Our Special, Dysfunctional Relationship With China

We send them money, they send us more or less everything. Simple.

Actually there’s a lot more to it than that. It may seem that our money is going there never to return (except in the form of loans and – perhaps – investments), but China’s increasing wealth is little more than a side-effect of the highly integrated role that it now plays in the world economy. China is a machine for transferring wealth all right, but while some of it goes to the rich in China and some even goes to the poor there, most of it flows from our poor to our rich, here in the West. It’s the great money pump. As such it plays a very useful role in the destruction of democracy, by democracy.

Think back to those far-gone days when Capitalism seemed to actually work. Owners of businesses would employ people who would then be able to buy things from businesses. It was a two-way street and it worked well enough. The owners arguably got more than their fair share and working conditions were downright dangerous in the early days, but overall it was a benign circle where people saw their incomes rise.

It began to fail only when everyone, more or less, had a job. This meant that the labour supply was no longer an endless resource, and that very much strengthened the position of the “working class” in their campaign for a bigger share. Labour was still a renewable resource though, so at this point things might conceivably have reached an equilibrium. But capitalism is driven not by profit, as you might assume, but by increasing profit. Its most powerful members after all are not those who create wealth, but those who have it already. Investment will go not to what might make a sustainable economy or society, but to whatever can return the biggest immediate margin.

And one of those things was China, where labour seems again to be in infinite supply and working conditions can be just as dangerous as the good old days. Now instead of paying people in their own countries, businesses can pay people in China to make things to sell to the people of their countries. As owners of the patents, the brand names, the “intellectual property”, they still get the lion’s share of the profit from these Chinese-made goods. The transfer of wealth thus becomes a one-way street, from the poorer to the richer in our society, with China merely taking a commission as agent.

Most people in the West are still employed of course, but more and more they’re employed in secondary jobs that have little control over the production of actual saleable goods. I don’t think government is ever going to be brought to its knees by a mass stoppage of supermarket managers or Web designers. Robbed of this bargaining chip, people’s incomes are falling in real terms. It’s just that we don’t notice because the cost of many goods is rapidly falling too – thanks to them being made in China. It’s the tasks we cannot effectively outsource – health and education for example – that show how the real wealth of our society is decreasing.

Thanks to China. the rich no longer really need the rest of us as much as they once did. Which explains why the wealth gap is rapidly increasing. So China does turn out to be a threat to democracy, if not in a way that anyone expected back in the Red-Scare 50s. My question is this: If we encourage Chinese investment here, will it help us focus on finding solutions to this very dysfunctional relationship – or will it simply buy our silence?

Yeah Yeah, New iPhone

Photograph showing Apple Newton hand held comp...
Here it is, the iPhone 5... Wait.

Who would have thought this day would come? The day when they release a boring iPhone.

The 4S is by no means a minor update. It is significantly better than the 4. Dual core. iOS 5. The 8 Mpx camera alone will be enough to change the minds of many waverers. But it is a consolidation, a strategic market repositioning, not a shock. It perhaps takes back the lead, after the Galaxy S II being seen by many as the new messiah. But it’s still neck and neck, and that is not what we have come to expect from an iPhone release. On its day of launch, the latest iPhone is supposed to be the most desirable piece of consumer electronics on Earth. Unequivocally.

It’s Tim Cook I feel sorry for, Apple’s new CEO. In place of the showman, they’ve got the man credited with the sound strategic business decisions. Decisions like closing down Apple’s manufacturing in the US (and indeed, Ireland) and moving it to such questionable locations as Foxconn‘s giant plants in China. It is just his misfortune that his first product launch happens to be of a rather strategic and businesslike update to the iPhone.

But people are bound to say that if Steve were still in charge, there would have been surprises. Steve would have taken some feature of the new iPhone – probably Siri, the voice recognition ‘valet’ – and make it sound like God’s personal gift to you. Actually no, Steve wouldn’t even have presented us with something as lacklustre as mere voice recognition. It would have read your mind, and granted desires you had not yet even consciously formed. Steve could do it, why can’t this phone?

Yeah. Basically people are mostly just missing Steve.

The Persecution Of Google’s Eric Schmidt

There is now a follow-up to this article: The Return Of The Google Stalker

Schmidt, left, with Brin and Page
It is possible that they hired him to *look* evil though (Schmidt, left, with Brin and Page)

I’ve had unkind things to say in the past about Google, in particular executive chairman Eric E. Schmidt. Along with many others, I have – possibly unfairly – suggested that his attitude towards privacy rights might not be all it should.

I have never accused him of murder though. You have to give me that.

Eric Schmidt is being cyberstalked. No, that would be to aggrandize it. Someone is comment-spamming Eric Schmidt. Virtually anywhere Schmidt is mentioned, a Chinese guy calling himself Peter Cao comes to accuse him (and Stanford Professor of Artificial Intelligence Sebastian Thrun) of being involved in the murder and/or cover-up of the murder of May Mengyao Zhou, a Stanford graduate student whose suspicious death was ruled suicide. His accusations however lack… credibility. To say the least. Taken from the above links:

Eric Schmidt represents and is backed up by some mafia like dark force which tend to resovle their problems with killing power. Threatening my life with May Zhou’s case is not the only time, Schmidt’s side had actually plotted a murder on me during his fight with authorities and would have wiped me out, though it was crashed by securities in time, and that’s why he was removed from his CEO position. [Red text in the original]

Cao never seems to rest. Do a search on the terms “Peter Cao” “Eric Schmidt” and there are countless (highly repetitive) examples of his accusations. Is there any substance to them? Well, personally, I am strongly persuaded that the guy is an utter fruitbat. Here’s a glimpse of how he sees himself (which perhaps also reveals his motivation):

Google’s ambition in China is not limited in business. Google tried to act as a flagship of foreign powers to rival Chinese authorities on Chinese territory. Even till today, google still arrogantly places itself hight and lofty above Chinese people over its existence in China.
In the past, Google’s former CEO Eric Schmidt had backed up crimes against me, and had threatened my life with the mysterious death of very innocent people in Stanford in that case. I defeated Schmidt at authorities in this case and got him down from his CEO position. I could tell Google would be eventually terminated and kicked out of in China if Google executives refuse to ‘change stance on China’.

To make a bad situation worse, it appears someone responded to his comments on Business Insider by registering under the name Eric Schmidt and trolling the crazy guy (See comments):

Peter. It’s me, Eric. I thought we already talked about this. I am going to squash you like a bug if you keep posting on this comment board. What you don’t know (but surely suspected) is that the video cameras I installed in your house are allowing me to track everything you do. In fact, I am live streaming your pathetic life, including all the insane searches you do about my home address and love interests, to all my friends on the Stanford faculty. Next I will bring in my mafia-like dark killing power to bear.

I think most of us would assume that was not the real Schmidt… On what appears to be his blog however, Cao has taken the threat as vindication.

I report all this not because I think it’s amusing (though shamefully, I do), but out of a rather morbid fascination. Paranoid delusion is in the air right now as the tenth anniversary of 9/11 approaches. Fantasies of persecution – whether those of the deniers, or those of the attackers themselves – have the power to change the world. And recently it feels a lot like the mad are winning.

Credit Raiding Agencies

Abraham Lincoln, the sixteenth President of th...
"In the longer term however, we can sell off the Union for its scrap value plus a small handling charge"

So now Standard & Poor’s has given the USA a lower rating than it did the mortgage-backed financial instruments that caused the meltdown. Does this mean America is in even worse shape than one of those?

Or does it mean that the criteria S&P use are arbitrary, inconsistent, and possibly reckless?

As I was saying before, there is no line that can possibly be drawn between ratings that help investors profit because they guide them accurately, and ratings that help investors profit because they influence the market favourably. So the agencies may as well say things that benefit investors. Who has S&P’s downgrade actually benefited? Well China for one. Not only can they relish the prospect of charging Americans more to lend them cash, they can now talk down to them too. According to Reuters:

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s official Xinhua news agency said in a commentary.

Xinhua scorned the United States for a “debt addiction” and “short sighted” political wrangling. China, it said, “has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets.”

Burn.

So S&P are in the pay of China? No not really. They’re in the pay of money. The rating also benefits many of America’s wealthy; a loose affiliation of the sort of people who were being given money freely under a Republican administration, now using more forcible tactics to transfer funds from the public purse into private pockets. Even, the threat of the destruction of US Federal government.

Everyone can and will blame the Tea Party – after all, if they got into power these mentalloids really would repudiate American debts. They’re internal enemies of the United States, and not ashamed to say so. But they’re not going to get into power. They are just going to be used by the Republicans, as their suicide squad.

It’s not in the interests of the Republicans or their supporters to really bring about default – not when many of them are America’s creditors. But there is nothing to stop them taking it to the brink like this to get their way again. And again, and again.

 

Some Mild Economic Hassle Ahead

Third world market / mercado tercermundista
Sign of the Times - Image by Andreuchis via Flickr

Some may say I’ve been ignoring the global economic crisis, but the way I see it, if you’re at a funeral you don’t say “Jesus, it’s a dead guy in a freaking box!”

Let’s try to be positive. There has been a little good news in the last week. Some sort of half-assed budget deal was cut in the US, saving its economy from plunging to Third World status. Yet. The Euro still exists, even if it seems about as stable now as an upended pyramid. Full of nitroglycerine. On fire.

But otherwise, the outlook is not so good. The Americans cannot borrow and spend to get out of recession because the balance of power is held by political morons. In the eurozone, we apply band-aid after band-aid to a haemorrhage. Sooner or later we will need to face up to the facts: We either have one single economy with one single fiscal policy, or we can’t have a single currency. That’s not a decision we know how to even begin contemplating taking, and the longer we put it off, the more countries are going to be flung like screaming toddlers from the runaway merry-go-round.

And in a sure sign of economic brick-crapping terror, the gold price is skyrocketing again. Two weeks ago I pointed out that the world’s gold stocks were now worth eight trillion dollars. It’s estimated that in three months they’ll be worth over a trillion more. Funny how market chaos seems to be good for people who happen to own a lot of gold. But that’s probably just one of those coincidences.

We shouldn’t panic or despair yet though. There’s still China. China, that engine of the global economy, driving back collapse. Even when all of us in the West are too broke to buy each other’s stuff, we can always afford theirs. Guess what’s happening in China? Their buoyant, vibrant, export-fuelled high growth economy has led to – no go on, guess – has led to… Have you got it? Yep, that’s right. A housing bubble. China has a housing bubble.

But don’t worry, it’s bound to find a soft landing. Don’t they all? Ha ha ha. Oh God we’re so doomed.

A Gift From China

Unfortunately China is the name of my mother’s cat, and her feline idea of a neat gift is a small mammal. In this case, about as small as they get – a pygmy shrew. Poor little thing. I’ve shown it here with a credit card as they’re the same size the world over. As you see, it’s no bigger than your thumb.

Well, it’s nature’s way I guess. I mean, we actually have this cat around in order to murder small mammals, so I can’t be mad with her when she catches a non-verminous one. Though I notice there’s an ongoing debate in the US about whether cats are a major threat to the balance of nature as they’re not a native species. Well I suppose nothing is a native species if you go back far enough, but as domestic cats have only been in North America for a few hundred years you could see how the native birds aren’t prepared for them, and though it would be surprising if there wasn’t a native predator in the same niche, I can’t actually think of one. What catches small wild birds in North America? I don’t think coyotes do. Fisher cats perhaps, and related weasel-like things. But they are only found in some climates.

I don’t know; as far as I’m aware, cats in North America have never really gone feral and therefore are only found where humans live. And with a few exceptions, the balance of species in such places is never going to resemble what it did before farming and industry. So I suspect removing cats would be like trying to make a shopping mall more like a forest by painting it green.

But perhaps I should know better than to get into an argument between cat people and bird lovers.