ALL OF OUR BETS ON CHINA HAVE BEEN WRONG (MARSHALL AUERBACK)
Commentary by Charles Sulka on the article by Marshall Auerback, a market analyst and commentator, produced by Economy for All, a project of the Independent Media Institute
Blog post at Naked Capitalism (.com) December 21, 2018
See URL of original article at end of commentary …
In this thought-provoking examination of the China question, Marshall Auerback reminds us that America’s relationship with China has not turned out as many expected. Indeed, it has been a significant factor in the collapse of America’s productive economy, with this once-great nation facing a dismal future as an empire in decline.
Auerback’s conclusions are generally correct, even though much of the information on which he bases his conclusions are meaningless or outright deceptions.
For example: Auerback parrots the government’s propaganda that the economy is doing great. Sadly, Auerback continues in this mistaken belief — often expressed in his writings — that the financial sector (the stock market) is an accurate representation of the overall economy. This is simply not the case. The stock market has little bearing on the real economy (the productive economy.) Auerback seems to be struggling under the weight of a lot of baggage he picked up in college where he studied economics. Auerback seems unwilling to admit an important truth: that gains in the financial sector are counterproductive, and have a harmful effect on the real economy.
Growth in the parasitic financial sector actually hinders growth in the real economy. Moreover, the exponential rise in the distribution of wealth favoring the rich increasingly makes progress toward stimulating growth in the real economy all that much more difficult. At this point, as Western capitalism is on the verge of collapsing in on itself, it is probably safe to say that any real economic progress can be achieved only after tearing down the existing order and starting from scratch, like in the board game ‘Monopoly.’ Periodically resetting the economic order as a redistributive measure — to restore a just distribution of wealth and to put economic resources to optimal use — is a core principle of Scriptural economics. Unless this Biblical principle is embraced, America will continue its downward slide … to oblivion.
Note: tearing down the existing financialized system will probably not require any deliberate measures. The Western economic system will fall by itself — and probably fairly soon. The real challenge is accepting the difficult proposition that the system must collapse before it can be completely replaced. The sooner this happens, the sooner we can start to rebuild on sound economic principles.
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“The official unemployment rate is at a 50-year low.” The ‘official’ unemployment rate is BS, as those who have given up on finding work or are no longer on unemployment roles are not included. Also, today jobs pay 1972 wages while the cost of living has skyrocketed … and note that the ‘official’ government figure for cost of living has been adjusted and manipulated so many times that even this is a total lie.
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This is not meant to disparage Auerback’s work. His analyses are always sound, and his heart is in the right place. Besides, what is the man supposed to say when addressing the world’s economists? If he told the complete truth about the bogosity of economists’ theories he would alienate the readers and lose his audience. This way, at least, he makes them think. That is better than allowing them to continue in their unthinking ways.
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It is important to review just how we got to where we are today ….
Half a century ago, I overheard several intelligence types (CIA) asserting the elites’ strategy that trade with China would be good for the economy while at the same time it would help to reduce the possibility of nuclear war. These weren’t communists; they liked to think of themselves as subversives, on a mission — the mission of subverting totalitarianism. The CIA elites had good intentions, but their strategy failed to produce the expected results. Their plan (like so many of their schemes) fell victim to the law of unintended consequences.
Many believed that the interdependence of all the nations on earth in a global economy would make war impossible, or at least unnecessary. The elites (other than globalists & neocons) failed to see that deregulation and eviscerating governments worldwide would result in the enslavement of humanity (the secret aim of globalists and neocons.)
While war might be more difficult due to global supply chains, military alliances, and international trade pacts, the threat to freedom is no longer military invasion by totalitarian regimes. Rather, the threat humanity faces today is subversion of the economy & political system by globalist free traders and a parasitic financial sector. These forces are allied with, and supported by, an unholy alliance of the loon left and the rabid right. The problem cannot be defined simply in terms of Right and Left.
Like so many of us, CIA types have an inflated opinion of their own intelligence. This is a universal human trait. A more humble (and surely more effective) approach would be to admit that there are too many variables to predict the future with any degree of accuracy. The better approach to life is to be less manipulative and stick to promoting sound principles instead. Keep it simple. Stick to the basics. And keep it true.
There were two fundamental ideas that formed the basis of the elites’ pro-China strategy:
1. The elites saw China primarily as a market, not as a competitor in business and trade. At the beginning of the globalists’ war on reason, China did not seem to pose a threat of competition to America’s vast industrial base.
There were innumerable books written extolling the potential of global markets during this period. The financial interests — who stood to gain the most from unhindered capital flows and free trade, along with deregulation of business and industry — were outspoken in their support of globalization. The financiers had pretty much run out of new peoples to exploit, as the number of people willing or able to be saddled with debt was dwindling. Both the business leaders and the financial interests were supportive of overtures to the world’s largest market — China, which had over a billion people living in abject poverty. They not only believed they could sell American consumer products to China by the boatload, they expected to ensnare the Chinese population in debt, selling them American consumer products on credit. This was the plan, anyway. It was a straightforward mercantilist approach.
The only problem was, most Americans thought the idea of doing business with communists was abhorrent. Many still do, but they have all been marginalized and have no influence on foreign policy, which nowadays is the province of multinational corporations, international financiers, and the politicians they own. The corporatists’ propaganda machine launched a relentless assault on the minds of sensible people … and prevailed. In the neocons’ victory, America lost big.
2. The elites believed that the interdependence of all the nations on earth in a global economy would make war impossible or at least unlikely. This idea was popular with the peace-loving faction of the elites, anyway. The neocons — who have no interest in world peace — kept quiet, biding their time. They had no intention of letting the military-industrial complex down in the end ….
They all agreed that war is primarily caused by economic pressures — pressures which globalization promised to eliminate, or at least significantly reduce. This was their spiel, anyway. While some of the elites might have been sincere, they were naive, as anyone can see. Globalization has led to the most unstable world in recent history … with the worst yet to come.
The elites were increasingly coming under the sway of business interests (and economists who kowtowed to business interests.) Viz., the rise of economists like Milton Friedman and his cohort at the Chicago School….
The financial interests, in their short-sightedness, misjudged the opportunities to subvert the Chinese economy and saddle the Chinese with perpetual debt like they had done in the West. Like Wall Street today, bankers and financial manipulators simply could not comprehend the power of sovereign wealth creation or responsible management of the economy by government. Indeed, mainstream economists were doing their best to misdirect government and confuse the issues, so as to derail attempts at responsible management of the economy. Let’s face it, if government were to actually do its job, this would not fit with the prevalent narrative being advanced by the neoconservatives. In American politics, obfuscation rules.
The neocons misjudged the potential market for Western goods in Asia. Perhaps most importantly, they did not see the danger in commingling the economies of a free nation with that of a totalitarian state. Face the fact: neocons are not deep thinkers.
Finally, in their contempt for their fellow man, the elites totally ignored the most important natural resource any country has, its people. Labor was treated disdainfully as nothing more than one more cost of production in the neocons’ malicious worldview, in keeping with neoliberal economic principles.
China never bought American-made products, and never will. Other than food, that is. As the global economy continues its downward spiral, which will have a dramatic effect on the Chinese economy, China will gobble up our food, then go after our natural resources. Foreign interests are buying up America’s farmland and food producers now. Be warned!
China is extremely protective of its domestic market, and will become more so as global trade unravels. Moreover, globalization and internet communications have all but eliminated the comparative advantage of the nations of the West in research and development and technological expertise. The West’s shift to ‘shareholder capitalism’ with stock buybacks to boost executive pay and shareholder dividends, along with short-term profit-taking instead of long-term capital investment has exacerbated the decline of the industrial sector, with R&D (research and development) suffering most from the cut-backs.
In their defense of globalization, after the overwhelming destructiveness of free market ideology became evident, the supporters of free trade changed their tune. China, and indeed all of Asia, was now touted as the world’s manufacturing center, with the West ostensibly maintaining dominance by virtue of research and development and technological advances. They repeated this facile lie for decades as Japan, China and Asia left America in the dust, so to speak, and became the R&D capitals of the world.
The Asians were depicted in this fable as mindless robotic workers, a contemptuous — and totally untrue — expression of American bigotry. In this vision of globalized capitalism the impoverished Chinese would work for far lower wages than American workers, and the corporatists would not be burdened with environmental concerns or worker safety, both being notoriously deficient in China, and, indeed, most of Asia. In fact, the Chinese government seemed to be totally uninterested in the workers’ well-being. Workers who complain about wages and working conditions are quickly silenced … forever. (The corporate chieftains in the U.S. Chamber of Commerce must have thought they had died and gone to Heaven. What’s not to love about doing business with communists who are as disdainful of the workers as the capitalists are themselves?)
While the prospects for American industrial firms doing business with China looked bleak, Wall Street financiers saw thing differently. The corporatists thought they could reap huge profits without the bother of selling manufactured goods to the Asian market. But their vision of Chinese reliance upon the West’s technology and finance proved to be unrealistic in only a short time. China is no longer dependent upon American technology, but rather has taken the lead in research and development in nearly all fields including agriculture, pharmaceuticals, and technology. The situation can be summed up nicely with just one example: China designs and builds all of the high-speed rail systems in use around the world. Not a single train bears the “Made in America” label.
The financiers’ dream of reaping windfall profits from massive loans to the Chinese has turned out to be ephemeral. China hardly needs Wall Street financing. Indeed, China has taken the lead in global economic development, forging alliances with half the peoples of the world … with the other half anxiously waiting in line for their turn to do business with the communists. To say that Wall Street is envious of the Chinese for acquiring all of the world’s natural resources in exchange for infrastructure improvements that will facilitate the global sale of Chinese manufactured goods would be an understatement. The Wall Street shysters would be depressed at how things have turned out were it not for the outrageous profits they are reaping from stock buy-backs using the free money given to them by the Federal Reserve .. giving themselves unimaginable bonuses and ‘earning’ humongous dividends while American firms are closing their doors and honest working Americans starve, many forced to live in their automobiles — or even on the streets.
China still lags the West in military technology (but not by far), but that will soon be irrelevant. There will be little need for advanced military technology in the emerging multi-polar world. China can conquer the world without the use of force, as we are witnessing today. The truth is, military confrontation between superpowers is quite simply impossible (unless the psychopaths manage to stay in power.) Economic warfare is the battlefield of the future.
This does not bode well for America. America’s economic and political system has little chance of effectively competing with the other better-managed countries of the world. Ironically, America’s exorbitantly expensive military machine has now become the nation’s greatest existential threat. The costs of America’s military budget will sink the Empire. Furthermore, America will have a difficult time shifting from the wartime economy that supports the military-industrial complex. America has become a nation of fortress, to use a Biblical expression. It seems that the nation can do little other than attack helpless peoples in distant lands … where the mightiest military the world has ever seen repeatedly gets its ass kicked by poorly trained insurgents using improvised weapons.
America’s military looks to have little role to play in the peacetime global economy. This is an extremely dangerous situation, for it puts pressure on the military-industrial complex — the real power underpinning the American economy — to launch wars to justify its existence. After all, what are human lives when profits are at stake?
The American businesses that moved to China often found themselves with little choice, due to competition from offshore ventures and intense pressure from the economic leaders and even the government itself (especially the Shadow Government / Deep State.) I will never forget the open hostility I faced from the Reaganites — American business leaders and neocon policy makers — when I advocated a pro-America position, pointing out the dangers in free trade and globalization. (Lest we ever forget who was responsible for this globalization fiasco….)
Much of the blame can be laid on misguided economists promoting neoliberal economic principles, including the redefining of the ‘market’ to include parasitic and non-productive economic activities (speculation, asset-stripping, and financialization.) Especially harmful was the shift to embrace the concept of maximizing shareholder value, abandoning any pretense of businesses being part of the larger community, accountable to higher principles (other than sheer greed.) What had always been regarded as criminal activity (i.e., stock price manipulation through stock buy-backs) was now touted as legal, desirable, and beneficial by America’s corrupt politicians … and their enablers, mainstream economists.
The dangers of globalization were not widely recognized … not by the people … not by the elites … not by government policy makers. Most did not foresee the problems that would result from the rise of a global (and thus uncontrollable) financial sector. Many early advocates of globalization truly believed their path would lead to freeing mankind — they could not foresee that free trade and globalization would lead to the enslavement of humanity.
None of this happened by accident. There are important lesson to be learned from Martin and Susan J. Tolchin’s book SELLING OUR SECURITY (Knopf, 1992.)
In the early days of the American government’s pivot to Asia — what might be thought of as the Rise of the Neocons — Congress referred to the White House more than 4,000 instances of foreign interests taking over American firms which could pose a potentially serious threat to national security. This was done in accordance with the law requiring foreign ownership of American businesses to be subject to review by the administration prior to approval. In typical Republican fashion, the Reaganites ignored the law and refused to act on so much as a single case. Only one incident — where a Communist Chinese outfit acquired a firm producing sensitive and classified defense missile guidance systems — was even considered for review under the program. The administration made a feeble attempt to look into the matter … months after the Chinese had copied all the files, blueprints, and technical documentation, and departed, closing the doors of the company. During the neoconservative heyday, over 80,000 defense subcontractors were forced out of business or acquired by foreign business interests.
[As an aside … America still has by far the largest military production capability in the world. Apparently there were far more defense contractors than were really needed. Who would have thought the Republicans would trim so much fat out of the defense budget, shutting down so many unneeded defense contractors? Actually, the Reaganites didn’t cut defense spending at all. Quite the contrary: they increased defense spending significantly. They still squandered billions of dollars of taxpayers’ money, they just did things a bit differently. They sent the money out of the country to foreign businesses, lavished America’s hard-earned dollars on multi-national corporations with overpaid executives, embraced sweetheart deals in no-bid (non-competitive) contract awards, or stood by approvingly as American ownership of defense industries was transferred to foreign hands … instead of doing business with American firms. And then they gave me hell for pointing out that this was shameful and stupid, hardly in America’s best interests.]
The Chinese were not the villains in selling out America’s national security — the Reaganites were. Blame the neocons. The Chinese were just taking advantage of the situation — a total sell-out of the American nation by the Republicans who controlled the government then, as now.
But it wasn’t just Republicans who sold the nation out. Recall Democratic Senator Jay Rockefeller’s successful pressuring of Congress to allow one of his firms (a Texas front company known as Sweringen Aircraft) to transfer the sensitive and restricted technology of the Tomahawk cruise missile engine to the communist Chinese. We must never forget that the U.S. Chamber of Commerce and Rockefeller’s CFR (Council on Foreign Relations) are central players in the corporatists’ plan to enslave the human race in the New World Order, a one-world government — an unelected bureaucracy — administered by the Jews on behalf of international financiers.
Rockefeller had the audacity to boast of his ‘win’ in Congress in a piece published in the Martinsburg Journal newspaper (a Rockefeller holding.) This arrogant propagandistic news article was one more instance of the globalists’ going out of their way to rub my nose in it, so to speak, after I had written a letter to the editor of this newspaper questioning the Senator’s efforts to transfer defense technology to a foreign power hostile to the United States.
The sell-out of the American nation can be attributed to a large number of America’s political leaders, including every U.S. president from Reagan to Obama. In a December 21, 2016 article, “Flashback: Bill Clinton Gave China Missile Technology — Democrats intermittently talk tough about our enemies — but only after aiding and comforting them”, Matthew Vadum reminds us that Presidents Clinton and Obama were every bit as bad as Republican presidents when it came to undermining America’s national interests. (Note 1) As we see, neoconservative politics is truly bipartisan.
But the betrayal of America also included some of this nation’s closest ‘allies.’ A Washington Post newspaper article I read in the 1980s warned that more than 2,000 Israeli scientists and technicians were working in China to aid the communists in developing ballistic missiles and advanced guidance systems. It is reasonable to assume that the Israelis also shared the most advanced nuclear weapons technology with the sworn enemies of freedom and democracy — nuclear technology the Israelis stole from the U.S. in the first place. As the F.B.I. has long maintained, Israel poses the greatest threat of espionage against the United States of any nation.
We must not forget that Israel was a communist state led by ruthless international terrorists when it was founded. That was before it was taken over by crypto-fascists. Today Israel is far and away the leading terrorist state in the world; the very existence of the pariah state of Israel threatens the entire world.
The Jews gave the communists in Russia the plans for the atomic bomb (stolen from the U.S. government by the Rosenbergs.) Israeli espionage is all part of a carefully orchestrated master plan. This never-ending arms race and a nuclear ‘balance of power’ based on the concept of mutually assured destruction is of central importance in the long-term strategy of the Zionists. Making sure the world is armed to the teeth with nuclear weapons — hundreds of thousands of weapons of mass destruction which are of absolutely no military usefulness, posing a continual threat of destroying all life on earth — is central to the long-term strategy of dark forces working to subjugate the human race. This is the reality behind the neocons’ plan for world domination — the Zionist dream of the New World Order.
The American government’s failure to insist on independent business activity rather than joint-ventures with state-owned and state-controlled (communist) enterprises was abject failure on government’s part. The neocon-controlled American government let the people down. Many regard it as a sell-out to the communists, abandoning everything America once stood for (freedom and free enterprise, and limited government.)
The military, and some on the political right, did resist. But the leftists were always willing to suck up to the communists. Some quite openly stated their intention of turning America into a communist totalitarian state. So too the financial interests were all too willing to do business with communists. The bankers have never had any qualms about doing business with totalitarian regimes, whether led by military juntas or representatives of ‘the dictatorship of the proletariat’, as they euphemistically refer to the leader of communist states … as long as they repaid their loans, with interest. And kept the hoi-polloi in their place at the bottom of the food chain. It is no surprise that there are no labor unions in the workers’ paradise of communist China. The Chinese government does not have a problem with hooligans demonstrating in the streets or labor leaders advocating democracy.
The charge has been made — and it seems to be fairly well documented despite concerted efforts at covering up the truth — that American bankers financed the Russian revolution and the Soviet government which followed. Like an octopus, Wall Street’s tentacles reach in every direction.
The mindless destruction of America’s productive economy — the de-industrialization of America — was touted as a good thing by many so-called ‘futurists’ in the last half of the twentieth century. This nonsense no doubt influenced the policy-making elites, anxious to embrace the next big idea. Contrary-wise, ideas such as the social contract, responsible stewardship of God’s creation, living in balance with nature (conservation, i.e. ‘small is beautiful’), sustainable economics, honest business practices, healthy competition, anti-monopoly legislation, local control (subsidiarity) and responsible regulation by government acting in the interests of the people were seen as toxic by the elites, who by this time were dominated by unscrupulous business interests and war hawks — the neocons. With regard to embracing the enemies of democracy — especially the collectivists — the business and financial interests and the policy elites had made common cause with leftist intellectuals.
We should have seen this debacle coming. No group is more short-sighted while at the same time less well informed on the issues than businessmen … although leftist intellectuals do come in a close second.
Note 1: Vadum, Matthew. “Flashback: Bill Clinton Gave China Missile Technology — Democrats intermittently talk tough about our enemies — but only after aiding and comforting them”, December 21, 2016.
https://www.frontpagemag.com/fpm/265200/flashback-bill-clinton-gave-china-missile-matthew-vadum
To read the article on the Naked Capitalism web site, cut-and-paste the URL:
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