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Why Is China Eating Our Lunch?

By Pamela Jean
Opinion | January 19, 2011

the-almightier.gifHAYS, Kan. - China has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders, regardless of where they reside.

Robert Reich, author of Aftershock: The Next Economy and America's Future, recently explained that the United States "doesn't have a national economic strategy. Instead, we have global corporations that happen to be headquartered here."

As many others have pointed out for at least a decade, the U.S. now has two distinct economies. We have the economy of "Main Street" and the economy of "Wall Street."

The two don't move in lock-step anymore; when one is profitable (Wall Street and global corporations), the other economy (made up of American small businesses not located in China or India and including most American citizens) is often unaffected or worsened.

That's why multinational corporations (such as ExxonMobil or Microsoft) are doing really well while many of our neighbors and friends are stressed and hurting.

Of course, this is exactly why many contend that Reagan's "trickle down" economic measures are no longer effective - national policies that help these global corporations are no longer the same policies that help American families find jobs, build businesses or put food on their kitchen tables.

It's time we realize how the global economy has changed the outlook for American citizens. It's time we craft policies that help, not hurt, our people.

Here are the real economic lessons we should learn from China.


The corporate structure, that has dominated our business system, is designed to disconnect the shareholders and managment from any personal accountability for the morals and ethics of business practices.

Where and how do we draw the line that rewards the businesses and corporations that are morally and ethically responsible beyond the greed of the shareholders and management? i.e. Do we shop at Walmart or the local independant hardware store? Do we shop at the Independant Grocery or Mom & Pop enterprise or go to the Kroger/Dillons type merchants who have limited regard to the real social needs of the community. Some of us have no choice. The independants have been forced out of business, because they couldn't rely on the ability to absorb the losses in the local business by the ability to raise the prices in less competitive environs.

When you look at this issue one must consider issues of market rates for labor, globalization, and question if American workers are really being paid too much?

Case in point: Lets say a company closes down an assembly line here in the US where the workers were paid $20 an hour. They move the equipment the American workers were using to China where now workers make $2 an hour. In the previous location the line produced 100 "units" (whatever you want) and when it was moved to China, that production level was sustained.

SOOOO the big question is were the American workers really worth being paid 10 times more? I mean, the company is getting the same output with the same equipment. While the $2 the Chinese worker is being paid seems low for them, it sure beats living in poverty.

The point I'm making is the American worker needs to show they are worth being paid 10 times what a Chinese worker is being paid. I mean, lets say you bid out a job to contractors and bids came in all over the place. Wouldn't you look at all the bids and choose, not only on price, but on how good a job you feel they would do? If one company would do a job for $500 while another company bids $1,000 is the $1,000 contractor's work performance twice as good?

Maybe American workers are simply overpaid? It could be that $2 is the new market rate for doing that job. The same thing happened here in KC where some of the union grocery stores which paid twice what the others paid, could not compete with them. The companies owners simply got tired of paying people above the market rate and fired the union workers.

Now the benefit for the company moving the jobs to China is not only more profit, but they now can put more resources into things like new product development and sales. Does it hurt the people let go? Yes, but you could also point out for every American job loss possibly 2 were created in China.

These are the facts of the global economy as production moves to areas of lower labor cost. Its the same reason some companies move from more expensive states here to Kansas because the cost of labor and doing business here is cheaper.

Brad, it seems to me what you are saying is that the 'haves' determine what the 'have nots' will get. Did the stock holders, CEOs, and upper management in those corporations take a proportionate cut in their rewards for their managment skills and ownership? Do the retail prices, here in the U.S., reflect the lessor cost of production, or do they reflect what the market will bare, on those products? In general, those products are priced just enough under domestic production to claim the market. Will the owners of those corporations turn to the mighty power of the U.S. to try protecting their interest when the people rebel and demand a bigger piece of the pie? (Cuba?) What happens when the 'socialist' government of China (communist style, that is) decides pure capitalism isn't rewarding the right people and nationalizes the business?

Is $2 per hour enough to eliminate poverty? What is poverty? The workers in Mexico who live in huts with dirt floors don't need as much income as we, here in the U.S. need. We think, at least, linoleum floor covering is the least we should have. Are the products produced in Mexico and imported to the U.S. being priced in proportion to the slave labor wages the corporations are paying in Mexico?

What is the wage for slave labor? Room and board? What is that, now that we have outlawed ownership of human beings? Well, sometimes it's a cardboard box in the ally and the dumpster behind the eatery that caters to the wealthy.

I contend that greed is the primary motivation that moves production out of the U.S. to other countries. Greed is the motivation that moves corporate head quarters to foriegn islands and countries. It certainly isn't compassionate conservative social standards that thinks all people are created equal and deserve equal civil rights and rewards for their contribution to society.

Brad, making these comparisons in terms of dollars per hour is a mistake. It doesn't even work within the U.S. You could have a decent apartment in Kansas on a salary that wouldn't be enough for you to live indoors in the Northeast or Southern California. In China, these regional differences are even greater. So comparing salaries of U.S. and, say, Chinese, workers in terms of dollars is less than meaningless.

If we move to property, the comparisons aren't much better. For instance, how bad is it not to have a car? That depends on the culture and infrastructure where you live. In Kansas you might need a car to get dates (unless you are really handsome) or even food. In NYC you wouldn't need a car for either. Again, a comparison in these terms isn't even meaningful within the U.S.; much less between the U.S. and China.

Finally, Brad, I am really interested in your "big question" of whether U.S. workers are worth more than Chinese workers. Do you think that people should be paid what they are worth? How do we determine what people are worth? Or do you mean their labor? If so, how should we determine what their labor is worth? You can't say market value, since that is what you are challenging. And I agree with you that market value is a bad answer. But what do you say instead?

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