Is China to Blame?

As America’s economy continue to sputter, politicians blame China for taking American jobs. But is that fair or is it just provocative rhetoric that redirects the ‘pitchforks?’ I find it ironic the same politicians tout globalism when it fits their agenda, yet they refuse to acknowledge the dynamics and nature of the global supply chain when it comes to domestic economic policies. This is especially true when US companies seek affordable resources abroad. Then it’s: “those greedy corporations are shipping our jobs to China!” The truth is it’s most convenient to make China the boogieman because this populous narrative works like a charm to deflect attention. Clearly, the vast number of imported consumer products is proof we’re loosing traditional manufacturing jobs in America, but China isn’t the problem, Washington is. Capitol Hill has a spending addiction and our gargantuan debt is evidence they will do just about anything to feed it. Therefore politicians make us watch the other hand to cover for the white elephant. The fact is, businesses move production to China because most have little choice.

Let’s first, set the record straight: “profit” isn’t “evil”. It’s not only necessary, the inability to profit prevents growth and doom businesses to failure. Just as a great work force is important, profit is likewise crucial. Profit provides resources for expansion creating more jobs. It enables rewarding excellence further driving performance. Profit builds sustainability which guarantees tax revenue. It also funds corporate charity to benefit the needy, and profit adds vibrancy and prosperity to the community. Yet many politicians routinely vilify corporations and use class warfare shamelessly to pit workers against management. They strangle businesses at the behest of their special interest partners like the unions, the green lobby and others. Who in America does not want better wages and security for their family? What American does not want clear air, clean water and a healthy environment? The ruling elites manipulate public opinion by exploiting populist fears to enrich their political capital. Their crime is the systematic degradation of American free enterprise. In other words, they’re killing the golden goose.

Demagogues suggest “greed” is the motivator, but the truth is many companies can no longer afford to make products at home. To do so means their high prices will put them out of business. It’s not “greed,” it’s about survival. In fact, for many industries domestic production hasn’t been a viable option for years due to: high taxes, draconian regulations, exploding healthcare costs, higher labor costs, restrictive work rules, unaffordable pension obligations, strangling environmental compliance, more permit fees, more license fees, bloated legal costs, prohibitive raw materials and energy costs. By contrast, China promotes free market activity even as they restrict political freedoms. Imagine, these days China lectures us about our lack of fiscal discipline! The irony is not lost on this humble patriot living with restrictions on our own economic liberties.

Jobs have disappeared because our traditional manufacturing is unaffordable. Progressive politicians, their union partners and radical environmentalists put America in this untenable position. Their inability to deliver real solutions to prevent the job exodus is not China’s fault. For our politicians to vilify American Business, the engine of our economy, is like putting sugar in our own gas tank. Protectionists say buying Chinese only makes China richer while we become even more indebted to them. Poppycock! That we owe China has nothing to do with our consumption but everything to do with our out of control government deficit spending, so they vilify China to defect blame from the reckless political class.

The government requires the “Made in China” label displayed on products manufactured in China, but most consumers don’t know the untold story beneath that label. Take toys for example, Mattel manufactures in China, but did you know Mattel also exports billions of Dollars of toys internationally? Even though you see a “Made in China” label, it does not mean all Mattel revenues go to China. Quite the contrary, on average only 15 to 20% of every Dollar paid for a Mattel toy goes to the factory, the rest Mattel and its customers keep to create jobs, buy services and invest right here at home. If we add a 25% tariff on Chinese imports as some suggest, what happens to Mattel’s business and the economic prosperity Mattel generates in America? The “Made in China” label is misleading. It implies the products are Chinese owned. They are not. Like Mattel’s Barbie, these are US brands. The Chinese factory or original equipment manufacturer (O.E.M.) is merely a vendor in Mattel’s supply chain.

Politicians say China manipulates its currency to artificially keep their exports cheap so we should impose tariffs. But their US customers benefit from the low prices as do US consumers. By imposing a tariff we will hurt our own companies and consumers, especially the poor. Waging a trade war isn’t the answer. If America returns to common sense free market principles, we will be better able to compete. We should increase production of domestic energy, raw materials and rebuild our own manufacturing services. A competitive America will give us greater leverage with China to level the playing field.

Progressive law makers have deliberately banned domestic drilling, blocking access to our own petroleum. Obama blocking the Keystone Pipeline is a prime example of an unreasonable liberal-progressive bias against supporting domestic energy. We may debate the motives of the anti-oil crowd another time, but let’s expose its consequence to business. Oil is a vital global commodity critical to all industries. Plastics its byproduct, is also essential to produce consumer and industrial products. Plastic raw materials are derived from petroleum but because our radical environmental policies have restricted drilling and our refinery capacity, businesses are forced to go overseas. When US companies contract Chinese factories they also gain access to affordable international raw materials. Therefore, unless our domestic policies change to permit drilling, companies will continue to go overseas and American jobs will continue to do likewise.
US companies with customers world-wide contribute to our GDP. To service international customers they must operate globally and manage a global supply chain network accordingly. China has positioned itself extremely successfully as a reliable manufacturing vendor of choice. Their success was not built on the backs of Americans. Our misguided economic, labor, educational, environmental and energy policies are to blame for our malaise. Washington is the problem. It’s an outrage our leaders are not focused on solutions to enable American businesses to compete. Their stunning lack of leadership has been the steady undoing of what was once the greatest growth economy on Earth. Therefore, whether you’re an American entrepreneur, union worker, corporate professional, environmentalist, educator, student, home maker, immigrant or public official, we all share a common interest in an economically vibrant America. We must work together to solve real problems not for short term gain but for America’s long term success. Politicians need to be held to account to not pit Americans who need jobs against Americans who provide them.

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2 Comments

Filed under Opinion, Politics & Economics

2 responses to “Is China to Blame?

  1. I lay the blame on American marketing execs who demand ever cheaper and lower quality products, and who allow American brand names to be applied to inferior products. If brand names like Maytag had maintained their quality, no one would care where they were made, and plenty of Americans would have jobs at Maytag creating new products. Let’s compete WITH China, not AGAINST China. I look forward to the rise of fantastic chinese brands and dynasties of excellence.

  2. Let me start by first defending the marketing executive. They have a particularly difficult job in today’s market environment. Depending on the industry type, the challenges do vary, so I would hesitate to paint with a broad brush.

    Apple leads its industry because it offers a superior product. Their marketers have figured out the optimum way to deploy their technologies while introducing and educating the user as to how to adapt to a whole new way to work, communicate or consume entertainment products. These marketers changed how we live and are the best at what they do.

    On the other hand, traditional house hold appliance manufacturers have a different nut to crack. Sure they too try to design and invent new ways to do things as they must, but the bulk of their business is a commodity. Where as Apple products have a fashion or new-news caché, a washer is like wall paper. So consumers have a different attitude in making their purchase decision. “I know what I want, I’ll have the best price-value, thank you very much!”

    Marketers must always seek the optimum price-value proposition to offer so the more the competition the more the challenge. With commodities, the customer sets the price and you comply, whereas selling the “I-gotta-have-or-I-will-die” product like the new I-phone 5, you get to set the price.

    So what’s a Maytag salesman to do? They will seek cheaper offshore suppliers to drive down the cost so they can compete. Sometimes they make a mistake and select a poor vendor. That will or course hurt their business. In the consumer product world, you do live or die by your decisions.

    So besides price, marketers try to stay ahead of the competition by offering innovative features as well. The smarter marketer will ultimately survive. Their superior products are a consequence of healthy competition and that ultimately benefits consumers and our economy.

    Only in the free market system have incredible new paradigms emerged to change the way we live our lives. When free markets are allowed to thrive, the American economy prospers as a result.

    The marketer who makes mistakes may lose but that’s not the story. If there is blame, it is the horrible business environment that has become the new normal in the last few years.

    Do you ever remember a time in America where the private sector has been so vilified? Why is it fashionable to accuse businesses of being greedy and uncaring? The class warfare declared on the private sector, I would argue is to blame for the malaise in industry.

    This current rhetorical poison is killing our industries and you wonder why there are no jobs. Why would entrepreneurs bother to put their hard earned money into a new enterprise and risk it all only to be told, “You didn’t build that?”

    As if the challenges of normal free market competition isn’t tough enough, now we have our own government demonizing our success! Washington imposes even more tax while heaping regulation upon regulation on business, artificially driving costs up and shrinking margins, which are already razor thin.

    The problems our industries face today isn’t just inflated cost of goods due to higher raw materials, labor, energy, and overhead costs. It’s all of the extra regulatory burden, legal costs, administrative expenses and EPA compliance our own government impose on them.

    This is not about competition with China, EU or any other country as some would have you believe. It’s our out of control government in Washington that is working overtime to render our industries impendent.

    To make matters worse, this is “election silly season,” and dishonest politicians attack corporations accusing them of greed and outsourcing.

    Not surprisingly, these are the same law makers who wish to tax businesses even more, they passed Dodd Frank, support more EPA compliance, more regulatory red tape, voted for Card Check in favor of growing unions which always impose pension obligation that balloon to become completely unsustainable. Bethleham Steel, a once great American steel production company, one that helped America win WWII met its demise because of the union cancer. And today, the anti-business law makers rammed down our throats the biggest and baddest freedom and prosperity killer of them all, Obamacare!

    The worst part is these politicians offer absolutely no solutions to American industry as to how they can survive conducting business in America. And God forbid if corporations should make a profit! When you stack up the perponderance of evidence, is there any doubt they have declared war on the private sector? In this new normal, it is “greedy & evil” to be successful and when you are you have a target on your back. And there is your blame.

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