In Which I Carry Yet More Water for the Commissars-Turned-Capitalists of Shanghai

Over at TPM Cafe, I respond to the eloquent and dangerous Jeff Faux yet again:

Sailing into Harm's Way versus the Dangerously Eloquent Jeff Faux | TPMCafe:

I had written:

Is there a way to interpret Jeff other than as a call to keep China a society of poor subsistence rice farmers as long as possible--keep them poor, barefoot, uneducated, and by no means allow them to work at any of the high-value manufacturing occupations we want to keep in the United States?

Jeff Faux writes back:

Feb | TPMCafe: Brad missed the point. There are rich people in poor countries and poor people in rich countries. China is not just a society of poor, barefoot, uneducated peasants. At the top, China is a place of immense wealth.... Why is it that it is the responsibility of $40,000 year American working families to sacrifice their future in order to raise up the living standards of poor Chinese, when commissars turned capitalists ride around Shanghai in a different Rolls every day?...

I think it's time to put myself seriously in harm's way here...

I reply:

There aren't many commissars-turned-capitalists.

Scratching on the back of my envelope, I find that at current exchange rates, China's GDP per worker--and there are 800 million workers--is $3,000 per year. (In 1990 it was $1,100 of today's dollars per year.) According to Piketty and Qian's guesses, the top 0.1% of China's workers get an average of $30,000 per year at current exchange rates. This elite of some 800,000 do live considerably better in their homes in Shanghai than Americans with $30,000 do--unskilled labor and the services it provides are really cheap in Shanghai because China is still really poor (perhaps at a level equivalent to $100,000 per year if you like being waited on and having a household staff; much less if you don't). Redistribute all the income of the 800,000 commissars-turned-capitalists back to the masses, and you boost median standards of living in China by 1% above current levels.

In 1877, it was the United States that was the rising superpower across the ocean to the west of the world's industrial and military leader. Today it is China. In 1917 and again in 1941 it was greatly to Britain's benefit that America regarded it as a friend and an ally rather than as a competitor and an enemy. And since 1945 it has been greatly to Britain's benefit that America has regarded it as a trading partner rather than an industrial competitor.

There is a good chance that China is now on the same path to world preeminence that America walked 130 years ago. Come 2047 and again in 2071 and in the years after 2075, America is going to need China. There is nothing more dangerous for America's future national security and nothing more destructive to America's future prosperity than for Chinese schoolchildren to be taught in 2047 and 2071 and 2075 that America tried to keep the Chinese as poor as possible for as long as possible.

Comments

[John Emerson]

"There is a good chance that China is now on the same path to world preeminence that America walked 130 years ago."

They seem to plan to do this with minimal democracy, civil liberties, and political participation, and maximal realpolitik. There's a rumor about that development automatically leads to democratization, etc., but Singapore (now fully developed, or almost) is trying to make a lie of this rumor, and China looks to Singapore as a model.

[brevno]

> There is nothing more dangerous for America's future national security and nothing more destructive to America's future prosperity than for Chinese schoolchildren to be taught in 2047 and 2071 and 2075 that America tried to keep the Chinese as poor as possible for as long as possible.

This is BS, pure and simple. Chinese culture divides the world into what must become a part of China and what can become a part of China - pure and simple. No amount of brown-nosing is going to get you out of the glorious future as a subject of Chinese autocracy - Communist, Capitalist, Magical Fundamentalist, whatever.

[DRR]

Why is it that it is the responsibility of $40,000 year American working families to sacrifice their future in order to raise up the living standards of poor Chinese, when commissars turned capitalists ride around Shanghai in a different Rolls every day?

Holy cartoon populism batman!

[DRR]

Oh and Brad, you need to quit being so dovish with Jeff Faux. Be nice to the people who have real intellectual integrity if you wish (Dean Baker, Max Sawicky) but not only is Jeff Faux a demagogic hack, you know perfectly well that he's a demagogic hack but you keep treating him gingerly because you don't want to ruffle feathers. Your opponents aren't playing by the same rules.

[Scott Martens]

John Emerson, 130 years ago the US was in the grip of the post-reconstruction retrenchment of segregation; it was theoretically democratic but local government was dominated by machine politicians who were prepared to use more of their authority to suppress dissent than China is; at the federal level, America's rulers were a handful of rich plutocrats who bought and sold politicians and a collection of rag-tag nationalists and racialists. Unions were busted with rifles, not bad appointments to the NLRB, and the very first anti-monopoly law in America saw its first application to an effort to unionize. And, I doubt very strongly that anyone in America's real leadership had the faintest intention to reform that system in any substantial way.

What Chinese leaders plan to do has little bearing on the result, both in the best and the worst possible worlds.

Brevno, this was true of China once, before 1689. The Treaty of Nerchinsk was the first time China had ever treated anyone else as possessing legal sovereignty. But even before that, China assimilated its periphery very slowly and made no real effort to rule most of the native cultures far from the centre. Nonetheless, until the Opium Wars, China did at least in part see itself as a global empire ruling everyone, but not all with equal length leashes.

1689 was an awful long time ago. So were the Opium Wars. Present day post-communist China is intensely nationalist, but has engaged in no remote wars of conquest and does not show any evidence of territorial aspirations beyond Taiwan and a few of its more contested borders, even now as it begins to have the power to really threaten its neighbours. China is a nation state in the model of, at most, pre-WWI Germany. The WWI vision of domination through client states might apply to it, but arguably it applies to present-day America's foreign policy too.

China may aspire to be the centre of world power, but the idea that the whole world can be made like China is further from anyone's vision of the future than the all too common and utterly stupid idea that the whole world will become like America. America is not exactly prepared to give up its global domination, so I'm ill inclined to hold any distant Chinese aspirations to international power against it.

[John Emerson]

Scott, China today has no civil liberties tradition, very minimal popular participation in government, and seems to be headed toward extreme economic stratification (not a new thing, of course). Historically Chinese claims to sovereignty were constrained only by the limits of Chinese power and the perceived usefulness of the land in question to the Chinese (e.g., Siberia wasn't really worth it.)

America in 1870 or so had all the things China lacked and was at the beginning of a century-long process of partially ameliorating the problems you named. I personally wish that the undemocratic oppression of the South had continued for another few decades, rather than being replaced by segregationism, but the Reconstruction only lasted 12 years or so.

[Denis Drew]

Unless I am mistaken, having Chinese labor produce cheap goods should be a (small) boon to an American family making $40,000 (BTW, the real poverty line) -- it should be the equivalent of automation, no? The real problem for that family is that it would perhaps be making $10-20,000 more were the labor market in this country not tipped so steeply in the direction of ownership that all surplus income flows straight into ownership's lap -- IOW the real problem in America is the dearth of unions.

[John Emerson]

Denis, there are many forces killing unions, and globalization is one of them. Unions can't protect workers if the inductry they work in is being offshored.

[Reality Check]

"There is nothing more dangerous for America's future national security and nothing more destructive to America's future prosperity than for Chinese schoolchildren to be taught in 2047 and 2071 and 2075 that America tried to keep the Chinese as poor as possible for as long as possible."

Hey, what makes you think that whatever trade policy we adopt right now is going to have any bearing on what Chinese school curriculum is going to be in 50 years? There are a 1,001 factors that could influence that. What hubris to think that MFN or any other econ. policy is going to swamp either 1) TAiwan or 2) Japan-U.S. relations as prime determinants of overall future Chinese antagonism toward the U.S.

Seriously, lets look at the countervailing example of Mexico. The U.S. has had a policy of benign neglect at best toward Mexico post 1848 yet Mexican textbooks still say the American southwest is the result of an imperialist war and rightly belongs to Mexico. Trade policy has 0 to do with this. Oh, except the wonderful NAFTA agreement which impoverished millions of Mexicans, made their staple food price hostage to subsidized ethanol plants in the Midwest, and in general had all the bad effects predicted.

[Denis Drew]

John, I truly believe that unions could protect them by insuring that all the economic benefit to the USA from offshoring is shared by fairly by labor and ownership -- if we had the normal checks and balances in the labor market which we lack since the "Great De-Unionization Disaster". Lopsided power can go the other way too: powerful unions v. government management (aka, no management): my brother worked as subway car cleaner for the NYTA in the early 70s -- 20 car clearners for one shift on a 10 car train (I personally visited twice)! In current America it is like labor has lost it's liver and kidneys and nobody notices.

I think (no pro here) that if American labor were as strong as say Germany's (legally mandated, sector-wide labor agreements -- no race to the bottom; no contractless scabs) that labor and management here should be able to get richer as the Chinese get richer (just as all the [empty-headed] Republicans say) -- not just ownership and (slowly) the Chinese.

[turkey turkey turkey]

Will there *be* an America in 2047 or 2071 or 2075 if current trends continue and American elites are allowed to destroy the middle class by exploiting trade with China?

Long term thinking is all very well, but it is entirely irrelevant in the face of a potential for short term doom.