsh reality killed the Japanese carry trade, they should have raised interest rates rapidly. This would have strengthened the yen and China would have had to strengthen the yuan much more and global liquidity would cease its rapid growth. Japan would then be better able to compete with China for commodities. And the US would have to cease its deficit spending on wars and buying stuff we can't afford. This would then right the lopsided global economic ship and we could sail on for a while.
But this would mean ceasing US spending on wars.
Mervyn King, the governor of the Bank of England, has repeatedly said he would like to see a 'rebalancing' of the economy. For too long, consumers have been borrowing to prop up their spending, saving next to nothing, and banking on rising house prices to make the sums add up. And banks have been devising ever more sophisticated funding models to raise the money to lend to them.But with the days of cheap borrowing over for the foreseeable future, and the housing boom at an end, it will take families a very long time to rebuild their finances. King and his colleagues at the Bank would like to see a band of doughty exporters up and down the country step forward, helping a new, more stable, less spendthrift economy rise, phoenix-like, from the ashes of the debt-fuelled boom of the past five years.
One such export hero could be Danny Bamping, managing director of Bedlam Puzzles, who has benefited from the fact that consumers have begun to shun toys made very cheaply in countries in the Far East. Mattel, maker of the Barbie doll, had to recall millions of toys - all made in China - because of lead in the paint, and because children were swallowing bits of them. 'The Mattel issue worked in our favour,' admits Bamping, who has appeared on the BBC's Dragon's Den
Britain is happy that they are building industries that sell to Britain? About time! Note that this article is NOT a peon to 'free trade.' It, at least, recognizes that free trade deindustrialized England. And it celebrates not going deeper into debt. But it is very sad to see the cradle of the Industrial revolution celebrating the return of industry in the form of making children's puzzles. Talk about pathetic. And sad. But one has to start somewhere.
For example, a huge growth area for defence manufacturers - one of the few large 'old-style' heavy industries left in the UK - is providing repair and maintenance services for the hardware they sell to the Ministry of Defence. Shipbuilding and services group VT makes just as much money from providing this type of 'lifetime care' as it does from selling the ships in the first place. According to the EEF, more than half of the 3 million people employed in manufacturing now work in areas other than production, such as research and development, sales and support services.
Just like the US, Britain clings to its imperial rags. And note that both bankrupt empires retain only its military portions of the industrial base. And these are bankrupting the two countries! In order to pay for these parasite industries, both the US and Britain have to go to Japan and China for loans. And this overspending is destroying our sovereignty. So the military manufacturing that is supposed to make us stronger is actually destroying us. Note, also, how profitable it is for these companies to have their products degenerate as we use them while aimlessly trolling about hostile Muslim nations or meddling in Asia! And who is buying up all this debt and putting a noose around our necks?
Asia and the oil pumping nations!
The Real Threat To U.S. Manufacturing
Forget the old factory. Soon, hardy workers in overalls punching in at the factory will no longer exist in our global economy. According to the Bureau of Labor Statistics, total manufacturing employment in the United States was down to 15.3 million in 2007 from 15.6 million in 2006 and 18.9 million in 2000. Where does it all end? Very close to zero.The majority of jobs that manufacturing unions are trying to preserve will no longer exist. This doesn't mean manufacturing jobs will go away completely. Instead, there will be a different type of job with very few workers on the factory floor painstakingly assembling products. Twenty-first century manufacturing is about an automated, integrated manufacturing process. Manufacturing automation will take over one manual task after another--first in the United States, then China and then eventually everywhere.
*snip*
For supply-chain professionals and manufacturing engineers, decisions about jobs are all part of an equation, and the math often says robots are better than people. Where cheap labor offers a lower cost, jobs are created, but this changes as wages rise and technology replaces manual work. This dynamic holds true from Japan and Korea to China and Eastern Europe, all of which have seen huge capital investment gradually replace workers.
*snip*
A poignant and telling example of how this plays out passes before my eyes each day as I drive past a building that 10 years ago was a sleepy General Motors (nyse: GM - news - people ) training facility. Today, it houses hundreds of employees of the local Fox television affiliate. Let's keep in mind that America's nationwide unemployment is still only about 5%. The jobs are there.
Note how this goofy writer thinks it is great that a former place that manufactured stuff for Americans to use is now a propaganda outfit run by an alien from another country, an outfit that has set out to drive us all mad.
Eventually, in the New World Order, we will have robot death machines protecting robot-run factories. And humans will be eliminated except for the rulers who hope to have this army of cyber slaves working on their behalf. So they can live in Paradise while the robots control nature and keep the handful of human survivors hiding in caves, under control. Or maybe they will succeed in annihilating all free people and then the rulers will go insane like Caligula and end up thinking sea shells are loot and they have defeated Neptune. Then, the Dire Sisters, the Furies, the Norns, the Guardians at the Gates of Death will eliminate them in their usual brutal fashion. For certainly, such a future is despair.
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