The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Tuesday, July 24, 2007

The West is Red

I've found occasion to write about China several times in the last few weeks, but a new article in The New Republic made me want to revisit the issue of China, trade and big business. Obviously, most of the media coverage has been about China's exportation of dangerous-- even deadly-- products. I argued earlier that the Chinese system is invariably going to produce such goods for a number of reasons: A)the system is corrupt and exploitable by autocrats as well as individual farmers, millers, butchers, et al., B) the centralized, authoritarian government can't possibly monitor everyone even if they want to, and C) foreign investors have been tripping over themselves buying into the system, which propagates it.

Naturally, it gets worse. For years we've been seeing reports of concerned citizens exposing their ability to sneak weapons onto planes, send nuclear materials into American ports, and legally buy the materials for a 'dirty bomb.' Then there are the e-Coli outbreaks that appear every year or so, and the disturbing reports of conditions at meat-processing plants.

Which brings me to this story about why our trade with China makes me nervous:

The FDA is planning a decisive response to the recent worries about tainted foodstuffs: It's going to get rid of seven of the current thirteen FDA laboratories, including the only one that specializes in detecting radioactive elements in food. . . .

Even when products are flagged by the FDA, importers have learned to manipulate the system, investigators said. For example, the FDA relies on results obtained from private labs, but those labs produce results driven by financial rather than scientific concerns, investigators told the subcommittee.

Investigative counsel Kevin Barstow said he was told by an unnamed FDA deputy lab director that "none of the test results he's seen are completely accurate."

"The words he used were 'not good' and 'spooky,'" Barstow said.

Importers also can reduce the level of scrutiny by having their products test negative five consecutive times, according to the investigators. Since some large fish, including tuna, can be flagged for high mercury levels, importers will arrange to have five lots of smaller fish -- generally younger and with comparatively less mercury -- tested to obtain an all-clear from the FDA. Once the monitoring decreases, the importers can then resume bringing in larger fish that otherwise might not pass muster, the investigators said.

"You're saying the importers know how to maneuver around the FDA?" asked Rep. Tim Murphy, R-Pa.

"Yes," said committee senior investigator David Nelson.

How else is prayer at the altar of the Almighty-Yet-Nonexistent Free Market helping things?

Americans might profess indifference to what happens to South Korea's economy, but it's hard to ignore what has happened in Mexico. As Schaeffer notes, Mexico lost nearly half a million manufacturing jobs to China in the in 1990s. From 2000 to 2003, it lost another 287,000 jobs to China. The loss of these jobs has increased the pressure for Mexican workers to emigrate to the United States.

The U.S. trade deficit with China is equivalent in lost jobs, primarily in manufacturing. According to the Economic Policy Institute, the United States lost almost two million manufacturing jobs to China in the last decade.

Just another example of red-staters getting screwed by robber barons and voting Republican anyway because they're told it's a sinister brown-person plot.

But the Mystical And Omnipotent (Yet Nonexistent) Free Market dictates that only through domestic layoffs and massive CEO bonuses, and the power of affordable Cheez-Its, can we bring freedom and liberty to China!

China's prosperity has depended upon the labor policies that the Communist Party has enforced and that foreign investors have happily accepted. These policies have kept wages low and prevented the formation of private (non-government) unions. . . .

The key lies in China's two-tier labor force. Its domestic industries rely primarily on migrant labor from the countryside that is exploited and abused--even enslaved, as in the recent case of kiln workers in Shanxi province. According to China Labor Watch, more than 60 percent of the migrant workers in Guangdong Province receive between the equivalent of $63 and $125 a month and work between 10 and 16 hours a day. There is a government minimum wage, but more than 85 percent of the workers that were surveyed were paid less.

Foreign investors, on the other hand, employ urban workers with residency permits. These workers make less than their counterparts in other countries--and their wages are constantly being eroded by inflation in China's scarce housing market--but they make more and enjoy greater job security and benefits than the migrant workers. This difference in wages between the migrant workers employed by domestic industries and the urban workers employed by foreign producers allows China's domestic industries to undersell foreign producers in its own market.

Now for the punchline:

China's economic strategy aims at increasing China's exports while limiting the growth of its imports. That entails growing inequality at home--China has gone from Maoist egalitarianism to the worst excesses of capitalist maldistribution.

To sum up:

*China's system encourages unfair trade, shoddy exports, and human rights abuses.
*America's system encourages businesses to support China's system to maximize profit.
*American workers watch as their jobs vanish, transformed into bigger paychecks for executives and politicians.
*Chinese workers watch as they're ruthlessly exploited for bigger paychecks for executives and politicians.
*Astonishingly, free marketeers focus on making markets and societies less free in favor of short-term, individual financial gain.

Something like that, anyway.