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September 29, 2008

Conflicting memes

So John Gray writes in the Guardian:

Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.

And this is seen as a sign of China's triumph and America's decline.

Well, okay. But while China's national government can, with a non-trivial commitment of GDP and educated workers launch a series of successful manned missions 40 years after the US, American billionaires are funding their own successful orbital launches for funsies.  (Not quite, but you get my drift.)

So is America hobbled, stumbling in to the oblivion that all empires face against a rising power? Or is China still so backwards that it takes substantial and sustained national efforts to exceed the successes of individual American entrepreneurs? Both? Neither?

I think it's a reasonable point that America looks kind of wobbly at the moment, but if our self-selected anecdotes were statistics they'd have a margin of error of plus or minus 100%.

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But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust.

China's success is the result of a partnership between an authoritarian government and the purest form of laissez faire economic policy this world has ever seen. The capitalism practiced in that country would make Rockefeller, Morgan, Carnegie and the rest turn their heads in disgust and shame. It has nothing to do with contempt for Western financial advice; if anything they're just willing to go further down the same path than we are - or ever have been.

From what I can read, China's development is unsustainable.
Of course, ours, in the light of Global Warming and Peak Oil, is also, at least, as we have practiced it.
I have said(and see the post in "A Tepid Case for the Bailout") that we need to definancialize the economy, return Finance to it's proper place (a limited control of the economy), and start Making Things again....
This craziness in the markets may mark a return to sanity and reality based economics.

start Making Things again....

Yes, exactly. Aside from all the economic benefits of being a nation of producers instead of consumers, there is a dignity in working to actually make something that just doesn't exist in so many of our vaunted service sector jobs.

This may sound silly, but back when Starbucks still used espresso machines that required the barista to be an expert on grinding, pressure applied to the coffee and even the fluctuating temperature and pressure of the hot water and steam boilers, I was able to take pride in what I did. I made damn excellent drinks and responded instantly to weather changes and other variables. When they switched to super-automatics designed to make a barista's skill level irrelevant, it just wasn't fun anymore.

Now, I understand that coffee is a silly thing in many ways - though the coffee farmers that earn a decent living by growing premium beans probably don't think so - but I felt valuable to the organization, and proud that I could actually make something which required skill. That type of work is vanishing in the name of increased profits for the wealthy, and not only is that reflected in wage stagnation, but in a damaged American psyche.

More than anything, that's why I oppose the bailout. I don't want to spend $700 billion - or $1 trillion, or even $100 billion - to let a bunch of wealthy assholes escape the consequences of their actions. Imagine the real benefit to our economy if we applied $700 billion directly to struggling Americans to meet their present needs, instead of yet another triumph of trickle-down bullshit. People who spread their bills on their kitchen table and wonder how they're going to buy God-damned groceries don't need another fucking credit card, or an option-ARM with a 3-year locked-in 2.9% rate. They need some God-damned money for God-damned groceries.

If we had Democrats in Congress that were A)actually liberals and B)not cowards, we could use this to beat the GOP and their merry band of corporate thieves down for more than a generation. We could reshape the landscape of the American economy, break the stranglehold the almighty shareholder has on corporation actions, get rid of all the incentives for corporations to ship jobs offshore, to import cheap/toxic shit from China, to engage in union-busting.

But that won't happen, because the family that can't afford milk and bread is just a couple of sad fuckers who made bad decisions and who are pretty much invisible anyway. But the CEO of Merrill Lynch, why, he's such a great guy who loves his kids and is so witty and delightful at the receptions that his company throws for our dedicated Senators and Representatives, so he needs to be kept in his comfortable lifestyle. And he'll be so grateful, he'll throw some crumbs to the lesser folks, proving that trickle-down bailouts work.

From what I can read, China's development is unsustainable.

Likewise, and from what I've been told by a colleague who recently spent a few weeks in that country on vacation (in the southern mountains as well as in Beijing) you cannot now see the blue sky and its clouds during the day. That's how extensive the air pollution is from their coal-burning power generators. It isn't just Beijing or the cities, but the countryside, even in very rural areas, that is now this way.

No, they have created an economy based upon others needing cheap products which they manufacture and sell at artificially low prices. They won't be able to sustain that paradigm.

(During the day the sky is gray, even on a sunny day.)

The contradictions (as the Marxists might say) of the Chinese system -- a melange of late 19th century American capitalism, fascist governance, and communist sloganeering -- strike me as unsustainable in the long run. At least one well placed activist has told me that the level of labor unrest is profound, although rarely reported. This includes wildcat strikes, acts of violence against managers, and a general sense of being ill-served by the present system.

I think China's problems and challenges are far more profound than any facing the United States.

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