Fabian socialism will be destroyed in the US and Europe
- From: taxationistheft2003@xxxxxxxxx
- Date: Mon, 16 Jul 2007 08:33:45 -0700
Western Political Liberation: 'Made in China'
by Gary North
As consumers in the West, we love China. We are not so fond of India,
since we seldom see "Made in India" stickers on the goods we buy. But
"Made in China" stickers are everywhere.
Wal-Mart in 1998 posted banners saying the company bought American.
Apparently, someone in management thought shoppers cared. They didn't.
Wal-Mart took down those banners years ago. Nobody protested. The
parking lots did not empty. Companies in China began stocking the
shelves at Wal-Mart, K-Mart, and Target.
Call it the Bob Barker phenomenon. The price is right. Bob has
retired, but the show goes on. So does its message.
So, if we buy "Made in China" items, we don't hate China.
As customers, we love China.
But if a person is employed in manufacturing, he fears China. If he
has just been laid off, he may hate China. If the plant where he
worked is closed for good, he blames China.
We all wear two hats: a consumer's hat and a producer's hat. As
consumers, we want producers to compete. As producers, we want
protection from unfair competition. What is unfair competition?
Successful competition.
People vote with their money as consumers. They often vote in a
polling booth as producers. As consumers, they want liberty. As
voters, they want controls, or more to the point, control. Control
over them. You know. Competitors.
Spending is about liberation from controls on us. Voting is about the
imposition of controls by us.
We are schizophrenic. It shows.
LIBERATION FROM TRADE UNIONS
When I was in my teens, I was interested in national politics. I no
longer am. I used to think we could make things better through
national politics. I no longer do. St. Paul commented on this change
of mind.
When I was a child, I spake as a child, I understood as a child, I
thought as a child: but when I became a man, I put away childish
things (1 Corinthians 13:11).
Back in the 1950's, there was a political movement called the right-to-
work movement. "The right to work" meant the right to work without
joining a union. It was a great slogan, although it was bad economics
and worse jurisprudence. There is no right to work. There ought to be
a right to make an offer to work. There is no right to a job. There
should be a right to bid on a job. But "the right to work" was a great
political slogan. When explained, it made an important point: trade
unions were limiting the right for an employer to accept bids from
people who wanted to work at wages lower than what trade union members
wanted to match.
Trade unionism in America in 1955 was limited to about 25% of the work
force, but the manufacturing sector was heavily unionized, especially
in the industrial North. If you did not belong to a union, you had to
seek employment elsewhere. It was illegal for unionized businesses to
hire you as an independent.
As government-protected producers, union members could demand and
receive above-market wages. They could not legally be fired if they
went on strike. People who crossed a picket line were taunted. They
were called scabs.
There are still scabs today. They are called Asians. There are over
three billion of them. They don't cross picket lines. There are no
picket lines in Asia. There are few unions. Asian workers produce
goods, which are offered for sale to Westerners. There is no phrase
more beloved by American consumers than "Let's make a deal." If
American manufacturers cannot beat Asian prices, they go out of
business. Result: no more picket lines. No more jobs.
Union members should have seen this coming. The process began in the
1950's. But "Asia" back then was located south of the Mason-Dixon
line.
In the South in the 1950's, right-to-work bills became laws.
Employment steadily moved south, reversing half a century of
emigration out of the South. The South benefited from two things:
right-to-work laws and air-conditioning. The North could not compete,
and still can't.
Right-to-work laws were passed in the deep Midwest. From Texas to
North Dakota, and from Texas to Virginia, the country is liberated
from unions. Twenty-two states have passed these laws.
If states in the North abolished state income taxes, and if the
Federal government revoked all "labor legislation" - laws forcing
businesses to bargain with unions that get a 51% vote of employees,
just once - the North would rise again. The North's economy would
start booming, the way that South Dakota - no state income tax - is
booming. But this is unlikely to take place. The North's economy is
bloated with bureaucracy, hostile to economic liberty, and aging fast.
When you think "North," think "Senator Kennedy."
Trade unions fought back in the 1950's. They could not keep businesses
from building plants in the South, where wages were lower, regulation
was weaker, and politicians could be bribed cheaper. So, they got
Congress to pass a series of minimum wage laws. The first result of
these laws was to keep black teenage males unemployed, thereby
reducing competition in the labor markets. The other result was to
keep Southern workers from being able to bid their labor below the
minimum wage. This made it less profitable to build plants in the
South.
But then price inflation under Johnson, Nixon, Ford, and especially
Carter forced down real wages. The dollar bought less. The legal
minimum wage did not keep pace with price inflation. The Federal
Reserve System did the bidding of four Presidents - debauched the
dollar - and that gutted the minimum wage law.
At the same time, Japan started exporting low-cost, high-value
products. Americans started buying them. The 1970's was the decade of
the Japanese invasion. The 1980's solidified the market share of
products manufactured by Japan, Hong Kong, and South Korea.
Then, in 1978, Deng Xiao Ping liberated China's agricultural sector.
Output soared within a year. This made more food available in cities.
More rural Chinese could then move to cities. The joint phenomenon of
agricultural revolution and urbanization, which had begun in the West
in the sixteenth century and has kept accelerating, had at last
reached China. Agricultural output always increases under liberty.
Efficient farmers out-compete inefficient farmers, who then move to
cities or into local trades.
Today, China must build the equivalent of Houston every month to
accommodate the flood of immigrants from the farms.
Initially, Japanese goods undermined American manufacturers. Here was
the basic strategy: price competition (1950's), product improvement
(1960's), marketing (1970's), credit (1980's). Then Chinese
manufacturers got the liberty they needed to compete, when the
Communist Party freed up the economy. China began where all newcomers
must begin: price competition. It caught up with Japan in less than
two decades. Capital flowed in. Technology was either stolen or
purchased. Output soared.
Wal-Mart took down its "We buy American" banners. That visibly marked
the end of American labor union movement. It exists mainly in the auto
industry, which is approaching bankruptcy, and government, which is
also approaching bankruptcy.
In 1958, I dreamed of the end of the labor union movement. Because of
the Federal Reserve and Asian manufacturing, my dream has pretty much
come true.
EUROPE FALLS BEHIND
The trade union movement in Europe is still strong. China is now
undermining Europe's unions. They are still politically powerful, but
consumers like good deals, and China offers good deals. The French
socialists failed to win last month. China is in the World Trade
Organization. The internationalists' goal has always been to cut trade
barriers and extend bureaucratic control over the international
economy. But the plan has backfired. The Chinese, with India close
behind, have used the WTO's managed trade system to breach the Great
Wall of Europe - trade unionism - without surrendering an inch on the
question of adopting European rules regarding pollution, wage
negotiating, and safety.
The internationalists worked for almost a century to get their system
accepted in North America and Western Europe. Their dream has almost
come true. But they didn't foresee what Asians would do to their
plans. Always, Asia had been looked at as a market for European and
American goods. Asian farmers would export food to us. We would sell
them manufactured goods.
America now sells its farm products to China - our only big export
success in China - while "Made in China" stickers are everywhere.
In short, Keynesian economic planners in the West, who adopted a post-
World War II strategy of imposing government controls on Japan to
prepare the West's economies for a grand invasion of Asia, knocked
down the Asian drawbridges that had kept out Western goods for
centuries. As soon as the drawbridges were down - in Japan, South
Korea, Hong Kong, and Singapore - the flood of goods started flowing:
from East to West. The planners' grand plan completely backfired.
Ludwig von Mises was correct when he argued that the results of
government economic planning will always be the opposite of the
official policy of the planners.
The United States succumbed first. We were Japan's primary export
market. Then, nation by nation, Japan's exporters established a
foothold. Western consumers started buying. The other Asian tigers
followed Japan's lead.
It is now Europe's turn. Bureaucracy is vastly more entrenched in
Europe. The welfare State is more extensive. Taxes are higher.
Mobility is less. Europe is sclerotic economically and biologically.
It is aging rapidly.
The European internationalists have centralized power through the
European Union. They are about to do an end run around voters, who
have rejected the 300-page constitution. The deal will be sealed
through treaty, with no opportunity for voters to register a veto.
The Eurocrats think they can gain control over the economy by means of
faceless bureaucrats who answer neither to politicians nor
businessmen. But they have no power at all over Asia. They are
committed to low tariffs and managed trade. But the Eurocrats will not
terrify China's politicians. China's politicians will smile, bow
politely, and do nothing.
China's politicians have a unique way of dealing with China's
bureaucrats, as Zheng Xuaoyu was reminded this week. He ran China's
equivalent of the Food and Drug Administration. He was executed for
taking bribes from companies that then released drugs that killed ten
people.
In 1968, George Wallace's third-party presidential campaign had a
slogan: "Send them a message!" They take message-sending seriously in
China.
Message to the WTO: "China will not comply."
China, India, and the rest of Asia will take advantage of the European
Union's low tariffs and reduced import quotas. Europe's main import
quotas are on agricultural imports. Asia imports food, so those
restrictions will have no effect on Asia. As for the WTO's guidelines
on labor relations and safety conditions, who will enforce them on 200
million Chinese workers, just off the farm, who earn about $350 a
month for a 12x7 work week?
Heads, Asia wins; tails, Eurocrats lose.
Europe is going to find that its government-protected industries
suffer a fate similar to Mr. Zheng's. It's just a matter of time.
Europe's century-old tradition of social democracy - Marxism without
bloody revolution - will not survive another 25 years. It's as
sclerotic as the rest of Europe is. If the Eurocrats don't allow the
European economy the freedom that China now enjoys, European
manufacturing is doomed. Labor unions control manufacturing and
government. All over the West, China's free market economy is
bankrupting both.
THE GREAT REVERSAL
The West after World War I began imitating ancient China. Not since
the days of Egypt's pharaohs has there been a bureaucracy to rival
China's, which lasted for a thousand years. Entry was based on mastery
of Chinese poetry. Even military officials had to pass this exam. It
was rigorous. Smart people with a gift for poetry passed. This
eliminated nepotism. Sons could not follow their fathers unless they
could pass the exam.
By 1900, the failure of the old system was visible even to the rulers.
The West had sent theologically liberal socialist missionaries to
China in the 1890's. The result was revolution: first organized by Sun
Yat-sen in 1913, then under Mao in 1949. China's leaders had been
trained by liberals in missionary schools and denominational colleges
in China. Mao speeded up the process of social revolution by
destroying old families and old wealth.
India experienced a similar system of secular evangelism. Its best and
brightest were sent to study at Oxford and Cambridge in 1900. They
came back confirmed Fabians. They became bureaucrats.
Japan had become Western in 1868, by top-down decree. It went
militaristic. It also went bureaucratic.
All roads were heading West in 1900: to Marxism, Fabianism, or
militarism, but surely to bureaucracy.
Then came Japan's defeat in World War II. The old guard lost face.
Industrialists invited W. Edwards Deming to teach them about quality
control in manufacturing. They were under the impression that Deming
was influential in Western manufacturing circles. He wasn't.
There was also Hong Kong's experiment in liberty after 1945. Deng saw
what happened there. Then he came to power. He imitated Hong Kong.
Next, India began to follow China's lead after 1995.
The East has generally abandoned Western economic theories of
protection of labor unions. It has adopted wage competition and labor
mobility. It passes the savings along to its trade partners.
Under pressure from Asian imports, the United States has been forced
to abandon the New Deal in the field of labor relations. Now it is
Europe's turn.
The tide has turned. Asian politicians have loosened government
control over their economies. The result is enormous productivity.
Anyone in the West who gets in the way of this avalanche of production
will be crushed. Consumers will be crushed with bargains. Producers
will be crushed with competition based on four major factors:
unprecedented price competition, an unprecedented savings rate, an
unprecedented work ethic, and unprecedented labor mobility.
Asia learned well: first from left-wing teachers, then from Henry
Ford.
THE COST OF LIBERATION
At the beginning of any revolution, leaders call their followers to a
life of self-sacrifice. For the sake of the revolution, men must
sacrifice their lives, purses, and sacred honor.
That call to sacrifice doesn't sell well these days. What sells well
is a call to go to the mall.
If today's revolutionary youth leader were as symbol-oriented as
yesterday's, he would have a large photo on his wall of Sam Walton.
Beneath the photo would be these words: Sam lives!
The West today is facing a different kind of political revolution: an
imported revolution. It was one exported by the West after World War
II: free trade. Now it is being sent back, embodied in low-price, high-
quality goods.
Those of us who grew up fighting the Fabians, who were dominant in
American academia after World War II, are at long last seeing the
bastions of Fabian-Keynesian power being bankrupted. The labor unions
are the symbol of this process. They are dying.
They will die soon enough in Western Europe.
Businesses that relied on government protection, such as tariffs and
import quotas, are also dying.
Even the public schools are in trouble. Home school curriculum
materials, which cost a fortune to design and print in 1980, can be
bought for $200, once per family. The program's CD-ROM's are run on a
$500 Chinese-made computer.
There will be more pain for people who were trained to work in
government-protected industries. There will be less pain for
consumers.
There will be great sacrifices made by retirees who trusted their
labor unions' leaders when the leaders negotiated fat pension promises
from companies that can renege simply by declaring bankruptcy. There
will be fewer sacrifices for people who spotted the scam and stayed in
the labor force.
There will be great pain for taxpayers who have trusted similar
promises about government pensions, Medicare, and drug payment
subsidies. There will be less pain for those who spotted the scam and
stayed in the labor force.
Every revolution has winners and losers. The winners will be
entrepreneurs and consumers. The losers will be politicians and their
victims, who believed political promises of protection.
Government today is a gigantic protection racket. Now the "family" is
under assault by products bearing these stickers: "Made in China."
The revolution is being made in China. It is not Mao's revolution. It
is Deng's.
CONCLUSION
My children will live to see the destruction of the cartel-creating,
tax-extracting, bureaucracy-expanding, sclerotic Fabian Establishment
that has had its way in the West since about 1933. As surely as its
evil twin, Marxism, went the way of all flesh by 1991, so will
Fabianism perish.
The cutting edge of the revolution is a sticker: "Made in China."
In my mind is a life-sized photo of David Rockefeller. (If I were a
European, it would be Jean Monnet.) Every time I buy something made in
Asia, I mentally stick a pin into the photo.
So, buy something made in Asia. Support the revolution.
.
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