This is a tale of two very powerful nations. One, called the
world�s only Superpower, has a very aggressive foreign policy with a massive
network of military installations around this planet. The other, the world�s
skyrocketing economic power, has a low-key foreign policy and no real military
presence except within its borders. America and China, with two distinctly
different philosophies and agendas are on a collision course that will
determine which of them will lead the world in the decades to follow.
China is ruled by a Communist government, but it also has a
capitalistic economic system. Among major industrial nations, China has the
most dynamic, fastest growing economy. Its projected growth for 2009 is 6
percent while America and the rest of the world are just trying to survive. Its
military budget is miniscule, less than 10 percent of America�s. It is involved
in no foreign wars. Because its economy depends a great deal on petroleum
imports, it has been very active in setting up contracts and agreements for oil
all around the world, including South America, with very aggressive business
and diplomatic efforts.
America is a democratic republic, governed by an elected
president and Congress with a capitalistic economic system. Its economy has
been in a steady decline for some time as U.S. corporations have aggressively
outsourced millions of manufacturing jobs. Its military budget is larger than
all other major industrialized nations in the world combined. The U.S.
maintains a military presence in more than 750 installations around the world
and is involved in conflicts and occupation in both Iraq and Afghanistan. It
imports most of its petroleum needs from foreign sources and its military is
actively engaged in securing and protecting its oil interests in various parts
of the world.
Yes, these are two very powerful nations whose agendas in
world affairs, economic strategies, and use of military resources could hardly
be more different. And, yet, these two nations are locked together in the
world�s largest economic arrangement -- at least for the time being.
How did America ever get to the point where it is so
dependent on Chinese manufacturing and the need to continually borrow from it
to finance those purchases? How did America go from once being the premier
creditor nation in the world to the premier debtor nation?
Since the 1980s, America has transformed itself from the world�s
premier manufacturing juggernaut into a nation that has concentrated on
outsourcing manufacturing to nations all over the world while morphing into a
service economy. The long-time tenuous and adversarial relationship between
unions and managements finally caused a total rupture that saw corporations put
outsourcing into high gear. That enriched CEOs, increased profits and stock
values, enriched investors and, thereby, initiated the demise of the American
At that point, manufacturing, the cornerstone of America,
began a rapidly escalating decline. This was the defining moment for an economy
that relies on consumers for 70 percent of GDP. When that turn away from
manufacturing and embrace of rampant outsourcing took place, it guaranteed an
ongoing decline in its economy as the purchasing power of the working class
Americans began to erode.
During this period, Japan was the rising economic star and
began accelerating its manufacturing engine. China was not much of a real
factor as a top economic player but it was beginning to show real potential
power. So Japan�s presence on the American stage underwent a stage of rapid
growth as it entered into US automobile and electronics markets as a major
force that could provide quality products at extremely competitive prices.
How did the U.S. corporations react to this potential threat
to their supremacy? They continued their process of outsourcing every type of
manufacturing that they could to whatever overseas sources with cheap labor
they could find. Of course, the U.S. auto industry years before had set up
manufacturing plants in Europe and other nations overseas. Now they would watch
as various foreign auto manufacturers, Japanese, German, and others returned
the favor and set up plants in America.
So here we are, but what does the future hold? Well, China
holds the trump cards and most of the aces. It patiently watches and waits as
America continues to spend itself into economic oblivion with a never-ending
war on so-called Islamic terrorists and the continued massive importing of
products once produced in America.
China, at least for the time being, is continuing to loan us
billions of dollars while watching our trade and national deficits rise to
astronomical heights. Out of the nearly $2 trillion that China holds in foreign
exchange reserves, about $1 trillion is in U.S. government securities. This
massive transfer of wealth from the U.S. to China cannot continue unabated for
it is eroding the economic foundation of our nation. What must we do?
One of the answers to this dilemma is that America simply
cannot and must not allow this situation to continue to deteriorate. It must
rebuild its manufacturing base and reverse the destructive outsourcing of jobs
or we will never restore our economic foundation.
Robert Reich, former Labor Secretary under President Clinton
and a noted economist, in a recent article indicated that we are losing routine
jobs, including traditional manufacturing jobs but not to worry because they
will be replaced in the future by �symbolic-analytic work� by �people who
analyze, manipulate, innovate and create. These people are responsible for
research and development, design and engineering or for high-level sales,
marketing and advertising. They�re composers, writers and producers. They�re
lawyers, journalists, doctors and management consultants.�
Well, Mr. Reich is the economist and I am not, but I
don�t buy into his reasoning at all. This appears to be the same old theory,
slightly repackaged, that we heard in the 1980s about how the service economy
was the way of the future for America. My point is this: you can create all the
symbolic-analytic jobs you want but, if we do not have a sizable portion of the
American workforce performing work that takes some form of raw materials,
together with labor, to create products that are purchased by Americans and
exported to foreign nations, the majority of Americans will not have the
purchasing power to fuel our consumer-driven economy.
We can rebuild our manufacturing base if we can change the
poisoned philosophy of corporate outsourcing that has led to enormous corporate
profits and the destruction of the American workforce. Mr. Obama and the
Congress must enact appropriate legislation, and they most certainly have the power,
that provides tax credits to corporations that do not outsource or to those that
bring jobs back. Secondly, those corporations that continue to outsource must
be assessed tax penalties.
In addition to returning outsourced basic manufacturing jobs
to America, a great potential lies with developing a massive new green
industrial sector where government stimulus dollars and private funds create
new jobs to manufacture solar panels, windmills, rapid transit systems and
various new energy sources to replace fossil fuels. Besides reversing the
outsourcing of American jobs, there is no better way to solve our economic
problems than by the aggressive promotion of programs to develop new sources of
It�s time for the American people to say �enough is enough�
and demand that President Obama begin the very necessary process of reversing
our extremely aggressive and expensive military presence around the world that
is causing a terrible hemorrhaging of our economic base. Our national debt is
increasing so rapidly that it is becoming unsustainable. Our foreign wars,
occupations and the maintenance of that huge complex of military installations
around the world are bleeding America dry. Our government must understand that
it is now time to scale back this entire military machine before it is too late
and we find ourselves entering national bankruptcy. The question is how in the
world do Obama and our leaders in Congress not understand that our military
actions and policies are bringing America to the edge of bankruptcy?
What will happen if we do not have the wisdom and the
courage to change? First of all, our debtor position with China will reach such
massive proportions that China, at some point, will announce that it can no
longer continue lending America the many billions of dollars as in the past;
and that, in fact, it will put a moratorium on any more loans until America
puts its economic and monetary systems in order. At this point, the value of
the dollar would be in distinct danger and could unravel so quickly that it
would no longer be used as the world�s reserve currency.
The funding for the entire military complex around the
entire world would rapidly begin to dry up. The U.S. would have to close the
majority of these bases. And when that happened, what in the world would we do
with the thousands upon thousands of our military that, when discharged, would
have no job opportunities in a failing economy?
Signs of great concern are beginning to emerge from China. A
report coming out of China states that the chairman of the state-controlled
China Construction Bank, Guo Shuqing, is looking into the possibility of
issuing loans to Chinese import/export companies in yuan, the base Chinese
currency. This would allow domestic Chinese and foreign trading companies to
use the yuan to settle their debts instead of the U.S. dollar. Also, China has
been switching their U.S. treasury securities from longer to shorter terms
I am not saying that China wants the American economy to
collapse -- not at all, for China knows that America is its cash cow, for now,
and it would be happy to continue to feed at this financial trough. However,
realists that they are, the Chinese clearly see that America is headed on a
dangerous course that threatens to collapse its economic foundation and they
may be positioning themselves for that eventuality.
Another scenario, not a pretty one, would involve foreign
creditor nations, most notably China, buying up all sorts of American
corporations. In fact, this scenario is already underway with Chrysler and
General Motors both going into bankruptcy proceedings. Chrysler will survive,
at least for a while, with Fiat of Italy owning most of the assets and managing
the operations. General Motors is shedding several auto divisions, with a
Chinese industrial conglomerate buying the Hummer line of GMC. This scenario
may be the model for the future, as more and more U.S. corporations fail
because of bad management and greed and various foreign nations, with China at
the forefront, acquiring American corporate resources for pennies, nickels or
dimes on the dollar.
America has now painted itself into a corner economically.
There are few signs that the Obama administration and the Congress understand
the urgent need to aggressively promote a rebirth of manufacturing and rapidly
reduce our military presence across the planet. If they do not have the vision
and the courage and cannot dedicate themselves to the best interest of the American
people, then this is what will happen: China will become the preeminent
economic power in the world. The American dollar will no longer have any
significant effect on world commerce and will be replaced. Our vast military
establishment around the world will rapidly disintegrate, as there will be no
funds to further fuel its existence. At that point, America will have forfeited
its position as the world�s leading economic power and as the lone Superpower.
to President Obama and the U.S. Congress: If ever there was a time for real
change in America, that time is now!