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Death by China to be shown around the state

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Reposted from the Dayton Daily News

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Death by China to be shown around the state

Steve Bennish | September 13, 2012 | Dayton Daily News

The documentary, “Death by China,” narrated by Dayton-native Martin Sheen will be shown in Beavercreek starting today for a seven-day run.

University of California-Irvine economist and author Peter Navarro is showing the film — based on his book by the same name in Michigan, Pennsylvania and Virginia after showings here — in a bid to intensify the debate over off-shoring.

The film will show at the Regal Commons Fairfield 20 today. An event will be Saturday night starting at 7 p.m., with a town hall-style discussion after the film. Theatrical releases are in Akron, Cincinnati, Cleveland, Columbus, Toledo, and Youngstown with special showings in Chillicothe, Lima, and Marietta and events in factories and on university campuses and union halls.

International trade policy has lit the Ohio campaigns of GOP challenger Mitt Romney and President Barack Obama as unemployment levels remain high. In July at an appearance in Maumee, Obama announced a U.S. challenge to China’s tariffs on more than $3 billion in American-made automobiles exports as Romney unleashed a fusillade of TV commercials saying he will be more aggressive in standing up to China. Obama’s campaign has implicated Romney in off-shoring jobs to China when he ran a private equity firm.

Navarro, who says he’s neutral in the presidential race, says the economy is stuck in neutral because we import too much of our consumer products from abroad and have run a huge annual trade deficit with China of nearly $300 billion. China, Navarro argues, benefits from using artificial trade barriers and currency manipulation to keep U.S. products out, instead dumping Chinese goods here underwritten by illegal government subsidies. The situation stopped the creation of 20 million U.S. jobs in a decade, Navarro said.

“The goal of the ‘Death By China Swing State Tour’ is to make trade reform with China the most important issue of the 2012 elections,” Navarro said. “We hope to give the highest possible visibility to an issue that is all too often ignored by politicians, journalists and consumers alike – the incredibly corrosive loss of America’s once formidable manufacturing base to a cheating China.”

Navarro’s thesis is opposed by advocates of free trade agreements like the Washington D.C.-based Club for Growth, which lobbies for deregulation and limited government.

“When people are free to buy from and invest with each other, they can achieve far more than when governments control markets so having free trade agreements provide benefits to everybody,” spokesman Barney Keller said.

Navarro is calling for a boycott of Chinese goods. He links the closure of 60,000 U.S. factories in a decade to off-shoring by U.S. multinationals to China and elsewhere. He calls Ohio “ground zero” for the destruction because of its heavy manufacturing base and small to mid-size companies that make up the supply chain. Ohio lost 3,500 factories in a decade, federal records show, and a third of its manufacturing employment.

In July 2012, the monthly goods deficit with China rose to $29.4 billion, up from $27.4 billion in June – the fifth straight month of a rising trade deficit with China.

4 Responses to “Death by China to be shown around the state”

  1. Dan DiFabio says:

    I am astounded how the Club for Growth could pretend that China is practicing free trade. The Club for Growth should rename itself the Club for China Growth. The United States needs to do exactly what China is doing. We need a 17% VAT tax,and we need to subsidize our industries.Furthermore,a 20% tariff on all imports is a necessity. This tariff would be somewhat of a safeguard against currency manipulation by China.

  2. Death by China Unmasks Bipartisan Blind Trust

    In his 2006 book, The Speed of Trust, Stephen M.R. Covey introduces the concept of blind trust: the combination of a high propensity to trust and low analysis. The documentary Death by China provides the missing analysis needed to reverse our blind trust in free trade, especially with China. The following quotes from Covey’s book are extremely relevant to Death by China’s connecting the dots to America’s economic malaise:

    ”I look for three things in hiring people. The first is personal integrity, the second is intelligence, and the third is a high energy level. But if you don’t have the first, the other two will kill you.” ~ Warren Buffett

    “Almost all conflict is a result of violated expectations.” ~ Blaine Lee, author of The Power Principle.

    The movie pulls no punches regarding the violation of expectations since China’s admission to the WTO in 2001, the lack of integrity on the part of China’s leadership and the totality of damages (direct and collateral) resulting from its mercantilist practices. Many economic theories and initiatives are double-edged with the favorable edge working its magic first and effects of the evil edge following later.

    The blind trust in free trade with China stems from the distraction of U.S. leaders by the Iraq/Afghanistan wars, the desire to finance the war without raising taxes and our citizens’ misplaced trust in terms and phrases containing the word free. Death by China is the wakeup call that’s long overdue. It’s going to take “We the People” to act, just like with Flight 93 passengers on 9/11.

  3. Mo says:

    Trade with China is a problem but is a symptom of the unsound monetary system we have. The reason why nothing is being done in Washington is because the US exports inflation to countries like China. For example before the Iraqi war oil was $30 now it averages around $100. A country only has a certain amount of resources. There is not enough resources for money to be printed to fund every industrial sector in the US like manufacturing and healthcare when Washington is interested in foreign policy objectives for example.

    In the last 10 years the US lost over 50,000 factories as higher inflation and an overvalued currency made manufacturing companies uncompetitive. Besides higher inflation from money printing squeezing manufacturing companies profit margins, it has also distorted the fiscal situation of state and local governments. Money being printed to fund malinvestments like war, financial speculation, offshoring, etc causes future prices to be higher which leads to state and local governments having budget deficits because goods and services wind up costing more than forecasted. So for entitlement programs like social security; spending is increasing due to inflation. Just like oil imports. The US actually has been importing less oil but the trade deficit in oil has increased in recent years because the dollar has got weaker.

  4. Tom T. says:

    Mo, I am not trying to be disagreeable here because you have come up with some important points.

    Inflation is a real affect of monetary policy and I well remember in my younger years eagerly looking at weekly M1, M2, and M3 numbers put out by the Fed after the Carter years and Reagan’s transformation under Fed Chairman Volcker of monetary policy curtailing stagflation.

    I just read an article that I think pretty clearly stated what happened historically, not what is portrayed ideologically in the current party soundbites:

    http://www.shmoop.com/reagan-era/economy.html

    In short, monetary policy does matter. The Fed has decided that relative prices should rise in a target range of 2 to 3 percent as a target. Deflation can lead to a deflationary spiral (a huge contraction in the economy) and so the 2 to 3 percent inflation is accepted as a target.

    I will take issue with you on the specific world commodity you mentioned, oil. I grew up just north of Houston, Tx, where my father was plant manager for a 4 city block rubber and plastics manufacturing company. The Texas economy is one that, during that time period and that just before, was one that was boom or bust based on one of the main drivers of that and many other industries– the price and availability of oil.

    Individual commodities are more influenced by supply/demand factors than by straight monetary policy. OPEC became influential as a cartel after peak oil was achieved in the United States and foreign oil became a much larger portion of supplies. OPEC sets its prices based on what they can get by restricting output and its relationship between supply and demand dictates the price of oil more than monetary inflation. Indeed, the problems of stagflation could be blamed partly on the oil embargo and the extraction of real price increases by OPEC’s muscle.

    Here is peak oil in the United States:

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=a

    Here is a graph of nominal and real oil prices (real being inflation adjusted and nominal being actual prices):

    http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/oilpricerealnominal.html

    Our dependence on world oil prices is directly related to the supply/demand price determination more so than monetary inflation (although OPEC will try to maximize their cut based on their own self interests which includes inflation adjusted dollars).

    In much the same way, our main problems with China do and do not have to do with monetary policy as much as they have to do with trade policy. China can adjust its internal conditions of production like labor costs through their own policies which affect these values. China has an almost unlimited supply of labor (yes, there is still a minimal cost to that but that cost must only be greater than the rewards of a Chinese agrarian economy). For arbitration to occur, the Chinese must make their costs slightly below the costs here in the United States for the same goods (Ian is probably right that these costs must be around 30% less due to the costs of transportation). As long as these costs for goods are less, capital will continue to flow from the U.S. into China to industrialize the Chinese economy.

    In this process, the Chinese government has found a way to capture those U.S. dollars flowing to China for its own strategic use. In a world with floating currencies and free markets, when China earned too many dollars, the value of the dollars would go down. The Chinese government has found a way around this—by investing the dollars it has earned into the U.S., thus decreasing the costs of borrowing and allowing the U.S. politicians low costs in capitalizing their debt. When I say capitalizing, what I mean is that foreign dollars earned by China really ends up being something similar to “hot money”, increasing the supply of dollars through the money multiplier effect even more than the incoming dollars represent. In essence, these dollars decrease the interest rates in the U.S., encourage more borrowing and leverage that low interest rates create through the economy. Real savers have to invest in businesses that can earn a higher rate of return than U.S. bonds and that essentially means the companies who are benefiting from the arbitrage game as well as companies remaining competitive advantages because of geography (the service industry or others where locating in the U.S. is more important than the transactional costs). In regards to trade, it is the retail locations of Walmart in the U.S. markets while maintaining their cheaper arbitraged labor/capital costs in China as an example. Going with suppliers in China benefits the Walmarts of the world in two ways: One is simply lower cost of goods and the other is a depression of one of their main costs, that of labor and those who work for them in the service economy.

    Reagan’s economy was in part one that seemed to benefit from his policies but in real terms, much of the “feeling right” about his policies came from a control of a previous demand shock, that of oil by OPEC and their embargo, a correction of monetary policy that was seen as the solution, and of government borrowing for present day spending (deficit spending). The problem with deficit spending is the same as one over spending by consumers on their credit cards. It makes a person seem like they maintaining the same standard of living but they are selling out their future standard of living (capitalizing their future earnings) for their present day standard of living. That scenario manifested itself in our latest crisis in housing where present day earnings had been capitalized (borrowed against) based on lending in the hard asset housing market and the fact that the average person could conceal their lower standard of living in real wages by borrowing at cheaper rates.

    To be sure, to get out of this mess we are in, we will have to have the same kind of supply shocks that we had in monetary policy and in the oil market. Items produced here in the U.S. will have to go up so that U.S. manufacturers can make a profit and those jobs will be a part of our economy, not China’s. Our government will have to stop its increasing deficit spending that has capitalized the hot money coming in from China or other investors. If not, we will continue this slide in our economy in real terms if not just nominal terms. If not, death by China for the middle class and thus, the engine of our economy, will occur sooner than later. Quantitative easing is the right course while relative interest and inflation rates are low (this devalues the dollar) but the trade policies must be addressed as well. China is able to do both easily because their leadership has no real limits and so out maneuver the U.S. and they have no separation between monetary and political trade policy.

    We may be saying the exact same things in a different way. Perhaps you are saying that the way we increase money in the U.S. that the benefits the wrong things. I guess I am saying that too but that it can not be affected only by monetary policy. Perhaps it was so under Bretton Woods where countries’ self interests directly related to their people but with free capital flows and “free trade”, the oligarchs have the advantage and it comes at the cost of the economy as a whole.

    Tom T.

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