The guest piece below from my friend Leo Hindery shows why he would be a great chair for the National Economic Council. He has been a consistently strong advocate for a trade and manufacturing policy that puts the interests of American workers ahead of those companies getting rich by outsourcing their factories to China. -Mike
After three decades of double-digit growth, China has just passed Japan to become the world's second-largest economy behind only the United States - and it should surpass us as early as 2030. And when China wins in trade, as it now does every day, it's really only the U.S. which loses. In fact, for the last several years the correlation has been almost dollar for dollar, with America's trade deficit with China in goods and services virtually mirroring China's overall trade surplus.
This should be enough of a clarion call to the administration to demand the integrated all-of-government approach to our trade relations with China that is the only one which is going to address the economic nightmare we find ourselves in with that country. Yet the realities around our trade with China trade continue to worsen - and become a whole lot more foreboding.
Back in May 2009, in a speech I gave in Qatar, I predicted that as an extension of its ever-growing trading and geopolitical status, China would soon accelerate (and relatively soon complete) its deployment of a full-scale "blue water navy." I felt that once China has this force in place and is able to readily project power throughout the Pacific and as far as the Indian Ocean, there will be, into the long term, regional and global tensions of a magnitude not seen since the Cold War. I also felt there would soon be great pressure on Japan to re-militarize, given that a massive 86% of its oil & gas needs are met by Middle East suppliers by way of the Indian Ocean.
This past April 2010, the New York Times also began to write about China's military's initiative that is now called "far sea defense", which China has publicly confirmed is fully intended to project naval power well beyond the Chinese coast. China has been testing long-range ballistic missiles that could be used against our aircraft carriers, it intends to deploy their own aircraft carrier group 'within a few years', and its naval forces already stand at 275 "principal combatants" - i.e., major warships - and more than 60 submarines, including at least two Jin-class submarines with ballistic missile capabilities, with two more under construction, and two Shang-class nuclear-powered attack submarines.
So, what do you do if you suddenly have a 'blue water navy'? Well, you use the bloody thing, which is exactly what China is already doing in the South China Sea, where it's just said it will tolerate no interference in what it now believes to be a "core interest" of its sovereignty, on par with Taiwan and Tibet. And by making the South China Sea sovereignty issue 'non-negotiable', imminent problems now exist between China and each of Vietnam, the Philippines, Indonesia, Malaysia, Singapore and Brunei.
So bipartisanship isn't dead. By a vote of 348-79, Democrats and Republicans alike put aside their acrimonious differences and agreed, at least for a moment, to stop blaming each other for the sad state of American economic life. Instead, they agreed to blame China.
The bill authorizes the president of the United States to impose tariffs on Chinese goods in response to what it considers an illegal subsidy of Chinese exports in the form of an undervalued currency. It helps that the supporters in the House know that this bill has precious little chance of becoming law; it will not pass the Senate and it is unlikely that it would be signed into law by Obama if it ever came to that. As a result, the bill is the perfect campaign gesture, bombastic, angry, self-righteous, and without much real-world consequence.
The office AFL-CIO union leader Richard Trumka issued a statement that encapsulated the thinking behind the bill: "the House of Representatives voted to put an end to the Chinese government's currency manipulation, which has destroyed millions of good American manufacturing jobs. For more than a decade, the Chinese government has deliberately manipulated the value of its currency, ballooning our trade deficit with China and costing American communities good jobs....Working people continue to mobilize to elect candidates who will put America's workers first and are committed to rebuilding an economy that values working people. This November we will send a powerful message that we will support those who vote for an economy that works for everyone."
Much has been made of the recent Russian spy swap, in which ten Russian infiltrators were exchanged for four American infiltrators. The overall reaction has been one of amusement. Russian spies combined with Desperate Housewives? Straight out of a Cold War movie thriller!
In fact, the reaction to the spy scandal reveals far more about American attitudes towards Russia than most classified information would. Simply put, the United States no longer regards Russia as its number-one nemesis and rival. In the days of the Cold War, when the Soviet Union had ten thousand nuclear missiles pointed at America, the reaction would have been far different - far more hostile, and far less amused.
Can Twitter save China? China's environment--and thus public health--has been severely undermined for 30 years, and environmental protests have been a major feature of Chinese political life for at least 20. But what's changed recently is the role of social media to help organize those protests on a massive scale. With that force growing ever more powerful, and an overall cost of pollution greater than the cost of cleanup, a major shift is in the offing, Bloomberg News reports:
China Is Set to Lose 2% of GDP Cleaning Up Decades of Pollution
Li Pingri remembers swimming with fish and shrimp as a boy in Guangdong's Chigang waterway in China. Today, even after the city spent 48.6 billion yuan ($7.2 billion) on a cleanup, he can't stand the canal's smell.
"We are surrounded by black and smelly waterways, breathing the foul air every day and paying the price at the cost of our health," said Li, 79, a former researcher at the Guangzhou Institute of Geography. "If we can't breathe clean air or drink clean water, high economic growth is meaningless."
China, the world's worst polluter, needs to spend at least 2 percent of gross domestic product a year -- 680 billion yuan at 2009 figures -- to clean up 30 years of industrial waste, said He Ping, chairman of the Washington-based International Fund for China's Environment. Mun Sing Ho, a senior economist at Dale W. Jorgenson Associates and a visiting scholar at Harvard University in Cambridge, Massachusetts, put the range at 2 percent to 4 percent of GDP.
Failure to spend that much -- equivalent to the annual GDP of Vietnam -- may cost the Chinese economy half as much again in blighted crops, health costs and pollution-related expenses, He said: "The cleanup can't catch up with the speed of pollution" if spending is less....
Lost Productivity
The costs arising from pollution in China -- including lost productivity due to health issues, crop degradation and losses from pollution-related accidents -- totaled 511.8 billion yuan, or 3.1 percent of GDP, in 2004, the latest figures available, according to the Beijing-based Chinese Academy for Environmental Planning, part of the Ministry of Environmental Protection.
China doubled total environmental spending in the 2006-2010 period to 1.4 trillion yuan from the previous five-year plan, and may more than double it again to 3.1 trillion yuan in the five years through 2015, said Wang Jinnan, vice-president of the academy.
That's less than the amount He predicts will be needed on the cleanup and includes other costs: developing alternative energy and new sewage works, and protecting ecological habitats. It's also less than the 4 trillion yuan China spent on stimulus in one year to boost the economy.
And as for the social forces pushing for change:
Twitter Protests
"Environmental protests have been one of the leading sources of social unrest for more than two decades," Elizabeth Economy, director for Asia Studies at the New York-based Council on Foreign Relations and author of "The River Runs Black," a book on China's environment, said in an e-mail. What has changed is "the ability of people to communicate through texting, e- mail, and Twitter to organize a protest."
Campaigns of up to 10,000 people in major cities such as Xiamen, Zhangzhou and Chengdu were fighting the planned siting of large-scale chemical plants, and in some cases have forced the government to reverse a decision, Economy told the U.S. Congressional-Executive Commission on China in October 2009. She said about 700 million people in China drink water contaminated with human or animal waste.
And China doesn't even pretend to be a democracy!
Clearly things are much, much worse in China, but they seem to be on the cusp of starting to get dramatically better.
Episode 2, that's right, the big wigs decided not to cancel us after the Pilot!
H.R. 2378 is being discussed in the Ways & Means Committee today and tomorrow. Our Executive Director, Jeremy Koulish has been livetweeting the hearing.
As expected the Republicans in the Senate said no to those whose livelihoods they gutted when they controlled Washington. Forget the fact that men like Mitch McConnell and yes, Ben Nelson who is a Republican and should get out of our party soaked up huge salaries while soaking the middle-class with policies that decimated them while enriching Corporate fatcats and the Chinese Communists. Of course the whole Republican Party, Mitch McConnell and Ben Nelson want you to forget. What they do not want is to bear any of the responsibility of their actions both in the past and now as working Americans who paid the price from Republicans and Corporate Democrats and the robber-barons in Corporate America getting fat, crashing the economy, and getting bailed out.
America needs an economic/industrial policy like other countries have. THAT is how we will pay off our debt -- by earning money.
You may have read about the back-and-forth on Chinese currency this weekend. China said they would let their exchange rate adjust, and then pulled the football away. The deal is that China manipulates its currency to keep undervalued, which makes Chinese good cost less than they otherwise would on the world market. So they end getting the manufacturing business (and jobs and supply chain and R&D; and ...) In fact it looks like next year China will replace the US as the #1 manufacturer.
But it is not just cheating on currency that is the problem. Today's news brings a reminder of another reason it costs less to make things in China: 47 killed when explosion rips through China mine,
The blast hit a mine in Pingdingshan city in the province of Henan, the State Administration of Work Safety said. Seventy-five miners were trapped initially but 28 escaped, the central government said on its website.
This is not an uncommon headline. We see headlines like this from China all the time. More than 2,600 miners were killed just last year.
When life is that cheap you can charge less for things.
We all know about the environmental problems in China, another reason things made there cost less. It is so bad that there are "cancer villages" near polluting factories.
Here is a list of the main unfair advantages China uses to its advantage:
1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
All of these things that China is doing are collectively called a national industrial policy. China has one. We don't. China's share of the world's business has grown exponentially because they have and follow a national industrial policy. Ours has declined dramatically because we don't. I'm trying to drop a hint here, but for those in Washington who aren't following let me spell it out more clearly: America needs to develop and follow a national industrial policy.
Last Thursday was the one-month anniversary of the Gulf oil disaster and every day, we see more and more evidence that collectively we have failed to not only act, but also we have failed to organize and express our anger about the disaster, and its truly shocking long-term consequences.
This isn't Katrina II, it's worse. As the oil keeps gushing and the damage keeps growing, we are squandering a rare chance to turn the tide against those whose laziness and greed and ignorance is imperiling every living thing on our wonderful and beautiful -- and wounded --- planet.
Words are a necessary precursor to deeds, anger is an essential ingredient for social change. Speaking up and speaking out is the difference between apathy and action.
We all do need to speak up, we all do need to speak out and we all need to make our voices heard. Every single day, the catastrophe is getting worse.
Today, as I debate why America is so apathetic towards the spill, I am in Los Angeles. As you travel the country, it's not top of the news anywhere anymore. It's fading away, but as the oil floods the Gulf, I was sent another great post by Pete Altman at NRDC, check out these shocking numbers about what one day of inaction looks like.
Because every day we delay,
The United States imports 11.7 million barrels of oil. According to the American Petroleum Institute, the U.S. imported an average of 11.7 million barrels per day of crude and other oil products in 2009.
Iran earns $173 million in oil revenues. The Economist Intelligence Unit forecasts that Iran will generate oil export revenue at $63.4 billion this year from output of 3.82 million barrels per day (bpd). $63.4 billion divided by 365 days is $173.7 million. Up to 4 million gallons of oil surges into the Gulf. The official estimate is that about 5,000 barrels of oil are spilling per day, but independent experts contend that the actual amount is far higher -- as much as 95,000 barrels per day. A barrel holds 42 gallons.
China invests $95 million in clean energy -- nearly double the United States investment ($51 million.) In 2009, China invested $34.6 billion in clean energy compared to $18.6 billion in the U.S. ($34.6 billion/365 = $95 million a day, $18.6 billion/365 = $51 million a day.)
100,000 solar panels roll off Chinese production lines. Solar module production in China and Taiwan will increase 48 percent to 5,515 megawatts in 2010, according to a February, 2010 report by Yuanta. One megawatt requires about 5,000 panels. Assuming 250 production days per year, this translates to 110,300 panels per day.
The United States generates 19 million tons (metric) of greenhouse gas emissions per year. EPA's most recent greenhouse gas inventory reports that the U.S. produced 6,956.8 million metric tons of greenhouse gas emissions (CO2 equivalent basis) in 2008. That's 19,059,726 metric tons of greenhouse gas emissions each day.
Clearly we need to move from apathy to action. Because as every day passes, as the evidence of our collective failure washes up on the beaches of the Gulf and deeper and deeper into the marshes of Louisiana, what's Washington's reaction?
"Pathetic" would be kind.
There will evidently be a commission to study this disaster, but as we saw with the 9/11 commission, even solid recommendations are usually ignored by one or both parties with little hope of action.
The 25 dead coal miners, and 4 still missing, in West Virginia is shocking and horrible. What is perhaps more shocking is that 29 workers dying on the job in one day is actually only about twice the daily average in America, and that about 50 coal miners in China die on the job every week:
China says 83,196 people lost their lives in work-related incidents last year.
China's State Administration of Work Safety reported 380,000 incidents in the workplace that caused death or injury.
How does that stack up compared to the U.S.? To put the situation into perspective, the U.S. has a workforce of 155 million, while China has over five times that amount, at about 801 million.
The U.S. reported 5,071 worker deaths in 2008.
So the number of workplace fatalities in China is 16 times that of those in the U.S.
Approximately 14 workers die per day in the U.S. compared to 228 in China.
Coal mining accounted for 2,631 deaths last year in China - 7 deaths per day.
In fact, even as we speak, China is searching for 33 trapped coal miners, too.
For additional context, on the 5,071 worker deaths in 2008, 5,424 Americans have died in Iraq and Afghanistan total.
There are human costs to our worker safety, energy and trade policies. Ongoing stories about trapped coal miners in China and West Virginia bring them into the public light, but they happen every day.
A student at an American university Googles "Tiananmen Square" from her dorm room. Among the hundreds of hits that will surface are photographs and reports stemming from the 1989 protest that followed the death of Chinese pro-democracy official Hu Yaobang. Scrolling down, she will learn that Chinese troops killed hundreds of protesters who were gathered in Tiananmen Square to voice their support for democracy and call for an end to government corruption.
If you were to look out to the horizon of the clean energy field right now, you would see the hazy outlines of nuclear reactors. President Barack Obama announced this week that two new nuclear plants will go up in Georgia, built on the promise that the federal government will guarantee $8.3 billion in loans-nearly the entire estimated cost of the project.
"It is a slap in the face to environmentalists," says Matthew Rothschild at The Progressive. "Though these will be the first nuclear reactors constructed in more than three decades, Obama still labeled them, somehow, as part of the "technologies of tomorrow.""
The president's announcement wasn't the only environmental downer this week. Expectations for the next international climate negotiations, to be held in Mexico at the end of 2010, are already low, and yesterday Yvo de Boer, the United Nations' top climate negotiator, said he would step down this summer and join the private sector. To top it all off, the Environmental Protection Agency (EPA) now faces sixteen lawsuits that would block its ability to decrease carbon emissions, including one backed by Texas Gov. Rick Perry (R).
A nuclear error
Although the Georgia reactors would be the first new nuclear construction in the country in decades, they mark the beginning of what the Obama administration hopes will be a shift towards nuclear energy. In the 2011 budget, President Obama proposed an expansion of the loan guarantee program that funds projects like these from $18.5 billion to $54.5 billion.
These nuclear projects deserve close scrutiny. At AlterNet, Harvey Wasserman details the problems with the Georgia reactors. The Nuclear Regulatory Commission (NRC) already rejected the initial designs for the plant. That means the estimated cost could well exceed the projected $8.5 billion, which Wasserman says, was low at the start.
"Over the past several years the estimated price tag for proposed new reactors has jumped from $2-3 billion each, in some cases to more than $12 billion today," he explains.
Risky business
In the past, energy firms like The Southern Company, the Atlanta-based group that is building the plants, could only imagine securing funding for new nuclear projects. These projects have a high risk of failure, and private investors do not dream of touching them.
Inter Press Service's Julio Godoy reviewed several European studies on the feasibility of financing nuclear plants. One study from Citibank concluded that "the risks faced by developers ... are so large and variable that individually they could each bring even the largest utility company to its knees financially," Godoy reports. These risks include uncontrollable construction costs, long delays, and the possibility of low power prices that would not support that plants' operation.
That's one reason that green advocates disapprove of nuclear energy: The money could be better spent elsewhere. "People tend to think that environmentalists have some sort of allergic reaction to nuclear because they're scared of radioactive waste and unsecured nuclear materials," writes Aaron Wiener at The Washington Independent. "But when it comes down to it...It's simply a bad investment to pour billions of taxpayer dollars into a nuclear sinkhole when proven technologies such as wind and solar would provide guaranteed benefits."
Wind to fly on
While the administration lavishes attention on nuclear, other clean energy industries are trying to move forward. In Wisconsin, a Spanish company is opening up a plant to build wind turbine components, which will bring much-needed jobs to the Milwaukee area, as Kari Lydersen reports for Working In These Times.
There's always the threat, however, that gains like this will be rolled back by competition from China. Clean energy jobs can still be sent overseas, Lydersen points out. She argues that the United State could be providing a boost to the solar and wind industry in order to keep jobs here.
"Manufacturing in the United States could be driven both with incentives to the actual producers - like the tax break to Ingeteam [the Spanish company building the Wisconsin plant] and support for renewable energy through renewable energy portfolio (RPS) standards and other incentives," she writes.
China as competition
From a purely environmental perspective, China's headway into green technology is not a problem. Mother Jones' Kevin Drum reminds us that the whole world can benefit from advances in clean energy, wherever they happen. Climate change is, after all, a global crisis. But Drum concedes that fear of Chinese competition does serve some purpose:
"I've lately become more receptive to the idea that, for better or worse, the only way to get Americans to take this stuff seriously is to kick it old school and start hauling out that old time Cold War evangelism," he says. "Frame green tech as a matter of vital economic and national security superiority over the Reds and quit worrying overmuch about whether that's really technically accurate. Just figure that it's close enough, it's language everyone understands, and it'll do a better job of motivating development than a couple hundred more PowerPoints about receding glaciers."
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On Friday, Rachel did a segment on China's aggressive development of high speed rail in the next few years. It's really amazing how much rail they're going to have built within the next two years, 42 lines including connections between China's most important cities:
The US, in contrast, will have one line built in four years, connecting Tampa and Orlando. Tampa and Orlando? That's not so much a high-speed rail line, more an overgrown Disney ride.
Here's the clip:
This short clip made me think of three things:
(1) At the same time that China was spending massively to build this new high-speed rail network, ($185 billion Rachel said, in the last two years), the GOP was screaming bloody murder over the idea of spending anything on high-speed rail in the stimulus bill.
(2) Even if Obama had been absolutely serious about spending our way out of the recession, and laying a green infrastructure foundation for our future, there is no way the US could have marshaled anything close to that level of construction in such a short period of time. The America that build the Interstate highway system is gone, baby, gone. Boxed up and shipped overseas in pieces starting with the Carter/Reagan double-dip recession, which we responded to by ignoring deindustrialization, cutting taxes, and investing heavily in military spending to compete with the USSR, based on the first grand neo-con con: the infamous "Team B" report that said the CIA was all wet when it accurately reported that the Soviet Union was struggling to keep up with us...and failing.
(3) The country that builds the most advanced transportation system is de facto the most advanced country on the planet. It used to be the US. We sensed this when Europe built the Concord and the Airbus. We're totally oblivious now that China is going apeshit with high-speed rail. Forget the time decades in the future when China's GDP equals ours. China is the most advanced country on the planet now. We're number 2. Get used to it. And don't forget to thank the Republicans in particular, because it's their beloved free market that tells us we don't need high-speed rail, and the market is never wrong. Piratize NASA! Yeah!
But, of course, even with all that advanced transportation, who wants to live in a Chinese-style security state? Well, all of Versailles, apparently, but in America, who wants to live in a Chinese-style security state? Which brings us to a Democracy Now! segment on Europe, talking with Steven Hill, author of "Europe's Promise: Why the European Way Is the Best Hope for an Insecure Age". (Europe has high-speed rail, too, you know.) They begin by noting the economic crisis happening in Greece, then pivot away from the expected story line, from one of impending doom to one of greater resiliency:
The United States media often - and for good reason - portrays China and Russia as reluctant to implement sanctions on Iran. Rarely (too rarely), however, does it attempt to view the issue through a Chinese or Russian lens. Americans nearly never try to understand the complex motivations behind Chinese and Russian lukewarmness.
I will attempt to do that now. How do China and Russia think of Iran?
Probably in the same way we thought of Honduras. The lukewarm American opposition to the coup strikingly paralleled China and Russia's stances on Iran.
This week, the Chinese government announced that China's economy had expanded by a stronger-than-anticipated 10.7 percent in the last quarter of 2009 and that it had grown 8.7 percent for the entire year. This news, however, was not greeted with relief but with the skepticism that has typically met such news emanating from China in recent years. The Wall Street Journal ran a story on its front page with the headline "China Seeks to Tame Boom, Stirs Growth Fears."
On the eighth anniversary of 9/11, a professor of mine made a comment that caused a lot of soul-searching for me. He remarked, quite casually, that the United States is in decline.
Those words angered me. Nobody likes to hear their country characterized in that manner. But ever since then I've been considering that casual statement.
I think it accurately describes the state of our nation.
We are a nation in decline.
We are in decline for a variety of reasons, some more controllable and some less so. Economic weakness has something to do with it, as does the popularity of anti-Americanism (thank you, George Bush). Misadventures in the Middle East and the rise of China also play a participating role.
But enough about why we are in decline. What can be done to stop it?
