DOES ST. NICK SPEAK MANDARIN?
Why China Is Rising And The U.S. Is Declining
By Lester R. Brown, 12-16-06
I know Santa Claus is Chinese because each Christmas morning after all the gifts are unwrapped and things settle down I systematically go through the presents to see where they are made. The results are almost always the same: roughly 70 percent are from China. After some research, it seems that my one-family survey is representative of the country as a whole.
Let’s start with toys. Some 80 percent of the toys sold in the United States—from Barbie dolls to video games—are made in China. Talking toys that speak English learned the language from Chinese workers. Electronic goods—from Apple’s iPod to Microsoft’s Xbox—are made in China. Clothing—from the latest cashmere sweaters to gym suits—is also likely to have a “Made in China” label.
The Christmas tree itself may come from China. While real Christmas trees are grown in every state in the United States and are marketed locally, many families now gather around artificial Christmas trees. Eight out of every 10 artificial Christmas trees sold in the United States are made in China. Last year Americans spent over $130 million on plastic Christmas trees from China.
This year Americans will spend over $1 billion on Christmas ornaments from China. And in perhaps the greatest irony of all, even nativity scenes are made in China. Last year Americans spent more than $39 million buying nativity scenes shipped in from the East. China’s success in attracting foreign investment capital and mobilizing this huge workforce has made it the workshop of the world.
That the U.S. Christmas is made in China is a metaphor for a far deeper set of economic issues affecting the United States. Today Christmas is celebrated in both the United States and China—but for different reasons and with far different economic consequences. For the Chinese, the manufacturing bonanza means record profits, rising incomes, and, in a society where people save some 40 percent of their income, a sharp jump in savings. In the United States, Christmas shopping expenditures, headed for another record high this year, contribute to rising credit card debt and a soaring trade deficit.
Underneath the American Christmas spirit and good cheer is a debt-laden society that appears to have lost its way, marred in the quicksand of consumerism. As a society, we seem to have forgotten how to save so we can invest in a better future. Instead of leaving our children a promising economic future, we are bequeathing them the largest debt burden of any generation in history.
At the personal level, credit card debt just keeps climbing, and at the government level, we have the largest deficit in history. At the international level, we have a trade deficit that moves to a new high month after month.
It’s not the fact that our Christmas is made in China, but rather the mindset that has led to it that is most disturbing. We want to consume no matter what. We want to spend now and let our children pay. It is this same mindset that introduces tax cuts while waging a costly war. Economic sacrifice is no longer part of our vocabulary. After the Japanese attack on Pearl Harbor, President Roosevelt banned the sale of private cars in order to mobilize the manufacturing capacity and engineering skills of the U.S. automobile industry to build tanks and planes. In contrast, after 9/11, President Bush urged us to go shopping.
In the United States we are so intent on consuming that personal savings have virtually disappeared. We have an average of five credit cards for every man, woman, and child. Of the 145 million cardholders, only 55 million clear their accounts each month. The other 90 million cannot seem to catch up and are paying steep interest rates on their remaining balance. Millions of people are so deeply in debt that they may remain indebted for life.
The official national debt, the product of years of fiscal deficits, now totals $8.5 trillion—some $64,000 per taxpayer. By the end of the Bush administration in 2008, this figure is projected to reach a staggering $9.4 trillion. We are digging a fiscal black hole and sinking deeper and deeper into it.
Each month the Treasury covers the fiscal deficit by auctioning off securities. The two leading international buyers of U.S. Treasury securities are Japan and China. In this role, China is now also becoming our banker. This developing country, where income levels are one sixth those of the United States, is financing the excesses of an affluent industrial society. What’s wrong with this picture?
In times past, when our fiscal deficits were covered largely by U.S. lenders, interest payments on the debt were reinvested in the United States. Now they are flowing abroad to Japan, China, and other foreign holders of U.S. debt.
While the U.S. fiscal deficit, driven partly by the war in Iraq, soars to stratospheric levels, the country is facing an unprecedented fiscal challenge as the baby boomer generation retires, pushing up the costs of social security, Medicaid, and Medicare. This, combined with the growing interest payments on our debt to China and other countries, will put a nearly impossible tax burden on the next generation—something for which they may never forgive us.
The U.S. trade deficit is growing by leaps and bounds, nearly doubling from $452 billion in 2000 to an estimated $850 billion in 2006. Rising oil imports and the trade deficit with China account for over half of it.
National policy failures such as not adequately supporting the use of renewable energy technologies have contributed to the growing U.S. trade deficit. For example, the United States should be a leading manufacturer and exporter of solar cells and wind turbines, but it has fallen behind both Europe and Japan. The solar cell, invented at Bell Labs in 1954, is an American technology. But the U.S. effort to develop solar energy was so weak and sporadic that both Germany and Japan forged ahead and developed robust solar cell manufacturing and export industries.
The situation is similar with wind. Although the modern wind industry was born in California at the beginning of the 1980s, the U.S. failure to sustain support for wind resource development allowed European countries to largely take over this industry.
Even though rising oil imports are widening our trade deficit, we consume oil with abandon, weakening the economy and undermining our political independence.
We have lost influence in world financial markets simply because of our mounting debt, much of it held by other countries. If China’s leaders ever become convinced that the dollar is headed continuously downward and they decide to dump their dollar holdings, the dollar could collapse.
Beholden to other countries for oil and to finance our debt, the United States is fast losing its leadership role in the world. The question we are facing is not simply whether our Christmas is made in China, but more fundamentally whether we can restore the discipline and values that made us a great nation—a nation the world admired, respected, and emulated. This is not something that Santa Claus can deliver, not even a Chinese Santa Claus. This is something only we can do.
Essay Copyright: Earth Policy Institute
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The Japanese attacked mainly our military installations as their first act in a country to country war. Their goal was to neuter the US military presence in the Pacific so that they could establish an Asian empire. They hoped that after a couple of quick body blows in the Phillipines and Hawaii the US would sue for peace. That was their hoped for result. Roosevelt responded to marshall our manufacturing capacity to respond to these body blows and come back with a few of our own. The 9/11 terrorist attack had as its purpose to sow the seeds of terror by attackin civilians. They would have been successful beyond their dreams if our country and its citizens responded with economic collapse as commerce within our cities withered and died. Both Presidents Bush and Roosevelt responded with the appropriate resolve and direction to dash the vilians goals. Just my opinion.
http://www.chinalawblog.com
See: http://www.theaustralian.news.com.au/story/0,20867,20943831-2703,00.html
Your story is not so much wrong as it is inaccurate & incomplete. I too now TRY to not buy things made in China, this is hard to do. And I do not blame China or the Chinese people for this. I exlcusively blame the hard right Conservatives who have dominated the Republican Party since Reagan. Policy tools in this country over the last thirty years have relentlessly been set to benefit the bare 1/10th of 1 percent of earners at the direct expense of everyone else, including generations to come. Warren Buffet said in the seventies that it was wrong that he,Buffet, should pay a smaller part of his income in taxes than his receptionist. Recently he and Bill Gates have said that this has gotten far worse, witness the Bush 78 Billion subsidy for the needy wealthy. You may also look at the Reagan era Pension Benefit Guaranty Corporation, designed to destroy company pensions, and the demise of Montana Power & Light as just two modest examples of robbing us all to benefit a very small number of people.
Yes, there are many things wrong with "Globalization", the first & foremost defect is that our economy and many others are in the hands of trans national corporations, predominately American.
And, No, there is no straight line between a company doing well and its employees and communities doing well. Mostly just a small handful of executives & large investors do well, all the rest of us are just being trickled on.
Have a Nice Day, Will Rogers said, in the 30s, "that every so often the Republicans get into office & make a whole lot of money. Then every so often us Democrats get back into office and take it all away from them." Let's look forward to 2008!
NAFTA 1 was brought to us when Democrats hung a "for rent" sign on the White House for wealthy contributors. I guess when a democrat again becomes President we can look forward to NAFTA 2.
"We have lost influence in world financial markets simply because of our mounting debt, much of it held by other countries. If China’s leaders ever become convinced that the dollar is headed continuously downward and they decide to dump their dollar holdings, the dollar could collapse."
As odd as it may seem, exactly the opposite of what you imply is true. China cannot "dump their dollar holdings" without hurting themselves even more than us. The reason that China and Japan buy so many US bonds is to keep their own currencies cheap so that they can export goods to the US at a competitive exchange rate. As soon as they decided to sell a significant amount of their dollar-based assets, their own currencies would inevitably rise against the dollar, ruining their export sectors and giving the US manufacturing sector a boost. So actually, our mounting debt actually increases our clout, because we are so big. If you owe the bank 10,000 dollars and you cannot pay, then you have a problem, but if you owe the bank 10 billion dollars and cannot pay, it is the bank that has the problem.
Harry
ABC's John Stossel of 20/20 wrote the following article on American generosity: http://www.realclearpolitics.com/articles/2006/12/who_gives_to_charity.html
>>>>>
But the idea that liberals give more is a myth. Of the top 25 states where people give an above-average percentage of their income, all but one (Maryland) were red -- conservative -- states in the last presidential election.
"When you look at the data," says Syracuse University professor Arthur Brooks, "it turns out the conservatives give about 30 percent more. And incidentally, conservative-headed families make slightly less money."
Researching his book, "Who Really Cares", Brooks found that the conservative/liberal difference goes beyond money:
"The people who give one thing tend to be the people who give everything in America. You find that people who believe it's the government's job to make incomes more equal, are far less likely to give their money away."
Conservatives are even 18 percent more likely to donate blood.
<<<<<<<
Tim, let's all defy the statistics, steroptypes, barriers, and mindsets that retard making the spirit of Christmas giving an everyday habit.
USA entrepreneurs, with a price equality or even advantage, would spring up like weeds to fill the suddenly appearing vacuums. USA manufacturers are CAPABLE of manufacturing anything on Earth. A cheap dollar simply makes it economically feasible.
Raise the dollar price of Chinese-made Barbies by a factor of two and you'll have ten USA Barbie factories within six months. Google any manufactured good you can think of and see how many USA manufacturers exist.
Crude oil is a special case. But raise it's price far enough (in dollars) and you'll be up to your eyeballs in pluggable hybrids made by the suddenly resurgent American auto companies. And, after ten years, hundreds of new nuclear power plants to charge them.
No foreign manufacturer can cast off the USA market painlessly. And no large foreign holder of USD in their reserves can afford to see their value decrease significantly.
For every action there is a reaction.
On the other side I find the argument that China is afraid to divest in the U.S. because they'll lose money by causing a crash, rather weak. A gambler whose up 200% isn't afraid to lose some money to put on a good show - and China doesn't need to totally divest. They only have to THREATEN it to scare the world.
Anyway, whatever the future holds, SOMEONE is going to pay. I just can't guess whether it is the borrowers or the lenders or both. I just think the long term the value of the dollar must fail, and it's just a game of chicken to decide when to "cut and run".
Reducing one's cost of living seems the only defensive strategy.
_____Out here in the United States, in the real world, we are working multiple jobs merely to survive. Housing prices are nearing psychotic levels. Thank you, Wall Street, for playing paper games with real estate and jacking up rents, mortgages and land prices to champaigne-and-caviar levels! Benefits for workers are being cut all over the darned place as corporations seek to be "more competitive" in the "global economy." Compound that with floods of illegal immigrants taking all the entry-level jobs, outsourcing of all the technical jobs, and a love of reactionary politics cutting back New Deal programs (Thank you, President Clinton!), and one sees that this place is getting to be Hell on most people who work for a living.
_____Meanwhile, the only people happy are the sort of people who don't work to live--rather, live to accumulate ever more wealth, ever more property and ever more millions and billions for their friends. They have lobbyists to cut, cut, cut taxes--even in a time of war. Corporate welfare comes in the forms of publicly subsidized oil exploration programs and wholesale bail-outs of major manufacturing conglomerates (e.g. General Motors and Ford), along with--get this--even more tax cuts to those who do not need them. Heck, they do not even pay taxes at all; accountants find all kinds of tax shelters and tax credits to let millionaires keep their millions. And should it ever come to the millionaires being confronted with any sort of criminal wrongdoing, teams of high-priced lawyers and even more PAC lobbyists have them covered. The elitist ruling class rules, and they do whatever they wish.
_____So if you want to preach, go preach to THEM. Go to the Hamptons and drop some mail to the Vanderbilts or something. Send Bill Gates an e-mail about this. Drop by the Kennedy family compound and let them know about what is happening. Do not preach to us because we're too damned tired from working our two-or-more jobs just to pay the damned rent, the car payments (if fortunate enough to have a vehicle), and cannot even afford to have children. Better yet, tell it to someone who cares. Now I am off to take a nap from working sunup to sun-down and hope to get at least five hours of sleep tonight before the madness starts again. Or maybe things would be all the more better if the whole system just went the way of La Revolution Francaise and showed the elitists a thing or two about the need for noblesse oblige and social policy.
Really? And just which side of the aisle is responsible for our predicament of "rising oil imports"?
What I really don't understand is why our government gives China a "most favored nation" status in the world economic community? Could it be that our leaders sold us out to our communist enemy for the sake of a dollar? It IS the god in whom we trust. It says so right on it.
You seem an intelligent guy stuck in a hard place. I'm sorry. But here are some facts. I am one of the "rich guys" you castigate. I have assets over $80 million. I earn more than $5 million annually.
But guess what...I earned every damned cent of it. Myself. And do you know that the top 1% of income earners pay 37% of the US personal income taxes? And the bottom 50 % of income earners pay 3% of the US personal income taxes?
Do I have high-paid accountants and lawyers hired to avoid my taxes? Ha! I pay 35% of my income every year to the Feds and 7% more to states. That's 42% total. That's over $2 million each year in taxes. How much do you pay?
I'm sorry I'm luckier or smarter or better educated or worked harder than you. But it's America, and everyone has a chance. I started with $600.
And with my 58% left, I don't sit on my ass and eat grapes and drink wine. I pay for my life needs then invest the rest in businesses that are starting or growing and need my investment.
Without that, how would our economy grow?
So, I'm sorry you feel you are in a rough patch. But you are richer than 99% of the humans on the face of the earth. Just spend less than you earn. Forget the new SUV or the plasma TV. Save and pay your damned bills, then start a business as I did.
Stop whining. The gates are open for everyone.
The earliest Americans happened upon the richest treasure trove the world has ever seen. Fertile land. Abundant water. An isolation preserved by oceans with no realistic competition near our borders.
The world for us in the 17th, 18th and 19th centuries was sheltered. We could do whatever we pleased. And luckily, we had abundant timber, iron ore, coal and hardened pioneers and entrepreneurs to take advantage.
The hoards of subsistance-level denizens of China, Africa, India, Japan and other remote locales were of no import to us. So we just built...helped in no small measure by the amazingly abundant natural resources of this continent.
And we grew and grew. Robber barons of the various eras...Rockefeller, Gould, Carnegie, Ford and Harriman, for example, put their wits to work to make themselves rich. Bad men.
Bullshit. They built an amazingly robust economy that transcended anything ever imagined. All within the confines of the USA. Of course, they exported, but it wasn't essential then. But make no mistake...the riches that happened to be found in this country...iron ore, coal, timber, copper...had a mighty hand in our supremacy.
The wealth produced by this economic miracle was so abundant that it "had" to be shared. Unions appeared. And the producers could afford to pony up to their demands. So, they did.
This produced a new social class. Everyday workers, who in the past had existed in virtual servitude, suddenly were being paid 35-45-60-70 thousand dollars annually. GM, Ford, Chrysler, US Steel, and hundreds of others, were paying the workers more than could have ever been imagined in the past.
Health care exploded. In the past, if you got real sick, you died. As it should be. But no, we can solve that and save you. Well, it will cost $100,000 but who cares...insurance will pay for it. Err, maybe your company health plan will.
Retirement. No problem. Social Security will pay for your lazy ass. Who cares if you never saved for it.
So, over the years, we developed a vast middle class who expected a $60K salary, prepaid health, pensions, vacations, et al. And they were screwing bolts into nuts minute by minute, hour by hour, day by day. For $60K.
World War II only exacerbated the picture. Now we needed every man (and woman) jack to fight the Hun and the Nip. Salaries and sales and profits rose rapidly. The economy soared. Oh well, a little Federal debt was incurred.
The 1945-1970 economy soared as the warriors came home to help fill the the staggering surge in demand for all goods scarce during the war. Good times for all. And the factory workers and construction laborers prospered with their $60K++ lifestyles.
But the shit has hit the fan. "Lifelong healthcare is my right. A retirement pension is my right. Forty hours max per week is my right. Vacations in Disneyland are my right. I'm an American, and I almost finished high school".
Suddenly, the world obtained air travel, FedEx, UPS, overseas phone service, the Internet and more than 5.5 billion people who would kill to have 1/10th of what our "entitled" citizens had.
And they could produce what we were producing at 1/10th the price, considering what we were paying our "entitled" citizens.
And so it happened. We can't compete. We can't compete because our labor costs too much. And if you think it's bad now, just wait.
Lawyers, accountants, file clerks, physicians, auditors, actuaries, computer technologists, service centers, mail-order retailers...you all are next. You think you are worth $60K++. Well, there's a guy a lot smarter than you in China, India or Vietnam who'll do it for $6K.
Our own wealth has overpriced our wages. And we'll never recover until the other 5.5 billion people in the world get even.
So...we are screwed. Hunker down, save something every month. Live below your means. Start a service business that can't be outsourced. I cannot even find someone to mow my lawn, except a Mexican who is happy to do it. No "entitled" American would stoop to that.
Get over yourselves. You aren't worth $60K. And you never will be again. Because, many of our citizens are stupid. They cannot spell. They cannot compose a coherent sentence. They cannot balance a checkbook.
If you don't know what the population of the world is, you are stupid. What is the population of the USA? Your state? Who is your Vice-President? How many justices sit on the Supreme Court?
What is the average family income in the United States? What percentage profit does the average American company make after taxes? How do you spell liaison, fluorescent, rhythm?
Don't know? You are stupid. That's why we are in the fix we are in.
End of rant. Have fun with Britney Spears, your DVDs, Disneyland, and your weekend BBQ because the party's over.