"bg" wrote in message
om...


When you see that economy grow first hand, then way I have in such a
short time, I can only think of the historic 1920's USA production
oriented economy, which eventually led to a a big bang. However,
today, institutions are more transparent then yesteryear. I dont know
any other way to find answers. It seems to me, either you are a free
trader, or a fair trader.

Only two possibilities? Perhaps that's because of the way the issue has been
framed by the ideologues, who have overwhelmed the debate for so long. And
those ideologues tend to be people who have a financial interest in the
outcome.


The slightest move to fair trade can have grave consequences. Just
look at the recent duty placed on steel imports in this country. Steel
prices have risen anywhere from 35-50%. To protect what? A few
outdated inefficient steel MFR's? The whole economy suffers because of
it. Corporate profits have suffered in the face of trying not to raise
prices,and many companies have been buried, especially in the
metalworking trades.

The steel industry is far from transparent. The fact is that U.S. primary
steel producers are too small to compete on world markets. Until now,
they've been unable to consolidate because they're all carrying enormous
legacy liabilities in the form of unfunded pension obligations and
retirement healthcare plans. No one with the capital to do it will touch
them.

The idea behind the tariffs was to give them some profitibility, which would
interest investors in buying them up and consolidating them. It hasn't
worked so far, and it may never work. But it's a good example of how such
things are seldom what they seem.



It is not a matter of research to find the solution. The solution is
evident. Change the paradigm or die. It is the law of nature. The
nature of the beast. The strong survive and the weak die off. Adapt
and thee will survive. What they will adapt to, is what really needs
to be researched.

"The solution is evident"? So, what's the solution?

What does it mean when the "strong" get there only by paying their workers
80 cents/hour? What other "strength" do the Chinese have? Have they
innovated any manufacturing technologies? Do they have geographic
advantages? Resource advantages? More efficient production? Is their
competitive edge explained by better schemes of industrial organization and
efficient automation, like the Japanese have innovated? No. They have low
wages, and a command-and-control economic structure that focuses on exports.
Period.

And their low wages are attracting astronomical amounts of FDI (foreign
direct invertment). The new "paradigm" seems to be, as Alan Tonelson puts
it, a race to the bottom.

The goals of economic development, the old "paradigm," run towards
improvements in labor productivity, economic opportunity, and innovations in
products and manufacturing. So the equation has been stood on its head. The
real question now, for a country that wants its economy to grow, is what
goals they should establish. Keep cutting wages? There's a winner for you...


I believe China knows exactly what they are doing.

It isn't a matter of belief. It's a matter of facts. And one key fact is
that the Chinese are addicted to their state-run enterprises, which are
their employment buffer that keeps a lid on unrest, even while they run
their banking system into the tank. Their banks are insolvent. If they
opened up their state banking system to competition, as they've promised the
WTO they will do, there would be a run on those banks tomorrow, and they
would collapse within a week. All of their money is loaned out in
non-performing loans, which can never be paid back. They knew they would
never be paid back when they loaned the money -- to state-run enterprises,
exclusively. There's no way to call those loans in. The money is all gone.

For both practical and ideological reasons, China's government is unable to
do anything about it. They can't get off of the merry-go-'round they've
created. They're sweating it. So is the world banking community.


By the way, In regards to your numbers on the automotive guys buying
from China, I am really surprised they are so late. VW, audi, Peugeot,
Toyota, Honda and Nissan have all been benefitting greatly. I dont
believe all have been exporting full vehicles, but many have.

Not. VW has by far the largest market share in China, at 40%. From "The
Business Times," August 4, 2003: "China, the land of $50 VCRs and $3
haircuts, remains too uncompetitive a place to make cars for export. And it
could take up to five years before the country exports cars, according to a
top VW executive yesterday."

From Automotive News Europe, July 16, 2003: "Volkswagen, which has
complained frequently about the high cost of auto parts in China, will
follow the example of Ford Motor Co. and General Motors and begin sourcing
parts here for its global operations."

Opinion is a kind of low-level ailment, bg. The cure for it is facts.
Unfortunately, they require some effort to research.

But they can really help clear your head.

--
Ed Huntress
(remove "3" from email address for email reply)