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The Candidates Keep Slugging It Out On China, But Hypocrisy Abounds

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Reposted from the Campaign for America’s Future blog


The Candidates Keep Slugging It Out On China, But Hypocrisy Abounds

Steven Cappozzola  |  October 15, 2012  |  Campaign for America’s Future

President Obama and Governor Romney continue to take to the airwaves with competing ads that claim each is tougher than the other in confronting China’s predatory trade practices.

In battleground states like Ohio, Obama has run television spots that tout the tariffshe imposed three years ago on surging tire imports from China.

GOP challenger Romney has also been trekking through Ohio.  On Friday, heblasted the Obama Administration for delaying a Treasury report (due today) that could have been used to formally designate China as a currency manipulator.

Romney has repeatedly promised to hold China accountable for its cheating by designating Beijing as a currency manipulator on day one of his presidency.  In contrast, the Obama Administration has so far refused to take such a step despite seven consecutive opportunities in semi-annual Treasury reports on currency.

Unfortunately for America’s manufacturers and their workers, there’s plenty of hypocrisy to go around.  While President Obama campaigned in 2008 on a strong pledge to tackle China’s currency peg, he has indeed failed to act on it, as Romney accuses.

However, Romney’s running mate, Rep. Paul Ryan (R-WI) doesn’t have a very good track record either.  He had tough words at a campaign stop in Ohio this past weekend, lamenting the manufacturing jobs that America has lost to China.  Sadly, Ryan was among a small minority of Congress that did not support a China currency measure in 2010.  That bill, which passed by a strong, bipartisan vote of348-79, was intended to specifically address China’s ongoing currency undervaluation.

While Gov. Romney has vowed to tackle China’s currency peg, his real commitment on the issue remains in question.  Currently, a majority of the House has co-sponsored a new bill, H.R.639, “The Currency Reform for Fair Trade Act,” including 64 House Republican cosponsors.  Frustratingly, House Speaker John Boehner has refused to let H.R.639 to come to the floor for a vote, though.

Boehner’s obstruction on the bill is extremely disappointing.  But it becomes all the more unfortunate because Romney has made no public comment on the matter.  As the current standard-bearer for the Republican Party, Romney could easily and publicly confront Boehner on the matter, and ask that the bill move forward.  But he has made no such effort.

And so the “China issue” muddles along.

41 Responses to “The Candidates Keep Slugging It Out On China, But Hypocrisy Abounds”

  1. Jim Schollaert says:

    Excellent points, Steven, about Ryan’s failure to support China Currency legislation and Romney’s failure to confront Speaker Boehner who is blocking the China Currency legislation from moving forward. These actions and failures to act by the GOP ticket speak volumes, as opposed to empty campaign rhetoric. But let’s not forget, Obama is no better.

  2. Joe Brooks says:

    Please watch:

    This is ridiculous. If someone wants to learn Chinese, it should be their choice, not the public schools and certainly not before a reasonable age, as determined by their parents.

    The Chinese government clearly wants Mandarin to become the primary language in the US, by teaching this to 6 year olds.

    • Jim Schollaert says:

      Nonsense. Six year olds and younger are learning English in China. And China is cleaning our clock because there are so many Chinese that speak fluent English, while so few Americans are fluent in Chinese.

      • Joe Brooks says:

        Jim, did you watch the video? The Chinese are using a very different method than the US, or any other country uses to help others learn English.

        Also, I can tell you very few of the 90,000 Red Chinese students here in our colleges speak fluent English. The universties they are attending all have crash courses in english for them, the summer before they begin. They are still mostly unintelligble, I live near a college with nearly 10% Chinese students. They drive brand new Audis with “Mao” on the license plate.

        As far as why Communist China is cleaning our clock, language has nothing to do with it.

        That is happening because we practice idiot “free trade’ while the Communists practice massive economic protectionism.

  3. Will Wilkin says:

    Hi Joe Brooks, I don’t think the Red Scare approach to China is the right way to look across the Pacific. The Cold War is over, and European philosophies like Marxism will never fully penetrate an ancient society with its own traditions. Look for a revival of Confucianism as more in the spirit of Chinese concepts of society and leadership.


    …the main reason Chinese officials and scholars do not talk about communism is that hardly anybody re­ally believes that Marxism should provide guidelines for thinking about China’s political future. The ideology has been so discredited by its misuses that it has lost almost all legitimacy in society. In reality, even the “communist” government won’t be conined by Marxist theory if it conflicts with the imperative to remain in power and to provide stability and order in society. For practical purposes, it’s the end of ideology in China. Not the end of all ideology, but the end of Marxist ideology….

    In China, the moral vacuum is being illed by Christian sects, Falun Gong, and extreme forms of nationalism. But the government considers that such alternatives threaten the hard­ won peace and stability that underpins the country’s development, so it has encouraged the revival of China’s most venerable political tradition: Confucianism.


    The framework of “Red China” v. the “Free World” (the implied second half of your concept) ignores the more historical (v. ideological) explanation of them that any large country or state will exert controls over their trade, commerce, and employment conditions as they modernize into large industrial powers, seeking political and social stability even as the economy revolutionizes. The ideologies underneath are all only mental models loosely reflecting the shapes of reality, none of them to be taken too seriously as literal truths. This ideological lightness is called pragmatism.

    The USA should be pragmatic in dealing with China, allowing them their sovereign right to govern their country as they choose. Instead of blaming our problems on China, and requiring changes by China as the solutions to our problems, we should become more like them in the sense of installing leaders who actually care about the overall development of society. I’m not asserting the Chinese leaders have any moral superiority over our own, but at least at this stage in their history their elited DO seem to be developing their country in a way that increases the general prosperity. Contrast that to the American elites, who seem to care nothing for the national interest, at least if defined as including the population itself. Instead we get elites who have staked their future as individuals and as a class not on the future of the USA but rather on the future of the global corporations they own. That is why the 1% have bought both political parties to write “free trade” laws and treaties that make the 1% rich by exporting the industries that once made America prosperous. Now our nation’s industrial ecosystem itself is being dismantled and shipped abroad, and as the future of our people is exported with the mfg industries, the American elites grow wealthier than ever before in history.

    Maybe the USA could use a little Confucianism ourselves.

  4. Jim Schollaert says:

    Joe, if you want to bemoan the flood of Chinese students invading American schools, I am with you. But teaching Chinese to Americans still strikes me as a good idea. How else to know your enemy.

  5. Joe Brooks says:

    Jim, I agree we should have the ability to undestand the language. Taught without a Anti-American agenda.

    What I am saying is that a Communist government, with a global propaganda plan and a stated goal of world domination, should not be allowed to place paid agents into US public school systems.

    The “educator” in the ABC piece says he does not get into politics. This is not politics, this is revisionist history, depicting Americans who came to the aid of South Korea as evil and died by the thousands, to free them from Communist murder and slavery.

    If Red China has it’s way all nations will bear a strong resemblance to North Korea.

    A few minutes search and you will find many folks who say this was shown to US children:

  6. Joe Brooks says:

    Jim, Will, many in the US government have been sounding the alarm on these issues for years:

    “Foreign spies have become much more common in America’s higher education institutions over the last five years, reports Bloomberg. The FBI says many of them are Chinese nationals.

    China alone directed 76,830 students to US universities in 2010-2011, more than any other country. The FBI says many Chinese researchers who have received an American education and started working in American companies do have a tendency to commit corporate espionage.

    China’s intelligence service deploys networks of freelance volunteer students and researchers to collect information wherever they study, do research or work, says David Major, president of the Centre for Counterintelligence and Security Studies in Falls Church, Virginia and former FBI official.

    In addition, more than 3,000 Chinese false-front companies pursue new technologies directly on American soil, writes former CIA officer S. Eugene Poteat.

  7. Joe Brooks says:

    Will, I refer you to this, I strongly endorse this effort. I have seen it twice and had an eye opening experience at the showing at WSU.

  8. Joe Brooks says:

    Death By China Documentary

    My review, I was stunned by the aggressive presence of what appeared to be Chinese Nationals, pressing Professor Navarro with “free trade” propaganda, 9/11/2012:

    WSU hosted Peter Navarro and the documentary last night, amid much unrest by the Red Chinese students/activists attending there. The Chinese tore down the posters alerting interested parties as to the time and location of the event. Before the film started one of the WSU hosts came forward and said further intolerance of the film’s showing would not be acceptable and dealt with.

    Approximately 150 people attended, around 20 were from Red China. They behaved during the showing.

    As expected, the film delivered on the director’s premise of proving that US dependence on Red China for manufacturing, food, Federal loans, commercial and military electronics and US R&D is destroying the USA, as a viable country.

    He also points out that the multi national corporate influence over US politicians and the government is the root of this dependence on a mass murdering Communist country, where profits are of paramount importance, as long as the US companies are willing to give up all US patents and military secrets to the criminal Communist government of Red China.

    Upon arrival, with the signs torn down, a little difficulty locating the event would have been experienced, as the site had been moved by the president of the university at the last minute. I assume he was trying to avoid trouble. I checked shortly before going.

    The discussion panel after the film was supposed to be limited to 15 minutes, but a WSU professor named Hopkins, who was very pro Communist China and loved disastrous US unilateral “free trade” with the Communists, at our expense [300 Billion dollars/year] hogged all of the time remaining and no direct questions from the audience happened.

    Afterwards, I did get to speak with Professor Navarro, after stepping in front of an apparently Red Chinese woman who blocked the way for 15 minutes talking “free trade” propaganda, not allowing the 30 or so people behind her to speak with him. Most Americans are too polite to just move a Communist out of their way, but I was expecting these tactics. This allowed others to speak, as well.

    Foreign Communist activism in Dayton, Ohio is here.

    In response to my question; “What to do?” Professor Navarro stated that import tariffs and a national plan will have to be re-initiated to counter the Chinese and 150 other nations protectionism.

  9. Joe Brooks says:

    “Maybe the USA could use a little Confucianism ourselves.”

    Hey Will. I certainly agree that the elites running the US for the last 25 years are wrecking the country. However, I do not think we need to adopt any of the Eastern Civilization attributes of the USSR and PRC. BTW, Communism was created mostly by Asians and Eurasians. Stalin was an Asian, Mao was an Asian, being Asian is about your area of origin, not race.

    We need to return to our Western Civilization roots. Here it is:

    “The American School, also known as “National System”, represents three different yet related constructs in politics, policy and philosophy. It was the American policy for many decades, waxing and waning in actual degrees and details of implementation. Historian Michael Lind describes it as a coherent applied economic philosophy with logical and conceptual relationships with other economic ideas.[1]

    It is the macroeconomic philosophy that dominated United States national policies from 1789 until 1970 (after mercantilism and prior to Keynesian economics, it can be seen as a modified type of classical economics). It consisted of these three core policies:

    Protecting industry through selective high tariffs (especially 1861–1932) and some include through subsidies (especially 1932–70) and the advocacy of protectionism and opposition to free trade.

    Government investments in infrastructure creating targeted internal improvements (especially in transportation)

    A national bank with policies that promote the growth of productive enterprises. The privately owned Federal Reserve was not their intention.

    It is a capitalist economic school based on the Hamiltonian economic program. The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.

    During its American System period the United States grew into the largest economy in the world with the highest standard of living, surpassing the British Empire by the 1880s.

  10. Will Wilkin says:

    Hi Joe, I agree that industrial espionage is a problem, but more than anything else again it is being caused by the US free trade policies allowing corporations to move their technologies offshore as more profitable than keeping them here.

    As for mass-murdering criminal govts, don’t be so quick to assume China is worse than ours. It would take several pages of text to list all the US military interventions on foreign soil since 1898. It would take a few pages to list all the ruthless dictators the US govt gave weapons, money and intelligence to. The US-led blockade of Iraq through the 1990s resulted in a million civilian deaths, not to mention the US deliberate destruction of the Iraqi civilian water infrastructure at the end of the first Gulf War.

    Your inability to mention China without calling them “Red” and often more sinister adjectives is a way of diverting responsibility for our problems away from our own leadership and onto a foreign bogeyman, exactly the kind of attitude that excuses our own elites who are looting our economy, and the attitude that keeps our country in a permanent militarist stance, bankrupting our Treasury by attempting global military domination –on borrowed money no less!

    I agree with you we need to return the “American System” thinking and policies, centered around concept of a national interest in building the industries that will be key to 21st century prosperity. I would add the need for a full employment policy and a strenthened Social Security as well as a National Health Insurance –these added points of an “American System” being necessary to democratize the prosperity we can revive if only we would drop the “free trade” and free-market mythologies and act like a coherent society of self-government in the national interest, that is, in the interests of the people of the USA.

    • Joe Brooks says:

      Will, agreed on all points except calling the Communists for what they are. I also agree our military adventures since 1990 or so have largely been misguided.

      “Your inability to mention China without calling them “Red” and often more sinister adjectives is a way of diverting responsibility for our problems away from our own leadership and onto a foreign bogeyman, exactly the kind of attitude that excuses our own elites who are looting our economy, and the attitude that keeps our country in a permanent militarist stance, bankrupting our Treasury by attempting global military domination –on borrowed money no less!”

      You must be new to the site, as I have addressed this issue many times in the past. The Oligarchs are definitely to blame, but you may not be aware that the USSR prior and then concurrently with the PRC have been peddling “free trade” influence here for 70 years. Essentially without the foreign influence of the LSE [founded by Communists] the Austrian School of Economics [founded by LSE Communists], Nathan Gregory Silvermaster and his group of spies, Harry Dexter White, Alger Hiss and hundreds more proven USSR spies working as US economists, “free trade” would almost certainly would have never become the problem it is.

      Without question Communism is the most evil and murderous form of “governmet” to be inflicted on the human race, with the possible exception of the Asian Mongol Empire, at least on a population to murder ratio.

      If you have a Facebook account look me up and I can send you a PPT slide show of verified facts concerning the history of “free trade”.

      You can also read this and the comments:

      Communist Body Count: 149,469,610

    • Joe Brooks says:

      Will, here is something from about a year on this subject. I have managed to get some opinions in several newspapers 6 or 7 times over the last 4 years.

      This did not make it into a newspaper.

      Will, I agree with the bulk of your analysis, with some remarks.

      I would like to mention that promoting the industrial/manufacturing/agricultural base is not just a matter of profit, as has been mentioned in the past. Profiteering with no regard for the ripple effects on fellow citizens, the opportunities of future generations who are not elites/royalty, is the course of Communism, Libertarianism and Objectivism. These closely related unilateral US free trade “philosophies” have been hammered into us for decades, supplanting the American School.

      The fact is, most people are dependent on the wealthy and government regulation of the economy for a job. The Founders tried to set up a system that provided opportunity and upward mobility for all with a continually improving infrastructure. This included the folks who are not engineers, computer science majors, financial wizards, capitalized entrepreneurs, etc. They established free trade within our own borders. You pay no taxes between states to prevent the states from battling each other, economically. The real economy. They did this thru the Constitution and the Western Civilization based American School of Economics, injecting money, time, effort and protecting manufacturing that produced patents, civil progress, and things you can see and touch. Think of the Hoover Dam, NASA, the TVA, the Interstate Highway system, etc. Protectionism also ties investors and corporate interests to the success of the nation. This was a uniquely American concept is dependent upon a paternalistic/maternalistic attitude by the government and the wealthy controllers of any country, including the USA. I see little benevolence in the banking monetary scheme.

      If this attitude is missing, which is the goal of Communism, Libertarianism, Objectivism, Anarchism, Scumbagism, then that society degenerates into selfishness, greed and then street justice for those who were not born into successful circumstance or are unable to sociopath their way to prosperity. Romney’s territorial corporate tax plan comes to mind. Paul Ryan’s admitted love of Objectivist Philosophy and Ayn Rand, would of course include her stated goal of the destruction of Christianity and the American System of Capitalism in the US.

      I think we should all be American School of Capitalism pigs. There is nothing wrong with profit making, wealth creation, opportunity creation, building infrastructure, fun, as long as we remained within the limits [gasp-regulations] intended to make the place the land of opportunity for all. Which it clearly was, with some incursions by the Robber Barons, Communist spies, foreign lobbyists, etc. Was this perfect? No, but no other country has ever provided so much opportunity for citizens to come out of nowhere and succeed, whether you worked for someone else, or yourself. Besides, we already know this works, check out the first 180 years of the USA, also 150 other nations are practicing protectionism as we speak.

      We eventually and temporarily dealt with past issues because of the attitude discussed earlier. This time is different. The Red Chinese/Libertarians/Objectivists are not suddenly going to change their course and withdraw their foreign lobbyists and spies, the Red Chinese have murdered 70 million of their own, to get where they are. None of the other countries looting the US middle class thru free trade are suddenly going to become interested in US citizens’ welfare, either. Neither will any of them willingly return the means of production that have been outsourced, off shored and heavily enticed into their economies. So, it is up to the decent Americans left who still believe in the US to affect this return to our Founders original intent.

      MacArthur successfully transformed the Japanese into a form of the American School, check out his thoughts on Japan and Red China:

      • Mo says:

        Joe you left out the vital issue of sound money from your analysis. When Libertarians discuss Austrian economics and mention free trade, its in reference to a sound monetary system backed by gold. Under a sound monetary system the offshoring and wasteful gov’t spending that has been occuring the last 10 years would not have been possible.

        If the US never left the gold standard, it would have forced the US not to import too much more than it exports because as gold was drained it would have forced action like higher interest rates to encourage more savings to reduce imports and higher tariffs on countries that were devaluing their currency with intent of exporting their unemployment.

        If we had sound money backed by gold then the terms of trade would be different. Today because of the wasteful money printing, the US winds up exporting factories, jobs, transfering technology and trades ownership of US companies to pay for the importing of consumer goods, financial speculation, wars and overseas military bases. The terms of trade today clearly show capital consumption. Technically all trade is balanced trade because you have to trade something to get something which in the US case it exports the cow for milk which is a horrendous terms of trade.

        Yes I’ve heard some Libertarians say that its ok to trade with China freely but its under the premise that there should not be conditions imposed on the US by central planning organizations like WTO, NAFTA, CAFTA, etc. because this is managed trade which means some special interests benefit at the expense of many other industries. Ron Paul who is a libertarian has advocated the US withdraw from the WTO and opposed all these managed trade agreements called free trade. To a lot of libertarians, if trade with China entails US imposing tariffs thats fine but there should not be some central planning committee that tells the USA like the WTO we cannot impose tariffs. The special interests that lobby for free trade are not real free traders because free trade according to them means they get tax credits and credit created out of thin air to subsidize them.

        When it comes to the ideas of Austrian economics and communism, they are so far removed from each other. Commnunism advocates as one of its main tenets a central bank for the centralization of credit while austrian economics favors using money that the market has decided which historically has been gold and silver. We can see how the economy has performed in the last 3 decades as the economy has become more centrally planned with orgainzations like NAFTA, WTO, etc and money creation no longer being anchored by gold.

        If you follow the spending in Washington you will see they have no interest in correcting the trade imbalances because countries like China allow the US to export inflation. That is why many countries have hundreds of billions if not trillions worth of US dollar assets. These trade agreements allow the US to export dollars in exchange for real goods. This allows Washington to continue funding military conflicts, overseas bases etc.

        I strongly recommend reading the article linked below:

        Gold: The Protector and Creator of Jobs

        To see in charts the connection between inflation and manufacturing job losses check out the document linked below starting from page 36.

      • Mo says:

        Joe you forget to mention the vital issue of sound money. Under a sound monetary system companies wouldn’t have to offshore to other countries to hedge exchange rate risk. Companies would mostly opt to produce in the country that allows for the most productivity.

        The theory of free trade was based upon money being anchored to gold which is what the free market decided a long time ago. Libertarians like Ron Paul who subscribe to the Austrian school of economics and who are supporters of free trade usually support free trade in the context of a sound monetary system. Ron Paul has called for the US getting out of the WTO and has voted against NAFTA, CAFTA, most favored nation trade status for China and other countries because it’s managed trade which means some sectors benefit at the expense of others due to government intervention.

        Today with money created out of thin air by fiat, it distorts the structure of production and benefits those that receive the new money first. If we look at where the new money has been injected, it has gone into funding wars, overseas military bases, consumption of foreign made goods, financial speculation and offshoring. To pay for where the money has been spent, it has caused and contributed to the US exporting jobs, factories, transferring technology and trading ownership of US companies.

        Libertarians who subscribe to the Austrian school of economics is very far from communism. Commnunism has as one of its main tenets the creation of a central bank for the centralization of credit while the austrian school of economics is very against central banking.

        If the US never left the gold standard, it would have forced the US not to import too much more than it exports because as gold was drained it would have forced action like higher interest rates to encourage more savings to reduce imports and higher tariffs on countries that were devaluing their currency with intent of exporting their unemployment.

        I strongly recommend reading the article linked below:

        Gold: The Protector and Creator of Jobs

        To see in charts the connection between inflation and manufacturing job losses check out the document linked below starting from page 36.

  11. Jim Schollaert says:

    Joe: Sorry but I do not see free trade as part of a communist plot. It has very clear roots in Anglo-Saxon free market capitalism. Our problem with China began when China moved away from communism in the economic sphere and got in bed with our capitalist financiers and corporations. Ideology, whether it be communist or anti-communist, is the enemy of clear headed analysis.

  12. Tom T says:

    I agree, Jim, but it was the Chinese govt. system and very poor economy that allowed corps to send their jobs to China instead of employing the labor force here. It really doesn’t matter what it is called, it is the reality of it that counts. I think you have that spot on. The bigger question, even bigger than trade policy, is how do we govern the new plutocrats for the benefit of society. They are so powerful they don’t have to follow the rule of law. We haven’t had any accountability in the financial sector and their losses became public losses with massive public dollar infusion to keep the old system that failed.

    Tom T.

  13. Will Wilkin says:

    Hi Joe, You are more interested in ideology than I am, I consider it dangerous in practically any form, from communism to AynRandian free market social darwinism, which seem opposite but what they all have in common is commitment to an idea to the point of making one blind to practical human conditions. I think it is better to wear our ideologies lightly and instead be guided by pragmatic values like caring about the community around us, and on a larger scale staking our future with the rest of the country as a national fate, and ultimately to use our national government to make prosperity and opportunity for all our people, and to conduct our diplomacy in a respectful and humane way, seeking peaceful and cooperative solutions to international issues as much as possible.

    The problem I have with your theory of free trade originating in communist and foreign spy designs to ruin America is it feels too paranoid and simplistic, discounting the political responsibility of the vast majority of the population for allowing the system to become what it is. It reminds me of those who blame Israel for our own one-sided approach to the Israel-Palestine conflict and the larger geo-strategic maneuvers that grow out of such a one-sided “alliance” with Israel. The Israel Lobby has out-of-proportion influence we read, and it even seems true –but in the end, it is only the American people and the American politicians who are responsible for our policies –be they Mideast diplomacy or free trade treaties and policies, they are made through the American political system that has been built by Americans and can be altered by Americans. It amounts to our need to take responsibility for our society rather than seeing ourselves as victims of evil conspiracies. The vast majority of government and corporate crimes happen right out in the open, “legally” through policy and commerce, knowable through public information. Blaming foreigners and spies and traitors takes away the need for self-criticism, for asking ourselves “what can we do better? What are we doing wrong?”

    As for the communist body count, one could compile a Christianity (or Muslim or Jewish) body count, a Capitalism body count, even a Romantic Love body count. Noam Chomsky has interesting things to say about a capitalism body count just in comparing the last 60 years of development in China v. India, where the Chinese have been much more successful in lowering mortality, extending life span, etc, thus yielding in India a very high capitalism body count.

    Whatever…..they are all an insight into how ideas and value systems (ideologies) can lead to inhumanity, even if the principles themselves were meant to improve humanity. Also there is inhumanity that comes out in lowbrow ways only later “justified” by whatever ideology is available, and thus not really caused by the ideas but only wrapped in them. When genuinely ideologically motivated, it means one has decided ideas are more important than the people dying. And really, any ideologue knows there have never been “true” communist or “true” pure market societies, neither ideology is up to the task of guiding our billions of specific decisions on how to improve the human condition. The “body counts” are propaganda that vastly oversimplify history in order to make an ideological point, usually against some other ideology.

    Perhaps this inadequacy of ideology is because underneath all our thinking and reasoning there is the natural world challenge of a growing human population that, like any other species, must find sustainable ways of providing all their needs in a complex interdependent ecosystem full of nature’s capricious and variable whims. Because our species has very much evolved into a social species with huge divisions of labor and interdependency and specialization, we come to depend on the success of the larger social system for the delivery of our own individual needs. Yet no social system will ever find perfect continuous solutions to that larger natural challenge of a huge population on a changing planet. The best we can do is try to be as aware as possible of whatever the current problems and successes are, and always be willing to adjust our thinking to be able to change our strategies when it will bring better results.

    • Joe Brooks says:

      Hey Will. The facts are the facts, not paranoia or simplification. Unfortunately, a thorough study of this issue leads to inescapable conclusions. Conclusions that have been reached by the FBI, HUAC and many others before even I was born.

      I posted a few rebuttals, which I hope will show up, if not I will post them again.

      Clearly, we need a return to Nationalism, economic and otherwise, if America is to recover.

  14. Will Wilkin says:

    By the way Joe, I am spending all my words on our differences, but I think we actually agree on much about what needs to be done, ie, revive that American System you describe, and make a 21st century version of it for the new economic and ecological landscape around us. Also I agree very much with what Tom T is saying above about the need for America’s political system to reign in the oligarchs, which to me means we somehow re-introduce the concept of “national interest” into our policies, and, as Tom T says, “accountability” of leadership. And Jim says it well: “Our problem with China began when China moved away from communism in the economic sphere and got in bed with our capitalist financiers and corporations.” But again, it is not China that is the problem but rather the American Congress that made the free trade policies that create the incentives driving our industries offshore.

    • Joe Brooks says:

      Will, I agree completely with this assessment:

      “Our problem with China began when China moved away from communism in the economic sphere and got in bed with our capitalist financiers and corporations.”

      However, the CCP is still in charge of Red China and the issues of Communist endorsement of US unilateral free trade go back over 100 years.

      William McKinley was murdered minutes after giving a speech itemizing his support for the American System, by a Anarcho-Communist who was a “free trader”.

      Easy enough to look up.

  15. Tom T says:

    Will, to your point on absolute ideology, we saw Russia dissolve its communist economy by selling off its industries and assets to insiders making an instant plutocratic class. If this is their move to capitalism, then the people living under those conditions are not much better off than when the state owned those industries. It has, however, opened the society at large to capitalism as a different system than the crony communism and its stringent rules that bound even the peasantry to it. They are marginally better off because of this but perhaps worse off because of the instant crony capitalism and plutocrats.

    Our system seems to be going to the billionaires over the millionaires (more plutocratic). Our government has bought the line that they are indispensable and the job creators and so taxpayers must save them and their perks. This, even as they ship jobs overseas to increase their personal wealth at the expense of the wealth of the nation and the majority of people in it. Free trade allowed this to happen at an astonishing rate. Breaking other laws with no consequence has assured their interests with economic concepts like barriers to entry. I was watching the “Sharks” last night just a bit and the top really knows how to look for these economic concepts to make above average profits.

    You are right that it is Congress that is selling loopholes and advantages to the plutocrats over the average person (carried interest is one of them). It is how politicians get their support and avoid the wrath that money can buy. Ultimately it is a manipulated and uninformed electorate (they may just be too busy to take note) that allows this to go unchallenged. It will continue until the pain is just too great to bear and a clear concise plan against it evolves just like this trade issue.

    Tom T.

  16. Joe Broooks says:

    Jim S:

    “Gentlemen deceive themselves.

    It is not free trade that they are recommending to our acceptance. It is, in effect, the British colonial system that we are invited to adopt; and, if their policy prevail, it will lead, substantially, to the recolonization of these States, under the commercial dominion of Great Britain.”

    The above quote comes from Henry Clay’s “In Defence of The American System”. His thoughts apply just as well, today. Red China, India and many others have learned this lesson, we have politicians who choose to ignore it. The quote comes from pages 23, 24.

  17. Joe Broooks says:

    Jim S, continued. Marx of course, picked up the aspects of British free trade looting that he could capitalize on:

    Free Trade -> Misery -> Social Revolution.
    (1) Karl Marx on Free Trade (2) Frederick Engels on Free Trade (3) Trotskyists for Free Trade

    (1) Karl Marx on Free Trade
    Karl Marx’s major statement about Free Trade was an address delivered to the Democratic association of Brussels, Belgium, on January 9, 1848, around the same time as he wrote the Communist Manifesto.

    “Moreover, the Protective system is nothing but a means of establishing manufacture upon a large scale in any given country, that is to say, of making it dependent upon the market of the world: and from the moment that dependence upon the market of the world is established, there is more or less dependence upon Free Trade too.

    Besides this, the Protective system helps to develop free competition within a nation. Hence we see that in countries where the bourgeoisie is beginning to make itself felt as a class, in Germany for example, it makes great efforts to obtain Protective duties. They serve the bourgeoisie as weapons against feudalism and absolute monarchy, as a means for the concentration of its own powers for the realization of Free Trade within the country.

    But, generally speaking, the Protective system in these days is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie [bourgeoisie means middle class] to the uttermost point. In a word, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favor of Free Trade.”

  18. Joe Broooks says:

    Jim S continued, please watch as 2 highly educated economists discuss “free trade” and the connection to Marx.

  19. Joe Broooks says:

    Jim S continued:

    4. Permit free trade between all nations regardless of Communist affiliation and regardless of whether or not items could be used for war.

    The list of communist goals contained in the book was read into the Congressional Record by U.S. Congressman Albert S. Herlong, Jr. of Florida, on January 10, 1963.

  20. Joe Broooks says:

    Hey Jim, I much more evidence of this, a byproduct of being old enough to remember HUAC. Literally thousands of pages of data.

    “Harry Dexter White (October 9, 1892 – August 16, 1948) was an American economist, and a senior U.S. Treasury department official. He was the senior American official at the 1944 Bretton Woods conference, and reportedly dominated the conference and imposed his vision of post-war financial institutions over the objections of John Maynard Keynes, the British representative. After the war, White was a major architect of the International Monetary Fund and World Bank.

    In August 1948, White testified and defended his record to the House Un-American Activities Committee. Three days after testifying he died of a heart attack at his summer home in Fitzwilliam, NH. A number of sources, including the FBI and Soviet archives, indicate that he passed secret state information to the Soviet Union during World War II.[1]”

    • Jim Schollaert says:

      Joe: I think the old lefties and fellow travelers were highly ideological. ‘One worlders’ as they used to be called. Much of it spawned by the horror at the carnage of WW I, which was blamed on nationalism. Early communists were very much anti-nationalist and internationally oriented. That is why the Bolsheviks formed the USSR, rather than a new Russian state. And we should not forget their “Internationale”, which gradually faded away as national realities asserted themselves. So I think that free trade for the communists and was not so much an economic theory that lay at the center of their motivation, but rather was simply a natural consequence of getting rid of national government and borders.

      • Joe Brooks says:

        Jim, I agree completely, however it seems evident to me, that many of the “one world” policies are still being followed here in the US. Especially US unilateral “free trade”.

        Besides Death by China, there are several other excellent and recent books that cover the issue of “one world” domination by Red China.

        China, Inc. by Ted C. Fishman

        When China Rules the World: The End of the Western World and the Birth of a New Global Order: Second Edition by Martin Jacques

        I agree with you guys totally that the bought and sold leadership of the federal government by elites/oligarchs/plutocrats/libertarians, whatever we designate them, is the ultimate source of our problems, because they were enticed by foreign nations policies/lobbyists and payoffs to sell out the US for maximum profits.

        Larry McDonald on Crossfire in 1983 explaining the problems faced by Americans 4 months before the Communists killed him, everything he fought against has happened. He calls out all of the issues we have just discussed. I saw this live at the time.

        • Joe Brooks says:

          Larry said that the elites were subsidizing Communism as far back as 70 years ago, now. We now have the most massive foreign aid program in world history. An average 700 Billion Dollar per year trade deficit for 10 years.

          Last year alone, the Communist Chinese Government enjoyed a 300 Billion Dollar trade surplus subsidy from the USA. 40% of the massive US trade imbalance goes to a single Communist country. You can see my point.

  21. Joe Brooks says:

    Uh Oh, got tired. Joe Brooks, not Joe Broooks.

  22. Joe Brooks says:

    I think some of them know it, at this point, how could they not?

    “Libertarians and free trade economists don’t realize it, but they are pulling Marx out of his grave.

    Free traders are resurrecting class war, not because they are Marxists but because they confuse free trade with global labor arbitrage. Free traders turn cold shoulders to US job losses from offshore outsourcing, because they mistake the losses for the beneficial workings of comparative advantage.

    Committed to a 200 year old theory that they no longer understand, free traders are cheering on the destruction of middle class jobs and the dismantling of the ladders of upward mobility that make large income disparities politically acceptable.”

    A lot more:

    • Mo says:

      Joe when some libertarians and economists advocate free trade, they are only mentioning one part of the story. If people actually read Ricardo they would know that free trade, comparative advantage and sound money all go hand in hand. If the world fiat monetary system had even some nominal backing to gold it would have forced countries like the US that were running trade deficits due to wasteful money printing to raise interest rates to increase savings and to impose higher tariffs on countries that were found to be devaluing their currency to export their unemployment. Today because the US dollar is the world’s reserve currency the gov’t doesn’t worry about deficits because it can just pay for goods like oil in fiat dollars.

      One thing to note about Marx is that he understood why gold was used as money. However, he favored the creation of a central bank with the centralization of credit. Marx believed that capitalism was unstable but he didn’t apparently realize that the booms and busts he saw were the outcome of fractional reserve banking.

      Today global labor arbitrage is a monetary phenomenon where floating exchange rates have distorted the structure of production causing some countries to have labor costs that are artificially more expensive and cheaper. Under a sound monetary system interest rates and prices would be relatively stable where manufacturers wouldn’t have to worry about offshoring factories to hedge exchange rates. Manufacturers would instead opt to produce in the location that would offer the most productivity.

      It’s important to note that from 1850-1900 when the US had sounder money it ran current account deficits with having tariffs. During this time the US increased the size of it’s industrial base because it incurred debt to import capital and then used the capital to produce goods and services to pay back its debt. A country can have a vibrant manufacturing sector and have trade deficits. What matters is the terms of trade. Today the terms of trade are horrendous because to pay for the trade deficits that result from wasteful spending, the US winds up exporting jobs, factories, transferring technology and trading ownership of US companies. Its like trading the cow for milk which is the same as saying capital is being consumed.

      Another period to look is during the 1930s when the US had tariffs and trade surpluses. Even though the US had trade surpluses due to all the incoming gold, the 1930s was a decade of capital consumption and declining living standards due to monetary and fiscal mismanagement like today.

  23. Will Wilkin says:

    Hi Mo, I’m surprised you seem to reduce many complex phenomena to monetary causes when I think there is a lot more involved. Trade imbalances, boom-and-bust cycles, off-shoring our industrial ecosystem, and the 1930s Depression are all ascribed to monetary causes in your post. No doubt currency manipulation and exchange rates exert pressures on trade and investment decisions, but there is so much more going on to combine into the final outcomes you mention. For example, the trade imbalances and off-shoring result from a total balance-of-factors that induce corporate officers and large investors to make the decisions they do. In global trade, that total-balance-of-factors includes not just exchange rates but all the incentives govts package to attract new investments (corporate welfare) plus the price and quality of labor, the quality of infrastructure and supply and stability of inputs, tax and regulatory environments, and of course the rules of trade that will affect the prices of imports and exports. Just moving to a gold standard would not do much to manage these many other factors that aggregate into the total picture shaping economic decisions.

    Calls for “sound money” tied to bullion also seem dangerous because that can lead to huge deflation when the money supply does not grow with the economy. What would keep the 2 in stable ratio? If money became more dear then debtors will be ruined by having to pay back much more value than they borrowed. Imagine this rippling through an economy where debts are huge right now:

    Maybe a better way to handle monetary policy and credit would be to treat these as but one of many policies coordinated in a larger Industrial Policy using trade policy, tax policy, public investment policy, regulation of labor environment and commerce policies all in concert to grow and protect those industries that will be most key to 21st century prosperity for the people of the USA. Indeed that is how the National Interest should be defined: maximum long-term opportunity prosperity and security for ALL the citizens of the USA.

    On that premise, maybe a better way to approach monetary policy and credit would be to nationalize the Federal Reserve and lend directly to private citizens and businesses. Wasn’t such lending a feature of the 1st and 2nd Banks of the United States? This would break the powers of usury in this country as the price of lending would be publicly established, not defined by LIBOR-manipulating banks. As for lending policy, use a new BUS to finance infrastructure investments, lend to industries and small businesses, and act as one of many tools of that larger Industrial Policy I mention above.

    • Mo says:

      Will the reason why unsound money causes problems is because it causes future prices and costs to be higher. This leads to trade deficits when a country inflates faster than trade partners, budget deficits because future costs become higher than anticipated, higher future costs to manufacture, future problems with entitlement programs because future costs are higher than anticipated and etc.

      You can see by looking at the charts at the link below that after the US went off the gold standard, inflation and deficits rapidly increased. Yes regulations and taxes do influence where businesses produce but its the constant subsidies and lines of credits from countries that have industrial policies as well as constant inflation and wasteful spending of consuming nations like the US that continually distort the structure of production within countries.

      Under a world unfettered gold standard or commodity backed monetary system, exchange rates would be kept within specie points (cost to import and export the commodity) that would link price levels and interest rates between countries. So there would be no printing of money out of thin air to fund various malinvestments that have caused or contributed to offshoring.

      For world trade to function as distortionless as possible, every currency would have to be backed by a certain weight of a commodity and every banking system would have to have 100% reserves not fractional reserve banking like today that causes and contributes to bubbles, redistribution of income, offshoring etc.

      Assuming the world was on a system where money was backed by a fixed weight of gold and every system had 100% reserves; the following would happen when it comes to offshoring:

      If a company were to offshore to a country that had cheap labor which would mean the country has a higher ratio of labor to captial (capital is machines, tools, equipment that allow workers to make more goods per a given time period) then real wages holding everything else constant would decline in the country losing capital and would eventually rise in the country gaining capital. Besides real wages declining in the country losing capital like the US today, prices for goods would also decline because money would be flowing to the country that gained capital.

      So as the country that gained capital is now able to produce goods cheaper with the new capital than the country that lost capital, the increasing flow of money and demand for goods from that country causes the price level and possibly the exchange rate to rise relative to the country that lost capital. The country that lost capital and money would now have lower prices for labor and goods as well as an exchange rate that may be lower and favorable to more investment. So offshoring under a sound monetary system could not be as pervasive as today.

      However, if the US was still on a gold exchange standard like Bretton Woods it would have forced countries like the US that were running trade deficits due to wasteful spending to raise interest rates to increase savings and to impose higher tariffs on countries that were found to be devaluing their currency to export their unemployment.

      Under a commodity based monetary system like gold, prices would probably decline and it would be a good thing because it would be due to increases in productivity. If prices fall due to increases in productivity that is good for consumers and doesn’t cause businesses to have any harder time of repaying their debts. The deflations that are bad is when banks collapse and money that was originally created out of thin air then disappears and when central banks raise interest rates to halt increases in the money supply that usually results in disinflation. These two types of deflations can cause debtors to have a harder time repaying debt.

      Under a 100% reserve commodity backed monetary system, there is never a deflation due to a decline in the money supply which can result in all sectors of economy having problems repaying their debts. A decline in prices under a 100% backed commodity monetary system occurs because the supply of real goods and services increases faster than the supply of money. Under sounder money, most likely more industries would be like the computer industry where profits have continued to increase due to the increase in sales of more computers at lower prices.

      To see in charts the connection between inflation and manufacturing job losses check out the document linked below starting from page 36.

  24. Tom T says:

    Mo, I agree with many, many of your goals but when I look at recent history, I really don’t see any possibility of the gold standard working as you say. We just had two major wars with tax cuts and the last president took much of the war spending “off budget” and retired the pay as you go rules previously in place (by “conserveatives” no less). In short, what makes you think they will stick to any standard? This does not even count the inefficiencies of having a currency that is not flexible. Flexibility is necessary for price and wage stability when the formula for the GDP is money supply x velocity of money. The fed can change the money supply to react to velocity changes to spur or slow the economy and keep wages/prices stable in relation to the money supply (traditionally this was done with changes in interest rates by the fed buying or selling bonds)

    For a discussion on money supply and GDP (we can add trade in later) look here at the formula:

    I would agree that our politicians have made a mess of things but what makes you think they would give a hoot about how much gold was in the country? Could they just not do the same as they did in the above turn arounds in policy?

    All of the trade issues could and should be dealt with a good trade policy, not some insistence on a standard that would likely not be met anyway. Even Nixon, by the end of the quasi gold pegging (and it is really just pegging a currency to gold), the gold ratio would have had to be adjusted so he took convertibility of dollars into gold off the table. FDR actually made people turn in their gold holdings for the war effort. Our country has been in continuous wars since WWII even though they are not declared.

    I do agree with many of your goals that you say the gold standard would bring us back to. I just don’t think even if we had the auspices of a gold standard, that it would stop our politicians who have a real and recent history about following any standard. We hav to hold them to following their own standards before we can even attempt to believe they would follow a gold standard (it is reported that the gold now held by the U.S. have claims to it over 100%– that it is double pledged).

    I see federal prison for politicians as a more likely event than going back to the gold standard. Real standards have to be enforced before the gold standard has any chance and that is unlikely based on recent history.

    Tom T.

    • Mo says:

      Tom as long as the status quo continues with an unsound monetary system, the restribution of wealth from the middle class to the top 1% will continue until the US economy becomes completely hallowed out. Unsound money causes the distortions with trade, deficits, pensions, politics and hurts savers. The only flexibility fiat currency allows for is the funding of wars and the redistribution of wealth to the politically connected. Sound money like gold or silver would actually be a boom for manufacturing because the only way the US could import much more than it exports would be for it to acquire or mine more gold or silver. If a country can’t mine more gold or silver then it would have to manufacture what it needs.

      When it comes to wages, yes there can be rigidities in some sectors but only gov’t intervention can cause systematic rigidities. Understanding the economics of the 1929-1946 period is very important because it shows how gov’t intervention can cause systematic rigidities that make a recession into a depression. The 1921 depression that lasted one years shows how the liquidation of malinvestments can speed up recovery unlike the 1929-1946 period. I will save further discussion comparing these two periods for another time.

  25. Tom T says:

    Mo, I totally agree with so many of your points. Going back on the gold standard would do many of the things you suggest but it isn’t the best answer. Perhaps it is with the type of politicians we have had running the country. Balanced trade could be achieved under Warren Buffet’s plan or ANY plan that our politicians wanted to adopt to solve the problem and there are many. The will just isn’t there.

    International trade does not have to have the gold standard to work for a country. Look at China, and the others who have racked up trade surpluses. They are doing it without a gold standard and so could we. We just don’t have politicians who are willing to do it. They are not smart enough to do the things that others do or they just don’t want to. Their inaction will destroy the economy and transfer the wealth of the country into the hands of the few. It is already happening or has happened in many industries. We have politicians who worship the wealth, not the virtues that allows it to make a country prosperous.

    We went off the gold standard during the Great Depression and the government actually required people to turn in their gold. Do you think politicians wouldn’t do the same if we somehow went on the gold standard and they were in a bind? It just isn’t realistic to think a gold standard would stop politicians from bad policies. In fact, their policies could affect the economy in much worse ways on a gold standard. It just isn’t an answer to politicians screwing all of us although I wish it were that simple.

    We had real boom bust cycles when we were on the gold standard (or when banks backed their issues by gold) that were exaggerated by the fact that gold and a run on it limited monetary policy (both public or private when the banks issued currency on the amount of gold they had). It is not a flexible system but more of a system like you saw on Jimmy Stewart’s Christmas special “It’s a Wonderful Life”.

    There are much better ways to handle the money supply than a gold standard. Just because we have had some of the worst policies and their effects on the economy doesn’t mean a gold standard would have prevented them from doing the same. For that, we need to hold them and that kind of party policy accountable at the polls and we just don’t do it as a nation in the long run.

    Tom T.

    • Mo says:

      The reason there were booms and bust cycles under the classical gold standard, the gold exchange standard which was setup during the interval between WW1 and WW2, and Bretton Woods is because they were all fractional reserve gold standards where not all demand deposits were backed by gold. The classical gold standard that lasted up to 1914 was more sound because gold coins actually circulated where if people lost faith in the currency they would exchange their dollars for gold coins. I think if more people were educated about how the monetary system works, it would make it much harder for politicians to do what happened in the 1930s when gold was confiscated. Also under a sound monetary system where all money is backed, politicans would only be able to fund wasteful spending through taxation which tends to cause an uproar if taxes become very high.


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