Sunday, May 8, 2011

China & The US Holding High Level Economic Conference

China and the United States will hold a high level Economic Conference this week.  This is a dance we have been too many times.   China will complain about US Deficit spending and our $14.3 Trillion National Debt since they now hold $1.2 Trillion of that debt.  If the United States was a house, it would be China holding the mortgage and so naturally they are very worried about our ability to pay back this money.   They know that we will probably not default; but that we could just start printing money, which will seriously erode the value of the dollar even more.   So presumably, if that happens, the Chinese will get back pennies on a dollar that they lent us.  No wonder they are not happy with the United States. 

The United States will claim that China manipulates its currency, which is true, in order to maintain a trade surplus.  In fact, China experienced a $273 Billion trade surplus with the United States last year, which was 1/5 more than in 2009.  In other words, the cheap RMB, the Chinese currency, which many believe is under valued by 40% makes Chinese goods cheap in the US and US goods very expensive in China giving China a trade advantage.  In addition, China makes it very difficult for Western companies to do business in China.   The RMB is not a convertible currency so getting money into and out of China is very difficult at best.  And, China does not adhere to the rule of law when it comes to doing business.  China practices situational ethics that Westerners just don't understand that always advantage China so the notion of fair trade is not a Chinese concept.   China would argue that Western nations took advantage of China for years, which left their people in poverty as the justification for their actions. 

Of course, China argues that it is a developing country with several hundred million poor people, which is true.  Though  it may be true that many of the Chinese people are poor; the Chinese government and Chinese companies are not poor.   So once again, the United States and China will dance around all these issues.  

One thing is clear.   China has gained manufacturing jobs not just because of all these issues; but because Western countries, including the United States, particularly when managed by Socialists, have enacted job killer tax codes, laws and regulations that made it much more advantageous to manufacture goods in China and other developing countries than in Western countries.   That is not China's fault.   Western politicians, like Socialist President Obama, that do not understand Economics 101 are at fault.   Today, we compete in a global economy.   Western countries often either refuse to accept this reality, or prefer to ignore global competition as they pass job killing laws that raise the cost of doing business in Western countries.  

And, big unions just don't get it at all.  It is impossible to pay $75 an hour fully loaded for work that can be done overseas for $5 an hour fully loaded.  And, while no one is expecting an American or European worker to work for the same compensation and benefits as might exist in a developing or third world nation, it is pretty obvious that the difference cannot be 15 times greater.  In addition, knowledge work is being done in India for about a third the fully loaded cost in the United States.   It is what it is.  These facts are not going away any time soon.  The question is how do we deal with this reality in the United States and other Western countries.  

Socialists just don't get it.   We need to elect common sense Conservatives in 2012 and 2014 that support free market capitalism, limited government, lower taxes and less regulation, a balanced budget, term limits, real energy, education and health care reform, a strong national defense, including securing our border and fighting Terrorism, the right to bear arms, the sanctity of life and family values that are the foundation of our nation.   The is the platform supported by the majority of the American people and the only way to compete with the Chinese and restore economic growth and job creation in America.

We must take back our country to compete with the Chinese by sweeping Socialists out office.   We can do it.  We must do it to preserve our freedom, out nation and way of life for the sake of our children and grandchildren. 


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