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China is eating our lunch. What might we do about it?

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As Robert Reich recently pointed out, President Obama is happy with China's agreement to buy $45 billion of American exports.   The president says this will create more American jobs.   That's not exactly right.   It will create more profits for American companies but relatively few jobs.  

Nearly half of the deal is for two hundred Boeing aircraft whose parts come from all over the world.   The rest involves agricultural commodities that don't require much US labor because American agribusiness is highly automated, and chemical and high-tech goods that are even less labor-intensive.  

General Electric and other companies are signing up for deals with China involving energy and aviation manufacturing.   But much of this will be done in China.   GE's joint venture with Aviation Industries of China, to develop new integrated avionics systems (which presumably will find their way into Boeing planes) will be based in Shanghai.  

Here's the real story.   China has a national economic strategy designed to make it and its people the economic powerhouse of the future.   They're intent on learning as much as they can from us and then going beyond us (as they already are in solar and electric-battery technologies).   They're pouring money into basic research and education at all levels.   In the last 12 years they've built twenty universities, each designed to be the equivalent of MIT.   They're investing in huge mining operations in Afghanistan and Iraq, while we squander billions killing people and being killed.

Their goal is to make China number one in power and prestige -- and in high-wage jobs.  

Meanwhile, the United States doesn't even have a national economic strategy.   Instead, we have global corporations that just happen to be headquartered here.   Their goal is to maximize profits, wherever they can make the most money.   They'll make things in America for export to China when that's most profitable, and they'll make it in China and give the Chinese their know-how when that's the best short-term way to boost their bottom line.   They'll do research and development around the world, wherever it will deliver the biggest bang for the buck.   America was their launching pad.   Increasingly, they no longer need American workers.

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Meanwhile, Republicans and deficit hawks are cutting publicly-supported R&D in the US.   And cash-starved states are cutting K-12 education, and slashing the budgets of their great public research universities, such as the University of California at Berkeley.   America seems to be heading for third-world status.

No contest.   China wins.  

So let's get real.   We Americans are losing ground, with the help of the very corporations to which we gave birth.   We are giving up our superiority to China as well as to other industrialized countries.   The US labor force is now smaller than it was before the Great Recession began and most American families are worse off.   December's unemployment rate dropped to 9.4 percent from 9.8 percent but almost half the improvement was due to 260,000 people dropping out of the labor force.   So who does our government think they are kidding?  

Average hourly wages in the US grew by three cents in December; weekly wages, by $1.02.   And almost all the gains in income, which explained that tiny gain in the average, occurred at the top!   The major assets of rich Americans are financial -- the size of which have increased as corporate profits have grown.   The major assets of the middle-class asset are their homes, whose values continue to drop.  

So the President now says the answer is to help American business!   "We can't succeed unless American businesses succeed," he said dogmatically.   "And I'm going to do everything I can to promote their ability to grow and prosper."

But the prosperity of America's big businesses has become disconnected from the prosperity of most Americans.  

Republicans say the answer is to reduce the size and scope of government.   But without a government that's focused on more and better jobs, we're left with global corporations that don't give a damn about how many Americans have jobs or whether or not they are steadily losing their homes and income.  

So China is eating our lunch.   In a nutshell, the reason is that it has a national economic strategy designed to create more and better jobs, while w e have global corporations designed to make money for shareholders.   Fellow Americans, we are being played for fools.

Has America lost its nerve at the very moment in history when it most needs it?

Americans like to think of themselves as bold.   It was boldness that gave birth to the country, built it, protected it from external threat and rescued it in times of domestic turbulence.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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A recent article in the Wall Street Journal showed... by Richard Clark on Sunday, Jan 23, 2011 at 12:18:12 PM
Say what you want about the Chinese government, bu... by Bruce Morgan on Sunday, Jan 23, 2011 at 12:52:22 PM
But for the time being I keep hoping that if enoug... by Richard Clark on Sunday, Jan 23, 2011 at 1:07:20 PM