Looking at the current situation with globalization, I think it just means that the spirit of Capitalism is alive and well. Sure, we can blame China for manipulating its currency all we want but by printing its own currency America is manipulating its own currency. If anything, the Western democracies should be very happy that the evil of Communism is finally conquered by Capitalism in the world’s biggest nation. This is the goal which conservatives from Western nations have been envisioning for decades ever since the cold war.

As for the real human cost of Globalization, there are two sides to this as well. There are certainly engineers and factory workers whose lives are severely affected by losing jobs in the US, but at the same time there are a lot more engineers and factory workers whose lives have changed for the better in China.

Americans in general have been taught not to rely on others (especially the government) and have always been preaching so to other nations as well. Competition creates opportunities and drives innovation. Socialistic policies result in inefficiencies and stifle innovation. Heck America doesn’t even have universal healthcare because many think that socialistic policies would dampen the capitalistic spirit in the US. Unless America as a whole changes its attitude, I think the current pace of decline will just continue until global wages equalize. At the end of the day, if the average Chinese can live on less than $200 USD a month and still save over 20% of their income, I am sure Americans can manage the same.

I hear you Allen and accept the clarification.

Thanks for taking issue with me about “globalization is a good deal to everyone”. I may have typed too fast. By “everyone” in #30 I meant every country, not every individual. In fact in #30, I specifically wrote regarding globalization that “It is perfectly sensible if some Americans feel that globalization is a bad deal for them.”

The human cost of industrialization, economic development, globalization (in both China and U.S.) is very real – and I don’t mean to overlook them – but at the same time that also doesn’t mean industrialization, economic development, and globalization is per se bad for society. You’ve raised deep issues that I didn’t mean to get into!

I remember watching a TV show about happiness once. In the show Denmark was revealed to be a very happy country. An explanations was that no matter what you do for a living you get paid about the same there. Turns out the people are all in it together and do work they like.

Life is never fair, there is no free lunch, but wild west policies which disenfranchise parts of society to enrich other parts is not a society where people are all in it together.

@Allen #30, I take issue with “globalization is a good deal to everyone”.

Its a slippery slope to claim unemployed people created by global outsourcing and in-sourcing (by uncontrolled immigration and immigration policies meant to keep down American wages to enrich WASP homeboy CEOs (H1-B programs and policies like it) can possibly be a good thing.

All the spreadsheets in the world can’t justify policies which pull people apart instead of bringing them together. Globalization is good for the bottom line of corporations as it rapes the planet of our resources and changes the climate, but individual people have their own bottom line. A single person is more alive and valuable than all the corporations put together.

If globalization is good for everyone, please let me know exactly how. I will visit the people living in tents and under our freeway overpasses. I’m sure the news will cheer them up.

I actually do respect this sentiment. It is perfectly sensible if some Americans feel that globalization is a bad deal for them. It’s also perfectly sensible if some Americans feel that America would be stronger and more prosperous with less trade – and more protectionism.

However, even with this, I’d still argue that the value of China’s yuan is a boon to America. If China’s yuan is truly that much undervalued, consider it a free gift to the world. Imagine someone you were willing to hire to $10 / hour all of a suddenly tell you unilaterally that he is willing to work for just $8.

OK – maybe countries are different from people. When China’s yuan is valued too low, it is actually sucking away industries from developed worlds, making the developed world weaker and China stronger.

I don’t know if I quite buy this because I believe the currency deficit reflects a combination of America’s spending habits and capital flow to China as that economy develops – not the Yuan’s value. Changing China’s yuan would not change the currency deficit per se. It may affect the volume of trade or shift trade to other low cost centers in the world, but not the currency imbalance.

Shifting trade volumes would economically isolate China – or it would slow global trade in general. But in general China does not want to withdraw from global trade because it is dependent on continuous exchange with the developed world to buy much needed technology and expertise in developing its own economy.

I think globalization is a good deal to everyone. The West should enjoy’s China’s labor surplus as long as it exists. After that, hopefully other parts of the world would take China’s place. Even if no one else takes China’s place, then the West would still have benefited. Eventually, low tier manufacturing may make its way back to the developed world, but citizens of the developed world would have had plenty of time to adjust for that if that’s the way it going to happen.

For the time being, enjoy the interdependence: even as the West grows increasingly dependent on China, so is China on the West. This is an expected result of globalization. Interdependence should be leveraged as an asset. The West’s current economic problem does not lie in China (or interdependence on China), but in how it has allocated its resources (borrowing to build asset bubbles) in the past – and how it’s going to clean that up going forward.

K-dog, you actually have a fan here. As a fellow American I absolutely agree with you that there’s a war. But it is not the Chinese – it is our own WASP homeboy CEOs, decision makers, political leaders who are shipping our jobs overseas (if they don’t go to China they’ll go somewhere else), creating conflict and sending the unemployed people to fight it, wrecking the foundation of our wealth for greed and self-enrichment.

Make no mistake about it Keith you are on the mark about China – exactely like you are supposed to. America’s elite has been declaring war against it’s poor, but we Americans are so brainwashed by our military-industrial-media-complex we are led to believe all this is somehow the fault of our “enemies” – enemies manufactured for the sole purpose of maintaining class structure and perpetuate the ruling class dominace over America’s permanent underclass.

“Karl Who?

China is a Communist country, but I have yet to meet an actual Communist.

On several occasions during my 10 days in China, I’ve been told that there are 70 million members of the Chinese Communist Party. And yet it’s nearly impossible to find an orthodox Marxist in Beijing. When you stand in Tiananmen Square and look toward the Forbidden City, you see a huge portrait of Mao flanked by slogans. The slogans used to say things like “Long Live Marxism-Leninism.” Today, they’re simply nationalistic: “Long Live the People’s Republic of China!” (Click here to follow Daniel Gross).

While class struggle and common ownership of property may have motivated the revolution, Mao’s heirs are more interested in outcomes than process. At least a dozen times, officials and businesspeople have quoted Deng Xiaoping’s line about not caring whether a cat is black and white, as long as it catches the mouse. Chinese structures—whether socioeconomic theories or apartment buildings—don’t have to be elegant; they just have to stand up. And so far, 30 years into the great China experiment, the elites are confident that the grafting of capitalism onto a state-controlled economy, overseen by a government controlled by a Communist Party, is standing up.

The headquarters building of the China Academy of Engineering is a testament to the nation’s growing ability to create elegant structures. Light spilled in through a large glass wall. The green building was paved with recycled marble tiles and boasts a sophisticated heating and cooling system that relies on recirculating water from deep in the ground. In a large reception area, whose centerpiece was a glass case filled with trains and planes, we met Xu Kuangdi, a veteran apparatchik, engineer, manager, and leader. Xu, an academic who served as mayor of Shanghai from 1995 through 2001, is vice chairman of the National Committee of the Chinese People’s Political Consultative Conference and president of the Chinese Academy of Engineering Sciences. And while the format of the meeting was old-school—we sat in large, comfortable chairs in a setting more like an audience than interview—there were several times during the meeting when I felt as if I were on the set of CNBC’s Kudlow & Co. For the only class struggle this veteran Communist discussed was the struggle of the newly rich to hold onto their gains.

Xu boasted China’s engineering triumphs: the 88-story building in Shanghai, designed by an American architectural firm but built by Chinese engineers; the 67 bridges over the Yangtze River; the Olympic structures; high-speed rail; supercomputers. And when we asked how we would square the experience of modern China—parts of Beijing are a luxury retailer’s paradise—with Communist Party doctrine, he had a ready response. Karl who? “We’re not a bookish party,” he said. Besides, the Communist Party has always been flexible when it comes to dealing with national priorities. It cooperated with the Kuomintang to fight the Japanese. “Mr. Marx is still widely respected by the party and the party members. He’s a great mind in the people’s history.” Just because many of his ideas are outdated—they were devised in a period without today’s developments in science and technology—it doesn’t means he’s forgotten. “I want to compare it to God in your mind. Maybe you don’t go to church every week. But that doesn’t follow that God is not in your heart.” Marxism, like religion, is “still a power that controls the morality of the people.”

Of course, in China, Marxist morality shifts over time. And today, the most moral thing that Chinese policies and people can do is promote economic growth and development, regardless of the distributional outcomes. In our time in China, we heard several reasons why the massive country simply couldn’t adopt Western-style democracy. The population is too large and too diverse. Democracy promotes the sort of arguing that hinders growth. The performance of other Asian countries seemed to have suffered when fractious democracies emerged from authoritarian or military rule. Xu added a new one: It would promote unhealthy class warfare. If elections were to be held in a large geographical area where gaps between the rich and poor are wide, and in which people have different educational backgrounds, “it might cause turbulences to society,” he said. “If somebody just went out in the street and shouted, ‘I will divide the property of rich people into poor people,’ I think he would be elected. But it is useless, as parity will not solve the problem of economic development.” Yes, the creation of wealth in China has been wildly uneven. But this, too, is consistent with the party’s goals, doctrine, and history, according to Xu. “Sometimes when we have the faith we have to take different approaches to realize our beliefs. The ultimate goal is the common prosperity, but we have to let a group of people to get rich first.”

http://www.newsweek.com/id/224340

Many are right. The US is only concerned about it’s interests, those of China or any other country be damned. Everything else is just theatrics.

“Actually Keith, It’s not about China’s secret war with the U.S., but the U.S.’s secret war with China!”

Correct. The US has nothing to gain by sharing superpower status with, or even getting eclipsed by, another nation. It will do everything it CAN to stifle China’s rise.

I assume if Yuan is raised sufficiently (say 1-1 vs. USD) China will not be export anything anywhere, but I can’t see mere raise of, let’s say 20% vs USD will result in anything but a global economic shock that plunges it back into deep recession. It has been argued over and over again that the exchange rate can’t be the only or even the main contributor to the trade imbalance and the crisis. For example the willingness of Chinese to work more for less, American to consume more than they have and the distortion of the western financial service industry are probably more fundamental causes of the imbalance and crisis.

RMB will appreciate again, gradually as in 2005-2008. While the other structural problems remain. Just look at the financial industry, it now profits from “high-frequency trading”, can anybody tell me what is the benefit of that to the real economy?

You need to calm down. I never said it was a minority view, I asked whether it was YOUR view as well or if you were just reiterating the views of others. You started the paragraph with “many in China feel”, without using the word “I”.

Furthermore I never accused the Chinese people of causing any crisis. They do not decide China’s exchange rate – that’s controlled by the government. And I didn’t even accuse the government of causing the global crisis. I suggested that a better question is to ask whether an upward revaluation of the yuan would help rebalance the global economy and in doing so help stave off more economic trouble.