China Speaks

The most interesting and important interview (to me) in this supersaturated news cycle was Fareed Zakaria's CNN sit down with Wen Jiabao, the leader of China, no doubt one of the few world leaders who can speak intelligently about the works of Marcus Aurelius and Adam Smith. (I guarantee that neither Bush or McCain ever even heard of Smith's Theory of Moral Sentiments even if they've got The Wealth of Nations theme of "Free Markets" tattooed on their ass.)

The Chinese Premier believes we're in this together and all should share in fixing the credit crisis. Think about what an amazing shift this is from the isolation of "Red" China of just a few decades ago, where the Great Wall extended into their economic policy (and still dominates their internet access). However, if we don't get our house in order, this should be a signal that a credit squeeze, loss of value by international shareholders of Wall Street firms combined with a recessionary business cycle triggered plummeting housing values could quickly turn into a catastrophe that makes memories of the Great Depression seem like the good old days.

Wen, who is known for his openness and economic mastery, told Zakaria that despite the impressive growth his country has experienced over the past 30 years, things have changed because of the United States' subprime problems. "We have seen a decline in external demand, and China's domestic demand cannot be significantly increased in a short period of time. [So] we do risk a slowdown. We must re-adjust macroeconomic policy," Wen says. "A U.S. recession would certainly have an impact on China's economy. Ten years ago, China-U.S. trade stood at only $102.6 billion. Today the figure has soared to $302 billion-a 1.5-fold increase. A shrinking of U.S. demand would certainly have an impact on China's exports. And U.S. finance is closely connected with Chinese finance. If anything goes wrong in the U.S. financial sector, we would be anxious about the security of Chinese capital."

I think this confirms my analysis that without some kind of bailout that gets the credit markets going again, quickly, we risk exactly the historic meltdown Warren Buffet warns about.

I got the feeling that Premier Wen was trying to at least reassure us that they weren't considering cashing in all those T-Bills they hold and trigger a Boy And His Dog world. At least not yet. But he didn't obscure the fact that they may have no choice if we don't get 'er done.

They are willing to go along to a point, accepting the end of 10% plus growth and entering a period of more sustainable expansion. But unlike us, they won't tolerate a true recession there, a zero or negative period of economic growth without tapping into their savings -- so much of it tied into credit granted the US government to feed our war lust and conspicuous consumption. Remember, they've already cut off lending to US banks, which is hardly the way a "partner" who wants to "share the burden" all that much.

Maybe they'll conclude that no matter how bad a global economic implosion might hurt the USA, they'll suffer even more and will let it ride -- because any hint that they'd pull out of their "investment" in America would seal everyone's doom. (And you really have to know where to look to infer there was even a hint given, but not a threat.) We can only hope the threat doesn't become more blatant as things go from bad to suck in the next couple of years.

Weirdly, Wen spoke of the "real" American economy as fundamentally strong -- which he defines as our technical and manufacturing base, our innovative abilities. Interestingly enough, the head of the People's Republic didn't define our economic "fundamentals" in the transparently cynical way John McCain tried to redefine how stupid he sounds when talking all things economic.

So once again, for reasons no one in the government or the media cares to discuss, I've convinced myself that the bailout needs to happen or we face dire consequences. The devil being in the details, I'll be taking a close look at what comes out of the sausage factory on Capitol Hill, and some of the wacky ideologically driven alternatives that have been offerend recently.

Wal*Mart Uber Alles

The prospect of the Demon-crats taking over Washington has WalMart execs in a tizzy. The Murdoch Street Journal reports "thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized."

The Wal-Mart human-resources managers who run the meetings don't specifically tell attendees how to vote in November's election, but make it clear that voting for Democratic presidential hopeful Sen. Barack Obama would be tantamount to inviting unions in, according to Wal-Mart employees who attended gatherings in Maryland, Missouri and other states.

"The meeting leader said, 'I am not telling you how to vote, but if the Democrats win, this bill will pass and you won't have a vote on whether you want a union,'" said a Wal-Mart customer-service supervisor from Missouri. "I am not a stupid person. They were telling me how to vote," she said.

THIS WILL NOT STAND! We simply cannot allow WalMart employees to unionize, making all the cheap crap they import from China more expensive just so the peasants working there can have the same rights to collectively bargain for better working conditions, more affordable health care and competitive wages -- just like all the unionized WalMart workers in (wait for it) China. [/snark]

How much of a raise did some unionized Wal-Mart China workers collectively bargain for this year? 8% over last years wages and another 8% in 2009 over the already increased 2008 wages.

According to a Xinhua News article,
the trade union for Wal-Mart workers in Jinjiang, Fujian also
successfully negotiated issues of hours worked, general rest and
vacation time, insurance, and worker safety. Full time staff will
enjoy rights to vacation days, marital leave, maternity leave, and
parental leave.

How’s that compare to Wal-Mart’s U.S. workers? I seem to recall reading something about Wal-Mart wanting more part time labor and wage caps. And as another cost saving measure didn’t Wal-Mart violate labor laws over 2 million times in just six years - in Minnesota alone!?

This isn't just a case of China putting on it's best face for the Olympics, like they did today in bowing to pressure and agreeing to live by their agreement with the IOC when it comes to internet access for international journalists -- so the guys from the BBC can now access their own website. This is a concerted effort by China to improve it's society, and unions are considered an integral part of their advancement into the 21st century.

It is just another step in China’s efforts to move away from being a
destination for foreign companies seeking super low paid workers. Just
as with so much else in China, we are seeing foreign companies getting
out in front in terms of going along with what China wants to do with
its economy. Domestic companies are and will continue to follow in
terms of having to deal with unionized and higher paid employees…
anybody who still thinks China will do anything for foreign investment
is living in the past. Times have changed and China is getting more and
more selective in terms of the foreign (and even domestic) companies it
wants.

This is not window dressing, and Walmart executives knew going in that China would insist the company deal fairly with unions before they started investing in China -- where the company now has 90 supercenters, three Sam’s Clubs and holds a 35% share of the Taiwanese Trust-Mart brand. But interestingly enough, the union movement among Chinese WalMart employees was not an edict from Beijing, but a grass-roots movement that has been struggling for recognition for ten years before their first store went union in 2006 (pdf).

Ten Years. It took ten years of fighting, and two more years of negotiations before the first real collectively bargained agreement between WalMart and some of it's Chinese employees could be signed. And that's in Communist freaking China? The worker's paradise? And here in the Land of the Free, they're afraid of a centrist Democratic Party, barely tolerant of progressive causes?

Ugh!

Union membership in the US has been cut from 25% to 7% since the Reagan years, and the legacy of Reaganomics is continuing to devastate this nation as our Department of Labor has been morphed into the Department of Union-Busting. Meanwhile, union friendly China is indisputably moving in the right direction for it's economy and the standard of living of it's citizens.

Human rights? After Gitmo, Abu Ghraib, legalizing torture and creating a surveillance state, Americans are hardly in a position to get snooty about China's history of rights violations -- and they're kicking our ass economically, even with unions at their WalMart stores.

China Crackdown Leaves 30 Dead, Conservatives Confused

Scotsman reports 30 people killed as Chinese locked down the Tibetan "capital after the largest and most violent protests against its rule in the region in nearly two decades."

This despite a warning from the U.S. not to use force on the protesters. Wizbang notes the situation with typical disdain that China is the last great bastion of communism on Earth, and provides this context for the conflict:

The violence erupted just two weeks before China's Summer Olympic celebrations kick off with the start of the torch relay, which passes through Tibet. China is gambling that its crackdown will not draw an international outcry over human rights violations that could lead to boycotts of the Olympics.

I leave aside the argument that being one of our largest trading partners and most consequential creditors softens Bejing's image as the Red Menace because they do remain despotic as always even though they left Marx's path long ago. Let's go right to the predictable, yet sadly impotent international condemnation as the unrest spreads beyond borders of Tibet.

"Arrogant ..." guilty of the "greatest humanitarian disaster" of the modern world ... "accompanied by a deliberate ignoring of serious human rights problems on its own territory."

No, that's not what we said in condemnation of China's human rights records, but what they said about us.

This was not only inconsistent with universally recognised norms of international relations, but also exposed the double standards and downright hypocrisy of the United States on the human rights issue, and inevitably impaired its international image."

See, since we invaded Iraq without just cause, are responsible for killing civilians in Afghanstan, keep secret prisons and torture detainees, the Chinese feel that, "The United States has a notorious record of trampling on the sovereignty of and violating human rights in other countries."

It's called moral authority. We got none anymore. We used to, not all that long ago actually. We used to be able to get on our high horse and spout the kind of vitriol Bush Cheerleader Mark Noonan spews with no sense of irony.

I’m sick to death with these tyrannical regimes which presume to have the authority to actually do what they do. We can’t get rid of them all, but we can certainly cut our ties to them. I’m for completely free trade, but only with other free nations - we should ditch all trade agreements with China, and open trade agreements with, say, India. It is time for the free people of the world to firmly and without question stand athwart the unfree nations - and stand with their enslaved populations.

Psst. Mark, buddy. We are trading with India, in fact if they agree to buy a whole bunch of fighter jets, we're throwing in the Aircraft Carrier Kitty Hawk for free. Wadda Deal!

If you think that this episode should draw absolutely unequivocal outrage from the presidential candidates, your right, it did. From the two guys running for President of Tiawan.

The United States, however, just took them OFF the list of the worlds worst human rights violators.

Now I'm confused.