Wall Street and China: Perfect Together?
I was feeling haggard and grumbly this morning after a truncated night’s sleep, when I happened to spy the following headline tucked away on page 3 of the Philadelphia Inquirer:
Wall Street, dissed by U.S., seen as moving to China
O joy that cometh in the morning! What could have triggered such an ominously promising headline? Apparently JPMorgan Chase, that venerable behemoth of the banking world, is moving its capital markets chief to Hong Kong.
Not exactly a mass exodus, you say? True enough, but outspoken bank analyst Richard X. Bové sees the move as a portent of things to come. Bové’s contacts in the banking world have dropped hints that other megabanks are planning to follow suit. Why? Let me quote the article, which in turn quotes and paraphrases Bové’s report:
Asia is growing faster than the U.S. and “the bank [JPMorgan Chase] will not be as constrained by U.S. regulators.” More U.S. banks are looking to leave Wall Street for places where they aren’t taxed and treated like enemies…
Bové says his banking industry sources tell him “other giant banks are preparing to move key business outside the United States” due to the “hostile” attitude of the federal and New York State governments. Politicians here “have made their careers bashing banks,” while the Chinese are eager for U.S. banking help.
Waaah!! All they did was precipitate the most dire financial crisis in eighty years, then reap the benefits of a federal bailout that compensated them for their losses. (We middle-class investors should have been so lucky.) And now they sniffle that we don’t like them! That if they can’t make the rules anymore, they’re going home… to China! So be it… I say it’s time we let ’em go!
Come to think of it, Wall Street and China are a perfect fit. Both care more about profits than they do about people. Both would trample their grandmothers and plunder the planet for a little short-term gain. Both are accustomed to operating by fiat; they tend to cast a jaundiced eye on the concept of democracy. Both are intent on spreading their amoral power and influence throughout the known universe.
In short, Wall Street and China deserve each other. These two megalithic, profoundly anti-democratic entities will make a great team, and I wish them a long, happy marriage.
But what about the consequences, you ask? And you’re right to pose the question. Once again, let me quote from the article that quotes and paraphrases Bové:
Losing banks “will dilute the U.S. control over the global financial system” and end the dollar’s role as “the world’s only reserve currency,” Bové writes. That means a weaker dollar, more pressure to pay our debts, higher U.S. interest rates, higher import prices, and a lower standard of living for many Americans.
Sounds pretty much like the world we Americans have been inhabiting for the last decade, only more so. I say bring it on! What’s the worst that can happen? Our economy collapses… then our government breaks down because we no longer have the income to fund it… we revert to a village economy, growing crops and producing quaint handicrafts… we worry less about success and more about bonding with our neighbors. We become a Third World nation, take siestas, smell the roses and celebrate life’s little joys.
I think I could live without Wall Street. Couldn’t you?
THE NEW MODERATE 
It seems odd that banks incorporated in the United States could “move” to China. Sure, they can move their HQs, but not their charters. It would interesting to seem them try.
How do you plan on stopping them ? Why do you think a charter is the word of God ? The only impediment of consequence would be the ire of their stockholders.
In the event that you think there is some impediment that can actually be thrown in their way, imaging that some new corporate entity – say JPmorgan China, just moves in and buys JPmogan US in its entirety ? And if our government decides they can not do that, then they just close entire divisions wholesale and send their customers to “new” divisions in JPmorgan China.
Interesting question, Rob. I wonder if they can reincorporate abroad, and if not, whether they’d still be bound by US regulations even if they move their operations to China. (If so, why do they think they’d benefit by moving?)
This was one of those little hidden articles that woke me up fast. We could be looking at the first step in a mass exodus, or not. I thought it was worth covering just in case it really is the start of something big.
It should wake you up – though you have entirely missed the point.
I highly doubt we are looking at a mass exodus, for innumerable reasons the US is still highly competitive in many many ways.
But over the long run we better grasp that most business – particularly big business is incredibly mobile. What keeps them in a give city, state, country is the environment.
We already know that businesses have been migrating from the high tax/regulation blue states to the lower tax/regulation red states for several decades, and that migration is having disasterous negative consequences for most blue states.
Why should we beleive business will not make similar choices with respect to countries ?
Dave: Of course businesses are going to relocate their operations to wherever the conditions are most favorable. That said, it’s not incumbent on us to create a pampering environment for businesses — especially financial businesses with questionable ethical standards. Let them find a happy home in China… though I’m sure they’ll maintain some kind of presence here so they can continue to influence Congress.
Yes, let them move to China, and then let them see what happens the next time they deliberately inflate an asset bubble and nearly take the Chinese economy down with them. Let them see how forginving Chinese law can be.
Rick, Hong Kong has long been a major international financial center, and many US banks have moved there. There is a huge American ex-pat community there. Plus, HK has a completely separate political system from the communist mainland… There is a strong emphasis on transparency and rule of law in HK, as opposed to the crippling taxation and regulation that exists today on Wall St. Not to mention the demonization that has been heaped upon the banks by a president who raked in millions in campaign cash from them and never pursued any meaningful reform of the current system.
I would say, in this case, “be careful what you wish for” is an apt warning.
total cost of government in Hong Kong and Singapore is about 15% of GDP, Hong Kong and Singapore top the economic freedom index. Hong Kong has a median income almost $1000/year higher than ours, and Singapores is 10,000 higher than that.
There are other issues with both, but in a large number of measures both are better than the US. Even presuming that on net they are less desirable places to live – how much less desirable ? total cost of government as a percent of GDP in the US is 3 times that of either, yet there is no measure by which either are inferior to the US by more than 20%, certainly not a factor of 3. What is it that our high government cost has bought us ?
Priscilla: My little diatribe, though not entirely tongue-in-cheek like Swift’s “A Modest Proposal,” was written with a sense of mischief. The news about JPMorgan Chase made me smirk… then it made me think “So you want to move to Hong Kong? Buh-bye, banksters! Yeah, I’m liking this!”
Of course we won’t be better off without our major financial institutions, but I’m feeling a wayward impulse to see the whole incorrigibly corrupt corporatist system — from Wall Street to the halls of Congress — cleaned out from top to bottom.
There are regulations for the sake of bureaucracy and regulations for the sake of ethics. I think we need to distinguish between the two… and dump some of the former while we create more of the latter.
I know that Hong Kong has a little autonomy from China, at least for now. And that’s where JPMorgan Chase is moving its honcho. But the article referred to China as hospitable turf for American banks. Shanghai is a major business center. In general, the Pacific Rim is where it’s at these days (except, ironically, for Japan).
I like your two-sided attack (thinking) Rick. Now that’s Centrist.
Another thing I like to add is that Ma and Pa banks were more popular in the early days of America. Although any bank can be greedy and others not.
From what my studies on history and the information on the internet. The owners of the worlds’ money don’t care how money is used by the national governments. Just as long as “interest” is applied to make them own more of the world.
Indiana had regional banks and within a few years only a few can be found around the state. Chase, Wells Fargo, PNC, Regions, etc… they are all “headquartered” in other states under different taxation.
If they base in Hong Kong, which I figured China at some point in the past. They are looking for people to “help” for “profit” for the “man upstairs”. I am not talking about the people running the company. I am talking about the shareholders of the Central banks who give their money out and expect nations to pay it back.
Central Banks make and break Governments.
“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power of money should be taken away from the banks and restored to the people to whom it properly belongs.” – Thomas Jefferson
“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.” – James Madison
“Den of vipers” – Andrew Jackson on the international bankers.
“Give me control of a nation’s money and I care not who makes the laws.”
– Mayer Amschel Rothschild
The Rothschild’s are the founders of the Central Bank policy and now is the largest financial advisory group in the world in over 42 nations. When you can make loans to nations going to war against each other…the banker wins with interest.
Either way, you should still get your 0% interest deal for the first 6 months in the mail whether the bank is based in China or somewhere else.
These decisions are made by banks smaller than the Central bank.
Yes those in charge of those smaller banks should pay for their greed, but if they make more money for the “guy behind the curtain”…don’t expect much punishment unless the outrage can be centered on a few men.
Between the World Wars, Britans financial weakness and the attitude of its government resulted in the financial capitol of the world shifting from London to New York.
Ignored in the rants over bonuses to Wall Street Traders post TARP, was that London was actively engaged in poaching the best and most profitable members of the US financial community – London is closer to partity financially with the US than it has been in almost a century. Those bonuses – almost exclusively to traders than actually made money through the crisis, were a major factor in retaining some of our best and brightest minds in the fields of finance.
For a variety of reasons I think the threat to quickly migrate enmass to china is empty.
The real concern – and one that should not be confined solely to the financial community, is that business – particularly big business can and will relocate itself wherever in the world it can profit the most.
Even if every aspect of your rant above were true. And even if the decision to move was totally immoral – all of which I think you are wrong on, the only way in which you can prevent this type of migration is by actually being the better place for business to be located.
What are you going to do to stop something like this ? Tax the crap out of them ?
Spank them ? Throw a hissy fit ?
You are correct, we are living in the world of weak credit. We are seeing what the world of 2% growth – just barely below the average growth in most of europe for the past 4 decades, looks like. Is this or worse really the country you wish to live in ?
Do you want a country where houses sit empty, because no one can get a loan to buy them, where farmers can not get the money to buy seeds and equipment, where business can not hire because they can not borrow money to expand ?
As to that village economy – look arround the world and history You can not sustain the life style that even the poor in this country enjoy absent the modern economy we live in.
If you really wish to see life spans drop preciptously, medical care degrade, quality of life decline, standard of living disintegrate – then keep empowering government to make the environment for business more and more toxic, and though far slower than JPmorgan is predicting – but inevitably you will get exactly what you are after.
I hope your backyard is fertile, and you are skilled at basket weaving, and you are ready to take your kids from school to tend your garden.
All this is of course an exageration – because we are hopefully not stupid enough to allow this to happen and it would likely take many decades during which we could come to our senses at any moment.
But you are starting to sound and awful lot like the greeks upset because no one will bail them out, because the success without effort lifestyle their government finaced for them is unsustainable.
It does nto actually matter whether the banks and other big businesses leave for elsewhere. All that matters is that under the hostile centrally planned environment we are striving for that they can not thrive and prosper – because if business does nto thrive and prosper – then neither do we..
We produce in order to consume. If we do not produce we can not consume. True 200 years ago. Still true today.
If you are prepared to kiss your standard of living goodbye in order to fail to punish those who you think have evil-ally take advantage of you – by making your standard of living possible, then eventually it is not just the banks that are moving to China – or atleast someplace that actually is free.
Dave: I see your argument… Yes, if we reverted to a village economy we’d forfeit a lot of the comforts and advantages we take for granted, including our ever-increasing lifespans. But think about it: what’s the point of living to 90 or 100 if businesses don’t hire anybody over 50 and there’s no middle class to fund social security and medicare? I’d rather keel over at 70 after an earthy, sensual, contented Third World existence, surrounded by a dozen loving offspring, than linger on till 90 riddled with anxiety because I can’t pay my exorbitant First World bills.
Just for the record, surveys have indicated that the world’s happiest people are the Danes (European Social Democrat economy), followed closely by residents of various tropical countries in South America and (yes) Africa. Poverty and happiness aren’t mutually exclusive. Poverty in the US is miserable because you can’t possibly live well here without money. That’s just not the case in the tropics.
I will be happy to needle Rick endlessly here. I could not expect a better gift to make my arguments than this. And ultimately Rick is correct – we have a choice between an environment that encourages freedom – economic freedom is inseparable from all other freedoms, or gradually returning to the abysmal conditions that existed for most of human existence. I can think of no better punishment for liberals than to have to live in the world they endevor to create – unfortunately the rest of us must live there too.
At the same time we are decades – possibly even a century away from a return to “self sufficient” living, under the worst of circumstances. And we are highly unlikely to drive inexorably toward that without at some point in the journey grasping that maybe we are headed in the wrong direction.
Equally important – despite my praise for Hong Kong and Singapore as well as many other parts of the world that are discovering the importance of freedom that we are discarding casually, we are not a failed state. We are not a failing state. in comparison to much of the world we are doing quite well. Contra to Bove economic investment for factory workers in the US has risen steadily for over a century – with manufacturing wages dovetailing perfectly – and is still far higher than any other nation in the world. Put differently we are still the largest manufacturing nation in the world, we produce more manufacctured goods than any other nation in the world, and we pay the highest wages for manufacturing labor of any nation in the world – and there is absolutely no reason to expect that is changing.
At the same time we have the lowest ratio of employees to output – we produce more, we produce more valuable goods, we produce more goods requiring high skills, and we pay very well to do so. Technical schools in the US train factory workers “manufacturing calculus” because those are the skills necessary to be productive in US blue collar jobs and earn US high blue collar wages.
China is growing fast – but its entire economy is still comparable to Texas and California, it has decades, possibly a century to reach the level of the US and absent abdication on our part that will never happen. Growth in China does not come at the expense of growth in the US. more Prosperous chinese are a huge new market for expensive US goods – just as we are an enormous market for those goods they produce more cheaply.
Further despite substantial and laudible strides, China has an incredible distance to go
Hard information on the actual state of the chinese economy is extremely hard to come by. There is good reason to beleive that they have debt problems that for an economy their size are far worse than ours. We know they have made some enormous financial bungles. And we know there is alot they are hiding from the rest of us. At best China’s current economy is little more robust than ours, with higher but slowing growth and more risk. At the worst they have Greece like debt problems. Regardless the collapse of the Chinese economy – just as that of Greece will not take down the world economy. US financial decline has world wide catastrophic consequences. Even backtracking slightly towards the self sufficient economy that Rick seems to admire would mean starvation, poverty and death for hundreds of millions in the rest of the world.
Morgan Chase and every other major US financial institution should be investing in china, but it should also be hedging its bets. Chinese investment has far greater risk than US investment. The Take away from Mr. Bove’s report should be that the lower risk couple with the lower growth resulting from regulation of US investment is atleast approaching the point at which some investment is shifting away from the US.
We rant about the imbalance in our trade relationship with China – failing to realize that it is impossible to sustain even small imbalances permanently. The relationship with China (as with Japan in a prior decade) is nearly perfectly balanced. We buy their goods and they invest in our country – not theirs. We trade them worthless green slips of paper in return for goods they produced. Though there are many things they can do with those green slips of paper, ultimately one of two things must happen – they must buy US goods or services, or they must be invested in the US.
What financial crisis ? Did the banks wake up one morning and decide we are going to blow up the entire US financial system for fun or profit ? If it was profit, how did all but a miniscule few manage to profit from something that vaporized approximately 11Trillion in apparent wealth I say apparent because ultimately that is the real problem, the real root cause of everything. through smoke and mirrors – mostly government smoke and mirrors, we deluded ourselves into believing we had created 11T in wealth that we had not actually created. Things did not come crashing down because Wall Street made “risky” investments. They crashed because ordinary people woke up gradually to the fact that their borrowing, particularly on their homes was not sustainable. That 13%/year increases in the value of their homes was not realistic. some rich and middle class people recognized this, some “housing speculators” realized this, but the majority of people who pulled the board from their eyes were those floating between poor and middle class whom we – particularly through our government seduced into buying homes they could not afford, on credit they had not earned, before they were able to do so.. Absolutely they were harmed – it will probably take a decade atleast before most of the reach the point where they will actually be able to aspire to the dream of owning their own home – and many are now jaded.
Certainly banks and mortgage companies wrote loans they never should have written – for the most part gleefully, because the turned arround and sold them to Fannie Mae and Freddie MAC who our politicains were demanding write ever more loans to poor people with insufficient credit.
TARP was a bad idea. Anything too big to fail – needs to fail, now. Wachovia and Leahman were obliterated – yet most every bank I know seems to be building branchs.
Business failure is the end of the world for the stock holders in that particular business – or atleast it is the loss of all or nearly all of their investment. For the rest o us it is pretty much meaningless. If there really are too many banks in the market – then one less brings us closer to where we need to be. If there are not – new ones will be born from the carnage of the old.
But even so TARP has done well as an investment – except for a few specific loans such as those to GM, GMAC, Chrysler, and a miniscule number of banks – none of which is likely to even be repaid, the rest has mostly been repaid with interest. There have been some smoke and mirror games at the Fed that helped, but there was actually little question from the begining as to whether the government could profit from TARP. Government rules had artificially made most major banks technically insolvent. initially this provoked firesales of Mortgaged backed securities in an attemtp to regain solvency. but when Mortgage backed securities could nto be sold for better than .25/$ those sales stopped and the the banks essentially confronted the government, while they were technically insolvent they were nearly all profitable and in no real danger of collapse. Most had real balances sheets greatly exceeding their liabilities, Banks like citicorp essentially said – shut us down – I dare you. Their stock prices plummetted, and their investors took a bath, but there was never any danger that 25% of US mortgages were going to default, much less that 75% were which was what was required for MBS’s to actually be worth .25/$. The housing market to an 11T hit – but the market itself is over $50T.
Regardless, with few exceptions the real financial system was never actually insolvent. There was a serious problem – $11T in false property values is a serious problem.
Dave: From everything I’ve heard, if we had let AIG fail the entire Western economy would have been brought down in a flaming heap. Apparently AIG was interlinked with so many major corporations that its failure would essentially have pulled the plug on the corporate world as we know it. (Not necessarily a bad thing in moral terms, but it would have been a disastrous thing in practical terms.) That’s what they meant by “too big to fail.”
I am aware of what has been said.
Virtually everyone claiming that we were facing financial armegedon benefited in one way or another from the bailouts.
I have no doubt that things would have been worse – probably about twice as bad, without the bailouts. The same data that demonstrates that things would have been worse also shows that recovery would have come much quicker and been much stronger.
We have a long history of economic bubbles bursting. Both in the US and across the world. There is credible economic literature strongly suggesting that the lessons of the past are that government efforts to cushion the collapse of bubbles, reduces the depth of the trough – by extending the duration, and that the area under the curve – the total actual damage is substantially greater when government intervenes.
The FED deliberately caused the Carter Recession to purge inflation from the system. Carter went along – though it cost him the election. Reagan continued the same policies afterwards, and the recovery that eventually came was the strongest and longest int he entire 20th century.
The post war Depression of 1920-21 was possibly one of the most severe in our history, We have poor records but unemployment may have exceeded 30%. It resulted in a dramatic drop in wages and prices – deflation – that boogeyman that the FED has been working valiantly to avoid. It only lasted 18 months, and was followed by almost a decade of significant prosperity.
Issues regarding AIG are incredibly complex. The actual effects of – and even whether AIG would have collapsed depends on exactly how things went forward. AIG had a potential unfunded liability of almost $150B – aside from Fannie and Freddie which dwarf everything else, AIG had by far the single largest exposure. The word “potential” is critical. AIG’s liability only became real if banks actually sold their Mortgage Backed Securities at .25/$ and as TARP demonstrated they refused to do so.
Regardless, the total government spending on the crisis, TARP, Stimulus, Fannie and Freddie Bailouts is dwarfed by the actual fiscal carnage which I beleive was over $11T.
A problem we fail to grasp is the enormous numbers we are dealing with.
Total US GDP as a percent of financial market trades is below 2%.
The unregulated shadow banking system is possibly an order of magnitude larger than the regulated financial markets.
GDP is essentially the wealth we have created this year. The fact that our government is consuming 40-50% of what we produce is a major problem. But the new wealth we have created is a small part of our total wealth. The governments ability through spending – even Trillions of dollars of spending to significantly positively influence the marketplace is very small – the best credible studdies have govenrment spending generating 1.3 times as much economic activity as they cost – so $2T in government spending has a net economic impact of +600B – though i would note it still has a negative impact of $2T – the actual cost of the spending, which must come from somewhere. Essentially we just have another wealth transfer. Worse – the $600B in gains are the optomistic version. Harvard;s Barro claims the multiplier only reaches .8 during war and normally falls between .3 and .6 Essentially all government spending does more economic harm than good. Assuming a multiplier of .6 for TARP the net negative impact is larger than the AIG bailout. The net negative impact for the entire stimulus would be an order of magnitude larger than the AIG bailout.
Any time there is a substantial miscalculation of our wealth it will ALWAYS manifest itself in the financial system. Just as Money is not wealth – but it is the way we measure wealth, outside of the off the records cash economy the entire rest of our wealth is exchanged, held, moved organized, structured, etc. in the financial system.
the aggregate of every economic decision we make – good or bad is reflected in the financial system. If we miscalculate our wealth, if we inflate the value of something mistakenly beleiving the inflation to be real increases in value, when ever we come to recognize that mistake, it will show up in the financial system.
Rick’s assertion above is essentially that “they” destroyed $11T of our wealth. This is false – I thought the left did not believe that the financial system produced anything – added any value. If all they are is middle men moving things arround, they can neither create nor destroy real value – unless you think bankers had night jobs as arsonists.
In cahoots with government they help create $11T of false wealth, and after a decade they grasped that was false. But the core problem is the housing bubble.there can be no catastrophic financial crisis absent a serious large mistake in the value of something real – housing is just one of the worst possible choices.
The financial markets do not actually set prices – they measure them. We set prices when we chose to buy – or not buy – and when we chose not to buy houses – their price tanked.
Banks did not chose not to buy houses. they did not suddenly say – these houses are just not worth that much – we did.
The financial markets to not set values. They measure them. The value of anything is what a sellor and buyer agree to. There is no intrinsic value. CEOs and Celebrities are worth what they are – because WE chose to value them highly.
Damn those infernal bankers. Why won’t they run their banks as charities ? Why do they insist on making a profit ? After all I would no think of changing jobs to get paid better, or working at a loss when I could relocate and atleast break even.
How is the minimum wage different from a banks desire to make a minimum profit ?
I would think that after the carnage of the “financial crisis” you might grasp that businesses are owned by US – you an I. Our 401K’s our pension funds, our mutual finds, our insurance. If $11T vaporied from the stock market in 3 months – and it was all just the excess wealth of the rich – who would care ? It matters BECAUSE we – the 99% own nearly all the businesses in the US – including the banks and mortgage companies.
In August of 2008 I transfered my IRA from a Bank CD to an investment fund. Within 3 months It had lost almost 20% of its value. Today it is worth about 10% more than it was when I moved it. Absent being stupid enough to buy at the top of the market and sell at the bottom this is about the worst stockmarket investment one can make. Yet, I am well ahead of having left it in CD’s or treasuries, or …… Tomorow could easily prove that wrong I do nto know how to read the tea leaves and whether we are slowly struggling into a real recovery or whether we are in the eye of the financial storm. But I do know that across 4 years of “the worst financial crisis in nearly a century” my IRA has dramatically out performed what I have invested in Social security.
I’ve been a close-up witness to the process of establishing US-based business operations in China, and I have to laugh. The Chinese always crow about their eagerness to “learn” from us, while extolling the glories of the world’s largest potential marketplace. (“Hello, Fly. Meet Spider.”)
Are these investment-bank geniuses actually moving operations to the PRC to attain the benefits of what they perceive as a more favorable regulatory environment? Really? Good luck with that. And good luck navigating China’s byzantine, highly arbitrary system of regulating foreign financial firms. In a year or so, Bové and company won’t be able to cash a check without the approval of three levels of financial regulators and the blessing of their Chinese joint venture partner.
Paul, I’m no expert on any of this, but I have a couple of friends who have lived and worked in Hong King for several years now, and both say that it is nothing at all like the PRC. My understanding is that things are exactly as they were when HK was a British colony…free speech, democratic systems, western culture and entertainment, as well as an antipathy to Mainland China. Since the handover from Britain, they say, basically not much has changed and I believe that the agreement to keep HK an administratively separate political entity for 50 years was part of the handover agreement. Granted, you probably can’t trust that to continue, and your experience certainly sounds as if it was very different from those people that I have spoken to. Either way, I worry that the era of three levels of government financial regulators may be coming to our own shores 😦
Point taken, pear, re the present-day difference between Hong Kong and the PRC, and you’re right, of course. I’d simply suggest that China’s assimilation of HK is inevitable and will probably happen sooner rather than later, the 50-year handover agreement notwithstanding. (Agreements like this tend to be “flexible” in China.)
I can’t help but think that the positives you cite — free speech, democracy, etc. — will devolve over time, and with them, the vibrancy and dynamism that is today’s HK.
Appreciate your insights…
China will assimilate Hong Kong – over the longer run it will assimilate Tiawan. At the same time Hong Kong and Tiawan are assimilating the PRC.
China is not a role model we should follow. But we are talking about a nation that is deliberately choosing to evolve from possibly the largest statist centrally planned bureaucracy ever to exist towards far greater freedom.
Most of us do not grasp how close China came to collapse at Tianemen Square. The principle obstacle to sweeping political change was the absence of the historical, cultural and political background of freedom. The students (with broad popular support) knew they were unhappy with what they had, but despite paper mache Statues of Liberty had no real grasp of political or economic freedom. They did not know what to ask for.
Neither Hong Kong nor Tiawan are the US. But unlike students at Tianemen Square they have a far better idea what they want. They know what political and economic freedom is. They have some understanding of what is necescary for it to work.
And China did not want Hong Kong back to starve and punish it.
As Paul notes China is not the free market utopia that Bove is seeking.
But what if it or somewhere else was ?
Where should JPmorgan, its staff, and its shareholders want to be ?
Why isn’t that the US ? What is it about the US that attracts immigrants and businesses from arround the world, and what is it that drives some away ?
People from all over the world still risk death in droves to come to the US. Why ?
Do they come for the New Deal ? FDR’s four freedoms ? Social Security ? Medicare ? Welfare ? Food Stamps ? unemployment ? The minimum wage ?
Is there any progressive accomplishment in the past century that cry’s or whispers to the huddled masses, the wretched refuse of other nations, the homeless, and tempest tossed ? What is inside our golden door ?
For more than two centuries this has been the land of freedom, and opportunity. It is why we, our parents, grand-parents, or their parents came here.
They did not come for pure water, or clean air, they came to breath free.
Those attempting to enter from central america today still speak of the streets of gold.
Being a poor illegal immigrant in the US unable to access any of the benefits of a century of progressive government is still living better than most anywhere else in the world.
Yet for more than a century we strive for free things, rather than freedom, and wonder why the rest of the world starts to look more attractive to JPmorgan.
Progressives want fairness – everything the same for each of us – yet we left near perfect fairness – poverty for all but far less than 1%, and today’s immigrants leave similar fairness, for the chance to be below the bottom in a free country.
We squander our heritage for things much of the world could careless about.
That Rick, others here and progressives everywhere would not only are willing to, but have actually been striving to “return to village economy, growing crops and producing quaint handicrafts… we worry less about success” terrifies me..
What you are longing for has existed in the past, and does throughout the third world today – and nearly universally they would happily trade places with us.
I would not trade worrying less about success for worrying about my next meal. There is not so much time for bonding with our neighbors, smelling the roses, and celebrating life’s little joys when our quaint village economy is barely meeting our needs.
Eloquent tirade, Dave, but please don’t take my daydream about the village economy too seriously. And don’t forget that my village scenario was based on a mass abandonment of the US by our major banks and corporations. It’s not as if we’re kicking them out and forcing them to relocate to China. What I was saying, essentially, was that if their loyalty to America is so flimsy that they can’t abide any form of regulation without jumping ship, then damn them for their arrogance and amorality, and let them jump ship. They might have more in common with China than they do with us. This is the sorry state of corporatism today; their ways always struck me as oddly out of alignment with the principles of a democratic republic… what are corporations, after all, but miniature totalitarian states?
Rick, I am going to leave a thought to you and your readers.
“[I am] a socialist in ideology, a capitalist in methodology.”
-Maurice Strong as quoted in Macleans.
Licences to have babies incidentally is something that I got in trouble for some years ago for suggesting even in Canada that this might be necessary at some point, at least some restriction on the right to have a child. – M. Strong
History of this man is that he was the under secretary for Kofi Annan then he left to Beijing, China just as soon as the oil-for-food scandal hit the U.N. in 2005.
He has been known to be an economic advisor to high level Chinese leaders. Knowing that he is a highly respected entrepreneur with many awards, I wouldn’t doubt his power.
Imagine China as Communist in Government party and in authoritarian. Highly regulated, but it’s monetary system Capitalist.
In short, a new World Order in China, not in the United States as previously thought 10-20 years ago.
It would make sense for it has the largest population in the world and be able to host the world banks, and world powers. The sheer size of the military can’t be compared in numbers. The very rare Earth natural elements (resources) of the world are based in China. Our Space, Military, computer, manufacturing and high tech secrets are either being sold to them or stolen.
If you don’t see the “big picture” of the “man behind the curtain” then that can only be the fault of yourself.
We will either embrace the New World Order thru China or die trying to circumvent. The decision apparently was made in the early 21st century. I am gathering China was a second choice if the U.S. couldn’t stop it’s right-wing ideologues. There were rumors in certain places on the internet in the mid-late 2000’s on a “change” for a “New World Order”.
Unfortunately, it doesn’t bode well for the U.S.
Plan A: United States is the leader of the New World Order
Plan B: China if the United States resists “change”. U.S. freedoms may resist.
1. The U.S. politicians are told by private (secret bankers) to continue programs under a “provide help” clause and China will provide the money.
2. Money in China will be deflated in order to push Chinese exports abroad, thus boosting Chinese economy to get the Chinese banking system to stage 3.
Once China is fully “online” then you can expect the reverse. In some order.
3. China will try to secure itself as the dominant reserve currency.
Note: China has already suggested this when the economy tanked in 2008 and is still trying.
4. U.S. inflation spikes. Pay back time. Income taxes sky rocket and/or many businesses must close or move to China to keep in business.
Ben Bernanke says: at least rates will stay low till 2014, but after that it may become unbearable.
5. Politicians will be left with cutting their programs for the sake of economic national security or their jobs. The politician will be in a “catch-22” situation. Unstability will reign in the United States. Taxes will slow hiring.
Voting and the whole political process has been a mess since 2000. No national budget since 2006. Social Security still hasn’t been fixed. The past 4 years of only talking Obamacare is now a possible failure.
6. Ambitions of the Chinese are to control the world. With the United States broke and spread over the world financially and militarily, Chinese takeover of Taiwan and any other nation is available.
7. The needs of the people (Chinese) outweigh the needs of the many (world).
In effect consequentialism. “The ends justify the means”. “more basic wealth, then more reproduction; more people, then more production and wealth… if people have plenty, they would be good, filial, kind, and so on unproblematically.”
You can not grow a world Government without this last thing, otherwise the attempt to the means is void. This is clear to any nation that would want to take over the world in an authoritarian way.
What Chinese leaders would not disagree with this outcome????
What international bankers would not disagree???
There is alot you are saying that is interesting. There is also alot that though commonly beleived is just plain wrong.
Learn something about china, chinese culture, government, thought. I am no expert, but china is not and never has been the carciture westerners paint her. The China of Mao was vastly different than the Germany of Hitler. And China today has been jogging away from Mao for atleast 1/4 century. We may not know exactly where she is headed – but she certainly is not headed towards some econo-fascism.
Government in China even under Mao was far more distributed and less totalitarian than westerners perceive. The political purpose of the cultural revolution was to use the youth to bring the government back in line. The primary targets of the Cultural Revolution was autonomous regional communist leaders.
The US was going to be Japan, Inc. in the 80’s – Since then the US has grown from 1/4 to 1/3 of the world economy. The EU is another third. China and every other nation in the world make up the rest. China’s ecnomy is still smaller than Japan, and only slightly larger than that of California(9th) and Texas(14th) combined.
China produces large volumes of high tech goods – but it is still many decades behind in being able to create them.
Nations that engage in monetary and trade manipulation games ALWAYS lose.
If china choses to “grow its economy” by manipulating its currency and driving up its exports, it is engaged in transfering wealth from its own people to US. I am reminded of the salesman who when told he was losing 30% on every item he sold responded “yeah, but I am making it up in volume”
China is inevitably going to be a far more significant player in the world in the future. But presuming that its gains must come at our expense is the same obvious zero sum malthusian fallacy at the core of nearly all progressive thought.
As China actively moves toward ever greater economic freedom, it inevitably moves towards increasing political freedom. China and her culture are different from our own, and chinese political and economic freedom in several decades may be different from ours.
But for China to amass the kind of power in the future that you fear – which is likely, they must also embrace the freedom that ensures they will not become the threat that you fear.
Just a few decades ago, it was virtually impossible for a foreigner to even visit China. Today I have a nearly 16 year old daughter who was born there, and my family is planning to tour the country as soon as we can.
You may not grasp that wealth sufficient to make over a billion people happy must be created – it can not be acquired by steeling it from others. But the Chinese government does. They are not seeking to conquering anyone anymore – but they are seeking to compete for the resources necessary to make their own people prosperous.
There is a reason England prospered as Spain waned – despite the fact that 16th century Spain stole much of the worlds gold.
Chinese energy resources in the form of Shale Gas and Shale oil are probably the greatest in the world.
Rare Earths are not “rare”. Once concern arrose that China had a corner on the world Rare Earth market – miraculously they started being discovered all over the globe.
The Chinese are not seeking world government. That lunacy is the domain of the political left in the US and EU.
Inflation is always and everywhere a political monetary problem. The natural tendency through out history has been deflation. If you are victimized by inflation, it is because of the poor (and probably deliberate) choices of your government.
Kent: There’s the makings of a great dystopian sci-fi novel somewhere in the scenarios you present. But who knows what lies ahead? Back in the ’80s we all thought Japan was going to overtake us… and look at them: they’ve been worse off than we have for the past 20 years.
Rick, I remember those who hated Japan because of the cars. The small cars and the money they possessed. Not to mention the “American made” lingo.
If you make good quality stuff, people will want to buy it. You make the price affordable then a good majority will have it.
Some Japanese were buying land in those days with the excess money they acquired. Real Estate was cheap…that wasn’t Japan’s fault. America was weak and needed a monetary investment. Japanese decided to invest in open access land in America.
I will expect Chinese to do the same thing at some point.
Heck, we bought Chinese land rights to build manufacturing over there years ago when China was low in incomes.
I don’t find it odd at all that JPM/Chase are moving to China. As you pointed out, they have similar values. That they are allowed to do so probably has a legislative history that most of us Americans have missed–either through pork barreling or legislative secrecy. Personally, I have been disappointed with the moral direction of the government since the post-Clinton administration years. And when I say morality, I’m not talking about “women-related issues.” Perhaps the better word is ethics…
Ellie: I think we’ve lost our moral compass, too. Politically, it probably started when Bush II pulled us into Iraq. Economically it began back in the ’80s with the rise of the MBA in American society. Culturally it might have started as far back as the ’60s, when we liberated ourselves from soul-dulling convention but lost something called character in the process. One bright note: this is a topic that conscientious liberals, moderates and even conservatives can agree on… and we all loathe the amoral corporate culture that seems to have overtaken America.
Do not presume too much about what we can agree on.
Hayek noted just after WWII that inherent in progressivism was exchanging personal values and responsibility for communal values and responsibility.
That inevitably we would find ourselves less and less connected ot our neighbors.
i see what you are calling an amoral corporate culture as rooted in progressivism.
While it is true that the objective of business is and will always be profit. Not only is that not inherently amoral or immoral, but so long as society has a moral foundation it will be very moral.
It is extremely rare to succeed in business absent integrity. No one will do business with you.
Some of the canned goods and dehydrated meals I have are good until 2014. Store your water in opaque containers, not clear ones. It is absolutely crazy not to have a minimum of a six month supply of food & water, etc.
Just today I was at a red light and saw another small bank building empty. It is beautiful architecture–marble columns etc., but the building is empty and in disrepair. Yes there have always been some percentage of residences in disrepair, but when have BANKS been abandoned, at all, and now in such large numbers? If the bankers thought there was money to make they’d be occupying those buildings. I’m telling you an unprecedented number of “monopoly men” are pulling up stakes.
Yes there are some strong sectors in America, but the profits are going to fewer and fewer people. U.S. manufacturing OUTPUT is strong, but the processes are mechanized and/or overseas. Those high-tech U.S. manufacturing jobs are few and far between.
Can the strong sectors and new growth areas carry us? I’m worried about the domino effect if the weak sectors get weaker and are not replaced fast enough with new ventures. There ARE solutions to our problems, but I don’t see us heading to them fast enough. Things still seem fairly good in many ways, but how much of that is “old money” and hollow or fragile? I was there to witness Bethlehem Steel, the #2 steel manufacturer in the world, go down. Even close to the end many were in denial.
I’m doing what I can to be productive and positive and to stimulate in my spheres of influence, but I’m also preparing for the worst. Sorry, I’ve always been an optimist and not an alarmist, but I’m seeing too many bad signs.
Pat: Hey, I was living in Allentown when Bethlehem Steel (or, as they referred to it locally, “The Steel”) shut down. It was the symbolic end of an era — the age of American manufacturing dominance. I’m not quite ready to become a survivalist yet, but maybe I should start stockpiling bottled water and canned food in our cellar. Just in case all those companies move to China… and China calls us on our debt. Maybe I should buy some land, too… our 1/8 acre plot in Philly wouldn’t feed a toddler.
China is not calling our debt.
Though we have very serious problems, there is no one to bail out the US. If the US economy tanks the entire world goes with it.
What will likely happen – which is what happened in Greece, Italy, spain, … is suddenly the interest rates demanded for treasury loans will skyrocket.
Currently it is ridiculously low. If it doubled – and it could increase by a factor of 4 and be below where it was in the early eighties, our cost of borrowing would skyrocket. We would instantly need $200B in additional revenue/year – 1/3 of the budget of the pentagon, and we would get nothing for it. We are likely a few years away from that, but it is unlikely we will see it coming. Greece went from borrowing at 3% to unable to borrow at 13% in just a few months.
My crystal ball is pretty cloudy. There are signs of improvement and signs things could get worse Beyond that we have some very serious problems – every single one focused on government that if we do not solve pose very serious long terms threats.
Canning was invented in the Napoleonic era and there are goods canned then that are probably still edible today.
In my area banks – particularly small banks are building and have been since 2008. That has been infuriating to many of us – we bail them out and they build. We can’t build, but they can.
US corporations are owned buy us. Buy our pension funds, IRA’s life insurance, ..
If business is doing well – we are doing well.
The income inequality meme is fraught with errors and i have beaten it to death before.
But if you really want to go back to the standard of living you – or even the least well off of the 99% enjoyed in 1980 rather than what you have now – be my guest. In 1980 the US was 1/4 of the world economy, today it is 1/3. That is not because Gates and Buffet are buying Yachts. Income inequality tends to grow during good times. It is not just a measure of how rich the super rich are, but how much better everyone with a college degree does than everyone with out – and still even people without a highschool degree are have more wealth today than they had in 1980.
Income inequality is also distorted by booms and busts. During booms, the young (who are generally poorer than the rest of us) are more likely to strike out on their own, form families during good times – new households make income inequality appears worse. Where before you had one household with multiple wage earners, now you have two or more with fewer earners. Statistically inequality grows – but the reality is people are secure enough to go out on their own. When recession hits young people move back to their families – in droves. Further while most unemployment is in the bottom quintile, the loss of wages in the upper quintiles is dramatic – often from 1/4 to 1/2. The federal government and the states have all had serious revenue problems the past several years.
The upper quintile of americans who pay 60% of the total taxes of all kinds – that is federal, state, sales, income, ….. the upper 2 quintiles normall pay 80% of all taxes. Well when their incomes drop tax revenue drops too – as we have seen. And statistical income inequality becomes much smaller.
I have seen some data suggesting that at the peak of the recession income inequality was the lowest that it had been in almost 100 years.
At the supposed peak of the US steel industry in the 50’s we produced about 54 million metric tons/year. In February 2012 we produced 7.4 million metric tons (down from january), Or between 90 and 100 million metric tons in the midst of a recession.
With very few exceptions US heavy industry is producing far more than it did in the so called glory days of the 50’s. What is different is that there are far fewer jobs, they require far higher skill and they pay far more than in the past.
And that is a trend that is likely to continue. And it is a good thing..
And another thing…there are NOT just TWO choices, namely 1) continue our “modern” global economy or 2) revert back to some 18th or 19th century primitivism (word?). There are new options, new variations, new blended systems in which local communities and state-of-the-art production and innovation can complement eachother.
The modern structure of communities is a failure of progressive central planning, and has nothing to do with the modern global economy or prosperity. Any “Plan” to change it will fail – because trying to plan large aspects of human behavior always fails.
And ultimately we really only have two choices – trust government – despite the fact that just about everything that is in danger of failing is government. Or accept that if we wish to maintain and grow our standard of living – for everyone particularly those at the bottom, we need less government.
To the extent we have alternatives, it is only how much less government. Regardless, whether we pick the status quo, or some new scheme if it is “Planned” particularly government planned rather that derived from the spontaneous order human endeavor creates naturally – then it will fail.
The problem is not the specific structure of the community – there are plenty of smart people that grasp we could do better than what we have. It is that any structure imposed top down can not be sufficiently flexible to meet our widely varied, and dynamically changing needs.
Nor is it likely we are headed for the 18th century – though if Rick is planning on living self sufficiently on 1/8 acre in Phila. It might be the 16th century.
We are headed into the future one way or another. We are not going back. The question is are we headed into a future with the miserable 1-2% growth we have experienced the past 4 years that means permanently large unemployment and all the other dismal aspects of a weakly growing economy, or are we going to chose to scale back government sufficient to atleast get to the 3-3.5% average for the 20th century that made us all much happier, or even further and we can start talking 4.5 – 7% growth which no one now living has seen over a sustained period.
We can be less dependent on government and the “corporatists,” and be cutting edge, high-tech, and wealthier than ever. But too many people are asleep. That’s where I’m going now. Good Night!!
Rick, our paths must’ve crossed in the Lehigh Valley if you were living in Allentown. I probably held a door open for you at one of the old Wawa stores or something ( ! ).
Yes, “the Steel.” At one point in the early nineties I was getting a steady stream of laid off steel workers in my job training program. Then a grant project I was working for ended up in one of the main Bethlehem Steel office buildings on 3rd Street as they were carrying the desks out of the building (I got one. It’s made of steel. I will crawl under it in case of earthquake or nuclear attack!)
Also, you can be a MODERATE SURVIVALIST. The more extreme survivalists drop out of the mainstream and wait for the sky to fall. Us moderate survivalists are just as engaged in society as ever, ‘cept we have back up supplies in case of a serious downturn.
I was in architectural school in the late 70s and early eighties in the midst of the first solar self sufficient living boom. I had barely heard of Adam Smith, had no idea what division of labor was, but I quickly grasped that if my professors were right and we had 3-5 years to transform the entire city of Atlanta to dry toilets, solar homes, backyard gardens and total self sufficiency – that it was not going to happen. That in addition to all the liberal values true self sufficiency was going to require turreted automatic weapons. I decided that if my professors were right, that I would rather starve with the masses, that slaughter my fellow man in order to survive a bit longer in my self sufficient bubble.
Though I hope more of us grasp the lunacy of self sufficiency today than then, nothing else has changed. Division of Labor works. Ten people each making a part of a pin can make 100 times more pins that each can make on their own. Real self sufficiency is the route to poverty and violence. This planet is capable of supporting far more people than it currently has – but not using, 16th or 18th, or even 20th century technology.
Speaking in China Sec. State Clinton raised the issue of human rights stating our commitment to our core values of human dignity and the rule of law.
While disident Chen Guangcheng spoke from his hospital of his desire to come to the US
I suspect that Clinton, The Chinese and I have different views of what the rule of law and human dignity mean.
But the question of what our core values are is core to going forward.
Rather than plan our streets and roads and communities, we should consider what really matters to us.
Rick has waxed nostalgic, pondering a return to some mythical past values (that start to make him sound like a conservative), but day dreaming about something that never was, is not the same as striding forward to a better future.
Unless we are going to wander aimlessly we need some idea where we are going – what matters to us.
What is human dignity ? What does the rule of law mean ?
If we hunger for greater human morality, we must determine what morality is and what are its roots.
Previously. Rick has posed fairness as the core value of Moderates. I have made my criticisms of that. Regardless, if that is the core value of the New Moderate, what does that mean with respect to morality and the decisions we make.
I have posed Freedom as not only the core value, but a value without which no form of morality can exist. As not just a core value, but a Supra Value – a avlue that all other values depend on.
I still have no clue how to use fairness as a guide to moral decision making.
There is no common agreement on what fairness means. Even to the extent their might be a mafority view on a single aspect of fairness, I can not see how a consensus on some facet of what is fair does not devolve into the majoritarian tyranny of those with a different view. As a core value fairness presumes a right to acheive equality in some nebulous form by force when it does not occur naturally.
Regardless, what is it that Chen Guangcheng, China, Wall Street, Rick, I should be striving for ? what makes life worth living ?
The conflict with China over Chen threatens to forestall cooperation on issues such as North korea, and Iran – issues that without China’s cooperation could result in untold death and destruction.
How do our core values address that ? Can we and should we sacrifice Chen to a greater good ? Is that fair ?
Asmith, your concept of self-sufficiency from your next-to-last post is typical of your thinking which is polar and extreme.
You imagine or see division of labor at one pole and self-sufficiency at the other pole. That is flawed thinking.
You know examples where division of labor is a good, productive thing, so you surround your concept of division of labor with x number of samples (however many it takes for you), and then division of labor gets cemented into your thinking as a good thing, the good pole.
You know enough examples of self-sufficiency as let’s say slow and backward or less productive, so you surround your concept of self-sufficiency with those examples that support your concept, and then you cement that concept into your thinking as the other pole, diametrically opposed to the other pole, opposites, extremes. It shows time and time again in your posts.
Reality has many gradations between extremes. Moderates see the many gradations and are able to understand and see the range where the thing is healthy, as well as both extremes where the thing is detrimental, less healthy, harmful, noxious.
When you hear or read “self-sufficiency” you conjure something akin to an individual eking out a paltry existence in a vegetable garden. That is extreme, polar thinking.
Here is an example from the myriad of gradations between the conjured poles where I think you might see self-sufficiency in a positive light:
How many men shave? Billions of men. How many companies manufacture razor blades for shaving? Gillette, Remington, a few more? Have you seen how expensive good razor blades have become? Loyal status-quo capitalists will say we are all benefitting from the improvements made to razor blades, yada yada. Sure, that’s an example of the general population benefitting from the razor blade specialists. But it’s crazy for billions of men (and women) to rely on just a handful of companies monopolizing an industry.
There are clusters of men and woman all across the U.S. who are unemployed, underemployed, lost, wondering what to do, etc. If our society wasn’t so confused and off track, some of those people pining for work could have been precision machinists and could have started their own companies producing razor blades, or shoes, or lawn mowers, or widgets, even with given market pressures, if they wanted to make it happen bad enough.
People in Pennsylvania could buy excellent products from Pennsylvania manufacturers of X while people in Oregon could buy theirs from an Oregon manufacturer, et cetera, instead of everyone buying from one global ruler who needs billions of barrels of oil to truck the product all over to a bunch of over-dependent idiots. Now, don’t misunderstand. This doesn’t mean that all big national and international companies have to go away. That would be polar thinking creeping in again. Moderation: fewer over-dependent idiots who are at the mercy of the oligarch ruling/owning class; more capable independent and inter-dependent regions not so much at the mercy of the few.
So a healthy modern citizen could still be a specialist in a technologically advanced society and there’d still be division of labor, but better to have more competition, more specialists. Better to keep more of our wealth around us in our own towns and regions than shipping it off to super upper class islands.
It is irrelevant whether your definition of self sufficiency is Robinson Crusoe or some wierd modern version.
I wanted to say “High tech” modern – but “high tech” without tremendous division of labor is pretty much impossible.
I grasp peoples desire for self sufficiency. I have repaired my own cars in the past (no more), I do my own plumbing, electrical work, carpentry, ……
Sometimes I do it because I can not afford to hire someone, sometimes because i enjoy it, sometimes because it is the only way to get exactly what I want.
But it is ALWAYS a losing proposition against spending my time doing work that I am far better at – when I can get it and get well paid for it.
I am not trying to talk people out of broadening their skills and interests. But a significant change in our overall structure towards greater self sufficiency, means we produce less, have a lower standard of living – and the very people everyone here is most concerned about suffer the most.
I am an embedded software engineer. I am currently developing new products for a company with 300 local employees and many more globally. If I spend less of my time on that work, and more on my lawn, my car, my house, …. I am less productive, there are fewer new products, the company loses market share, and people end up out of a job.
I have no grasp of the meaning of your razor blade example.
If you think making razor blades is a good idea – start a company doing so.
If you think they should be made in PA or oregon – do so. If you think that is a selling point – then sell them as locally made. You can even pitch your idea to me or others and try to get us to invest.
To the extent you are free you may do as you please. If your perception is correct then a share of the wealth you create will be yours. If you are wrong – it is your money you will lose.
As long as your do not demand special legal protections from government, or subsidies, as long as my taxes are not part of your investment i do not care what you do, nor does it matter much whether your idea is a good one or not. so long as everyone remains free – free to support your idea or not, to purchase your product or not – go for it.
My problem is I do nto think that is really what you want or believe.
Your argument appears to suggest that there is some morally issue involving razor blades hiding here. One I can not grasp.
If it is actually crazy for billions of men and women to rely on just a few producers for something – then ultimately they wont. What is actually crazy is for you or I or government to tell everyone else that what they are doing is crazy and that they must do it some other way.
Note there is a difference between MUST and Can. If you do not like something you are free through your own efforts, and money to change it. If you are unwilling to – it must not have been all that important a problem. And unable really means you are unable to persuade a sufficient number of the billions of razor blade users to shift to a different product or model. If you think that is wrong, that means you believe you think you can use FORCE to change things.
As to the price of Razor’s, I can buy a 12 pack of Bic’s for $2.57 at Walmart. I suspect you would be hard pressed to find a time in human history when you could get that good a shave that cheaply.
And if you want the 23.95 for 4 quad blades, or if you want to spend $25 at a barber shop or …. you are FREE to do as you please. you are FREE to decide the value of any good or service totally differently from how I do, and spend more or less on it as you please.
Lots of people make purchases in ways I think are stupid inefficient and wasteful – but they are free to do so. just as I am free to do differently.
Regardless, I do not understand the problem ?
If you wish to keep your wealth locally – do so. you are free to spend your money as you wish. Just please do not try to tell me that I am NOT free to do so.
As to the actual merits of the buy local argument. Rising standards of living are tied to ever increasing specialization, higher productivity greater division of labor, and ever larger markets. NAFTA shifted lots of jobs making garbage cans and brooms to Mexico, and created lots of jobs here making the machines to make garbage cans and brooms and …..
Absolutely some unskilled labor lost jobs that they stand little or no chance of getting back. A poor young minority male with no high school education who must be paid minimum wage if they are hired at all can not compete with Mexican or Chinese labor.
But the US went toe to toe with Japan – and we gained an almost 10% share of the global market over 20 years. Japan stayed the same.
Now the boogey man is China, or Mexico or Korea.
If you really want the US to compete in the low end of the global manufacturing business – eliminate the minimum wage and open the borders. We can clean China’s clock.
One aspect of trade particularly foreign trade that far too many people have failed to grasp for over 200 years, is that the direct trade portion is one aspect of economics that is very nearly zero sum. When we buy things from China – we obtain wealth – in the form of things from Walmart or other goods and services. We get what we wanted, and we often buy more than we would have otherwise – because it is much cheaper.
If your local razor blade company makes the best blades in the world few people are going to buy them – if they are ten times as expensive as ordinary blades. Few will buy them if they are even twice the cost of ordinary blades.
in return for the real wealth china sends us, they get lots of green slips of paper (probably in electronic form, but it make no difference). The chinese can do as they please with those green slips of paper (in whatever for), But there is only one thing they can do that has an effect on us – that is trade them back to us for something else, for our wealth in some form. Every dollar we spend aquiring wealth from china eventually results in china aquiring exact one dollar of wealth from us.
Contrary to popular belief there is no “trade deficit” because any deficit in trade must be exactly matched by a capitol accounts surplus (they can either buy our goods, or they can invest in us). Trade is a win-win for everyone. Cheating at trade through protective tarrifs, subsidies, and monetary manipulation only harms the cheater.
If Chinese currency manipulation is allowing us to buy goods at below market prices, then they are exporting their wealth to us and diminishing what they get back in return.
Rick, I read some of the issues in the Romney website. I didn’t find abortion as one of the main topics. Neither Religion.
He seems to be “moderate” Republican in what I am reading.
He is pragmatic. He studies graphs, data and then asks lots of questions, gives a second analysis and then makes a decision. This isn’t ideology, this is methodical.
It is what makes and breaks deals. What was once seen as a person who cuts employees jobs to make the bottom-line and keep other jobs….he is now in the position to make jobs more than ever. Who says that he is going to cut American jobs? The damage has already been done!!! All Romeny can do is just re-organize and unite under systems that work.
Has Obama got a plan yet? Oh yes, they do. After 4 years they say they have one. Just to compete with Romney during election time???? Are we idiots or what??
I voted for Obama to give him four years…a “chance” to change some things. His time is up.
I understand that some people don’t like Romney for his methodical ways, but he isn’t a “player” (Ideology speaking). I am sure some of his advisors or followers are though.
Taking this seriously though, I think this guy is the one person that may not make China a superpower without care in the world toward othe nations, but make China a country that has to work on its own issues of human rights, North Korea, regional stability. I seriously think that China has a “media issue”. If they open up the media, China will be able to deal with the issues they they have and more respect from the citizens will occur.
As for the rest of Romney, moderates have a choice between “change” of one moderate over the other.
As I have said before, It is the President who analysis things and proposes things. It takes 535 members of Congress to approve them and alter them.
I think we should be proud we don’t have two extremists running for President, but two moderates in extremist parties running for President.
If we had Centrist Party we would put these two in a runoff or something listed to the voters as moderates, but certainly they are no Centrists in Ideologue.
The problem with Romney is not that he is methodical.
It is precisely the same as the problem with Obama – ultimately both believe that whatever the problem government is the answer.
Neither Romney, Nor Obama (nor Reagan, Carter, Clinton, …) can create jobs – aside from more government jobs. But both are capable of acting to significantly impair the creation of new jobs.
It is our job to advocate for our values – what are those “human rights” the chinese are devoid ? Opening up the media is also called Free Press” or more simply just freedom.
It is not our job to impose them on other nations by force – not China, not Libya, not Iran, not Iraq. I am not aware of an instance where freedom was successfully imposed on a people from the outside.
It might be arguable that Pres. Romney, would be less destructive that Pres. Obama – though I strongly suspect that gridlock would continue to be superior to single party control of government – regardless of the party in control. However the election of Romney as President would seriously disempower the nascent anti-statist powers that are growing within the Republican Party.
This country is on a path towards destruction, neither Romney nor Obama reflect a change in direction, only the rate at which we continue to head in a direction most of us grasp is wrong.
Dave, I don’t get your take on Romney in the slightest. I have heard Ron Paul supporters say exactly what you are saying ….not implying that you are using talking points, just saying that that is the only group that seems to make the curious argument that a capitalist technocrat with conservative leanings and a big-government politician with socialist leanings would take the country in the same direction. It is most curious to me, because if only on the one issue of Obamacare (assuming that it is not overturned by SCOTUS), the difference over the next 4 years would be immense. The level of taxation and the constriction of the the market that will occur after Obamacare is implemented in 2014 will increase dramatically, not to mention the chaos that will ensue as private insurance companies go under and the federal government has to begin nationalizing the healthcare system, in order to prevent its collapse.
My view is similar to Kent’s. The presidency is an executive position, and requires someone who is pragmatic and skilled at executive functions. Of course, s/he must be a leader of integrity and good character. Obama has proved, to me at least, that he is not capable of this type of leadership – he is a skilled politician and very good at creating the kind of fear and divisiveness that may get him re-elected, but has not shown in any way that he can harness the huge and ever-growing monster that is the federal government tax and entitlement system. Maybe no one can, but I think we need to give someone else a chance, before too many more trillions of dollars that we don’t have are spent. This necessity far outweighs any fear that I might have Romney may prove to be too much of a statist.
I honestly do not follow the Paul campaign and have little familiarity with its talking points.
While it is likely I would agree with many – Paul is the most libertarian candidate of either party, and I beleive that his candidacy has significant long term consequences for the GOP. But he is not getting elected, and whatever common greound we might share is meaningless in this election.
My views on Romney are my own. He is likeable enough and has said very many of the right things – but Obama is quite likeably and on occasions says the right things.
For me the fundimental question is in a choice between two essentially statist candidates – and Romney, Gingrich, Santorum, and Obama all see government as the answer not the problem.
Which outcome is better for the country – for the most statist – Obama to win, with the Republicans – even in the unlikely event they lose ground, still with sufficient power to ensure gridlock, and in the likely scenarios to have divided government – in this outcome the real libertarian and fiscal conservative voices will continue to be heard, and the GOP will likely shift towards a slightly more libertarian friendly position. Or for a less statist Republican candidate to win, to see the GOP control government – which would almost certainly impose substantial preasure on the leading GOP fiscal conservatives and libertarian leading congressment to shut up and toe the party line.
From a different perspective, despite his texas twang, George Bush was a very statist republican. Like Romney he talked fiscal conservative, but he did not act it NCLB, Medicare Drug benefits, Premptive war, Patriot act, Fannie and Freddie Bailouts, TARP I, …. and much much more are not the actions of someone who actually trusts people to take responsibility for their own lives and make their own decisions for themselves.
I expect Romney as president to be worse than Bush and better than Obama’s first two years.
The end result will kill the nascent voices of libertarianism rising in the GOP and drive the country back into the destructive hands of progressives, and we really will be the next greece.
Try this a different way – if Pres. Obama had government more similarly to Pres. Clinton, if he had done those things actually necescary to facilitate a real economic recovery rather than take the crisis as an oportunity to advance a failed ideology, the GOP would have been trounced in 2010. We would be solidly into a strong economic recovery, and Republicans at the national level would be almost irrelevant.
If elected Pres. Romeny will have exactly the same opportunity to make democrats irrelevant. But acheiving that will the courage of convictions that I do nto think anyone really beleives he holds.
We do not need a skilled politician able to strike deals and work with the other party.
We need a leader – only to the extent that we need someone willing to take a stance that will result in their being openly excoriated for atleast 18 months by the left and by the media.
We need someone willing to pull the brake leaver on government in every possible way available to them and to keep pulling as hard as possible as long as possible until people start to actually beleive the era of bloated government is waning and crawl out of their holes and do those things necescary to bring about a robust recovery.
One way or another economic recovery is inevitable. People will always use whatever small alotment of freedom they actually have to get ahead.
But the rapidity of that recovery and its strength is solely dependant on the actions of free individuals – and is only harmed by any form of government action.
Romney is not that man. Nor would a Romney presidency be better for the nation as a whole or the GOP in particular than Gridlock.
I have far less fear of Obamacare and all the other bad things you are concerned about.
I am not sure that the GOP victory in 2010 was actually good for the country – it was premature. It would have been far better for the nation for Obama and Progressives to get their last Hurah. To get Obamacare in whatever form they desired, to tax the crap out of carbon, to ….. And for the nation to actually see the real consequences of that.
In myraids of political battles over the past two years, I think the best GOP strategy would have been to be the party voting “present” rather than “no”.
Failure is an essential element of free markets. It is how we get rid of bad ideas, solutions approaches. This is equally true of government.
One way or another we have some rough times ahead. It would be better to fail the bad ideas now, and get them out of our system, than to choose compromise and moderation – the slow road to hell. One of the major flaws of the lets all get along and compromise views espoused by most moderates here – is that we do not actually learn what works and what does not.
Most here are unable to grasp that the lesson of the last economic collapse was a lesson of government failure. Appararently government failure can not be recognized until there is no other possible explanation.
I expect that SCOTUS is going to kill APACA.
But I think the best result would be to leave it alone -t to impliment it, to allow it to fail.
I do not have any sympathy for health insurance companies – they did not oppose this, and we have not had anything vaguely approximating a free market in healthcare for most of my lifetime. And we are not going to get one from either party until govenrment run heathcare fails.
I have argued repeatedly for small government.
Government is NOT like Business.
We do nto need more efficient government – that would actually be a bad thing. The convolution and complexity of govenrment are part of the price we pay to minimize corruption. It is because government should not and can not be efficient that it must be small.
We do not need either skill politicians or executives.
I do not want better big government – I do not beleive that is possible.
I want less government.
I want a president and politicians who actually grasp that most of the problems we have as a nation will solve themselves far batter on their own, than any result any government intervention can produce.
Politicians, leaders, and executives DO things. WE need govenrment to do less.
Given a choice between blowing $2T/year for 5 years, and blowing 500B/year for 20 before we grasp that permanent deficits are unsustainable. I would rather get this over ipermanently in 5 years. That atleast would give my children a chance at a better life aterwards.
As always, Dave, your reply is thoughtful and well-reasoned…and, as usual, I agree with a great deal of what you say. But you make some breathtakingly broad assumptions, while ignoring some of the political and economic realities of this world that we live in. And, with all due respect to your knowledge and reverence for the Constitution, you ignore some of it as well.
In a perfect world, I might agree with almost everything that you and other libertarians espouse. But you seem to assume that another 4 years of Obama will somehow energize a nascent movement, that will then rise up and miraculously pull us back from the brink of economic disaster , and back to constitutional government and fiscal sanity. That is precisely the argument made many times from libertarians in 2008….better Obama than McCain, because he will be so bad that he will energize the loyal opposition and create a renewed interest and desire for real leadership. Yet here we are, 3.5 years later, with Obama’s “fundamental transformation” of America well underway, and those who benefit from it – big unions, crony capitalists and big banks, the almost 50% of the population that pays no federal income tax, etc. – in fine electoral position to continue their dismantling of a once free economy into a cradle-to-grave nanny state, controlled by bureaucrats…all in the name of “fairness.” Sure, the mid-term elections demonstrated that there likely is another 50% who would like to see us go in a different direction, but, it has not happened, and will not happen, as long as political power is concentrated in the hands of those who wish to continue down the road that we are on.
We are straying pretty far off-topic here (sorry, Rick!)but a final point: The presidency IS an executive position, and the President does not govern alone. No American president can govern effectively unless he accepts the legitimacy of the other 2 branches of government, as well as the perspective of the opposition. In my view, this is the most damning quality of the Obama presidency – it is imperial; he governs as if the president were a ruler, not an executive (which, ironically, was the left’s indictment of Bush), and as if his worldview of class struggle and redistribution is the only fair and correct view. Romney may not fill your requirements for a libertarian leader, but he- rightly, in my view – perceives his challenge to be that of a chief executive who needs to right the course, using the constitutional means that he is given. He has repeatedly articulated this view of the presidency, and it is, in my view, the correct role of the POTUS, albeit one that has been slipping away, under the last two administrations.
I will be happy to debate the constitution if you wish, but my argument was not constitutional. As the declaration of independence noted the power of government comes from the consent of the governed – not the constitution. The constitution may be right – but it is not sacred scripture. The left may have abused it – but with sufficient support they could as easily discard it. Its power is purely in the truths is espouses, it is not stone tablets from god. My arguments are rooted in those truths more than the document itself.
My argument regarding what we need out of a president was also not semantic, or constitutional. Yes, the president is the head of the “executive” branch.
What the president CAN do, and what we actually NEED done are completely different.
Fiscal conservatives and libertarians have cried “wolf” over government power and impending doom for longer than I have been alive. Our core problem is that the incredible power of freedom, and the engine of economic freedom is so incredibly strong that it will manage to struggle forward under incredible load. But not infinite load.
In “Atlas Shrugged” John Galt vows to stop the engine of the world – it is the power of freedom he is seeking to tether. He concludes that the only effective way to discredit progressives is to allow the total collapse that will occur if they ever achieve their dreams. Even small amounts of freedom prove sufficiently powerful to forestall collapse for a very long time.
At the same time, it appears to many – even moderates and some progressives, that we are far too close to the fiscal calamity that has been claimed for liberalism for more than seventy five years. Every facet of the new deal, the great society, …. is failing under its own weight..
Today it is those who believe that this can continue indefinitely that lack credibility.
Many many things are wrong – even by the measure of liberals, nearly all are due to government.
We may disagree on the governments power to fix the economy – but there is little argument that it can destroy it.
I will agree with most every derisive remark you make about Obama, but nearly all were true of Bush, and different only in scale.
I like much of what Romney says (and alot of what Obama said in 2008), but I do not think that either really believe what they say. I believe both are probably honest and decent people. But they are also wrong. The difference primarily being one of speed not direction.
I suspect that if Romney were elected deficits would go down, growth would likely be between 0.5 and 1% greater, but all the problems we currently face would remain – just a little further in the distance. Worse still the fiscal conservative and libertarian voice growing within the GOP would likely be suffocated.
We are headed off a cliff, and fighting about how fast to do so. Slowing down is not going to solve our problems.
I do not believe a majority of people are really ready for the painful changes that wre going to be necessary, but I do believe the numbers and political power of that minority are growing.
I do not as an example see the “Tea Party” as a libertarian movement in the GOP. But i do see it as a significant step in the right direction. I also see it as a powerful threat of civil war. The GOP will move towards real fiscal conservatism, or it will fracture.
asmith wrote: “I also see it [“Tea Party”] as a powerful threat of civil war. ”
Yep, the masses rising against Tovarich Obama who prophetic said we will “cling to guns and religion” in these times. Also, let’s reenact the “Arab Spring” in the US, after all Obama is a muslin too.
After “Tea Party” civil war the US will vote Liberal, for Republicans and Democrats are all the same.
The Tea Party represents the threat of a political civil war within the GOP, not a military civil war in the country.
hi valdo!
“The removal, so far as possible, of all economic barriers and the establishment of equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.”
Woodrow Wilson , 14 points, #3.
I would not dream of debating the Constitution with you, Dave, as I am sure that you would mop the floor with me.
I am unpersuaded by the argument that Republicans and Democrats are all the same, separated only by a matter of degree….although it has become a new talking point for the Obama campaign, in the sense of “Better the devil you know than the devil you don’t.”
I read an article yesterday that Hollande is no different than Sarkozy, just easier to get along with….so I suppose that this new meme of “all politicians are the same” is now an international one.
Using that logic, Paul Ryan is no different than Barney Frank, Harry Reid no different than Jim DeMInt. A third party vote is the only real alternative, yet, in our two party system, almost certainly a “wasted” vote. Or a “spoiler” vote, a la Perot or Nader.
The GOP is clearly the more fiscally conservative party, albeit not conservative enough for most conservative purists and libertarians. So, the choice is between a candidate who supports budgeting and tax reform and one who supports continued spending and borrowing. I can understand your lack of faith in the words that politicians speak, but what other choice do you have?
All republicans and all democrats are not the same – separated only by degree.
At the same time I think it would be difficult to argue that the GOP as a minority party is usually quite different from the GOP as the party in Power.
during my lifetime there has been only one president of either party who one could honestly claim saw Government as the problem not the solution.
What I beleive is that the prominence of the Paul Ryan’s DeMint’s Rand Paul’s, Rubio’s Walker’s, Christie’s (I am not endorsing any of these, but all represent a shift in GOP values and focus), will gain power and stature and others somewhat like them will emerge so long as the GOP does not control the WhiteHouse.
I am not actually expecting the emergence of a third party. Nations with numerous parties generally have worse governments than ours.
The emergence of a real third party with a serious political power base would require catastrophy far greater than we have seen so far – though we are headed that way slowly.
Ultimately the only hope I see for the nation short of disaster, is with the Republican party. But not the party of Santorum, or Gingrich, or Romney.
Though I would argue for Gridlock, even Moderates should find this arrangement more appealing – if for different reasons than mine.
I do not believe that compromise is a core value. I believe that compromise is often just a decrease in the speed at which we drive off the cliff. Truly horrendous decisions are often better than compromises. Compromises are nearly impossible to kill even if neither side got what they wanted, both sides have a stake in what results.
But if you do believe that the answer lies in the middle – you will not get to the middle if you grant either side total control.
Then again I do not really believe that so called moderates actually beleive in compromise either, they just believe in moving towards ever greater statism slower than the left.
Anyway if you like any of the new voices you are seeing withing the GOP, I think the worst thing that could happen to them, and to those like them who might emerge would be a Republican president
BTW I do not believe Romney is evil – like Obama he is a like able person. It is even probable he would make a better president. But he is far closer to Obama than to what we need.
I suspect that absent some major shock like a deep european recession we would experience a stronger – though still weak recovery under Romney.
As to what Romney supports – just as with Obama, and Bush, and …. I do nto expect him to deliver a single campaign promise. His platform and speechs no matter how eloquent are meaningless. I could easily name 10 promises that Obama made that I would have been very happy with.
I am not opposed to compromise. In fact, I don’t believe that anything of value is accomplished without it. I am not talking here about compromising one’s values or equivocatng on what is truly right or wrong. But when it comes to crafting legislation, there is usually room for honest compromise, as both sides identify their priorities and their must-haves. As I said before, an executive, chief or otherwise, is not worth his salt if he does not grant legitimacy to the opposing view…that does not mean that he accepts it, but opposing sides cannot negotiate in good faith, if one side maintains that the other’s perspective is illegitimate. Therein lies my problem, not only with libertarians, but with most liberals and “true conservatives” these days. Everyone is a purist and compromise is a dirty word. If gridlock is indeed the best option that we have, we are in sad shape. Even “moderates” badmouth compromise. Sheesh.
I assume you refer to Reagan as the one president who saw big government as the problem rather than the solution, yet Reagan was a master at the art of compromise, knowing at all times what he could give up and what was non-negotiable. He did not let the perfect be the enemy of the good, but he achieved a great deal by his willingness to lose small battles in the interest of winning big victories.
It depends on what you are talking about. Voluntary compromise is often essential to accomplishing anything that must be done with the cooperation of others.
But that kind of compromise involves no conflict on principles.
I want two pieces of pie, and you want two, but there are only three, We split one, or I get the two this time and you next.
Principles are different – regardless of what your beliefs are, is there a compromise on the death penalty ? Slavery ? Political discrimination ?
Government and politics is also different, Political acts involve the rights and freedoms of others. Should any politician have to power to reduce the rights and freedom on any one else without their explicity consent ? If you believe that is sometimes permissible then what principle do you use to determine when it is not ?
You are correct, when a disagreement is truly a matter of principle – it is not possible to negotiate in good faith. Doing so presumes a willingness to sacrifice principles. One of my quibbles with republicans is that they have been all to willing to do so in the past.
Last august we fought over raising the debt ceiling, the GOP got only minor concessions and was excoriated for even those as being unwilling to compromise – prepare yourself – because nobody actually bothered to try to fix – or really even contemplate the real problems – Debt Ceiling debate #2 is headed your way just in time for the upcoming election – this is despite the act that the left insisted on a deal that would get them past the election.
Where compromise requires sacrificing principles, doing so robs you of any moral authority when the compromise does not work.
Gridlock is only a bad thing if you presume government accomplishing things is always (much less usually) good.
“That government is best which governs least.” — Thomas Paine
Our government was deliberately designed for gridlock. That was the specific intent of the “checks and balances” and of the complex competing powers, constituencies and special interests.
Rick and others rant about the power of special interests. So long as it is the power to block, and impede government I celebrate it. The instances in which government must act are few and far between, and nearly universally have deep and broad popular support.
Reagan did compromise. He also often regretted it, and he was noted for not compromising on many things too.
He stuck to the anti-keynesian tight money policy of Volker that ended the stagflation of the 60’s and 70’s and brought in the longest sustained period of prosperity and growth in our history. This despite being told by the Republican Economists that Ian loves to quote, that he was stupid, wrong and likely to cause a depression.
Regardless, i am not seeking to set Reagan up as some demi-god, just a far sight better than anything we have seen in a president in the past 100 years.
Whether compromise is good or bad depends on what it is you are sacrificing. If you are sacrificing, your principles, or the principles, rights and freedom of others, then compromise is destructive and evil – most government compromise fits that description.
While most of the compromises that each of us engage in every day do not involve our principles, nor the rights and freedoms of others – you are free to sacrifice your own rights and freedom, that is what being free means.
my problems with moderates is that these distinctions do not exist.
If it is permissible to compromise your own principles, rights and freedoms, it must be acceptable to do so for others. There is no understanding that without freedom there is not morality.
Back on topic…http://ca.news.yahoo.com/3-big-chinese-banks-enter-us-banking-market-185200086.html
Man, are we screwed…
You are too afraid of the wrong things.
How exactly is China buying things in the US a bad thing ? We went through this with Japan in the 80’s.
All this is, is the flip side to the balance of trade. Contrary to th idiocy of pundits on both the left and the right there is not and can not be any significant or long term imbalance in foreign exchange.
If you have a trade deficit, you must have a capitol accounts (foreign investment) surplus. It is one of few very nearly zero sum situations in economics.
So long as we import more goods and services than we export, there will be foreign investment in the US to make up the difference.
Why is this bad ?
Is China going to deliberately sabotage its US investments to destroy our country ?
Or is it going to seek to get the best possible return on its investment ?
Where does this Chinese investment money go ? Building banks and creating jobs in the US.
Toyota and Honda have factories in the US. where US workers make cars for US consumers – they are essentially a US car manufacturer, and the majority of the benefits of Toyota”s investment remains in the US
This is a point I have been trying to get through over and over here
When Buffet, or Gates or Oprah, or the chinese banks invest, no matter how well the investment works out for them the greatest benefit is to others.
How is it bad for the Chinese to lend money in the US. To invest in the US ?
This story is actually the exact opposite of the one Rick is writing about.
The US financial industry is removing investment from the US and moving to china (or atleast threatening to do so) while the chinese banks are moving investment from their own country to the US.
It is logically possible for both of these events to be good, but it is not actually possible for them both to be bad. If one is harmful to us, then since the other is the opposite it must be good for us.
If we are upset that US banks are increasing their presence in China – shouldn’t the chinese be angry that their banks are doing the same in the US ?