China Syndrome or Cannibal Capitalism

Back in 1979, only a week or so before the meltdown at the Three Mile Island nuclear plant, the movie, China Syndrome hit the screens. It was a story of a meltdown at a nuke - in Pennsylvania, no less. Probably the all-time best example of life imitating art. The China reference had to do with the nuclear material burning its way through the Earth’s core to China.

What’s happening today is more like a B-grade movie about hungry cannibals who eat their way to extinction. Like the bugs who invaded my basil plants and feasted so well they killed the plants; literally ate themselves out of house and home.

Have you heard? China is taking $200 billion dollars out of US Treasuries to buy equity stakes in multinational corporations. This is an extremely interesting and ominous development, but makes perfect sense for China, which now has a $1.3 trillion stash of foreign currency. That’s especially meaningful when you consider the fall in the dollar is partly wiping out the low interest gained by Treasury bonds.

That 1.3 trillion: first stage of capitalist self-destruction. Actually let’s go back one step and set definitions, what we refer to today as capitalism should be qualified with the adjective mindless. It’s an ism without a greater ideology; that is, it’s predicated solely on the base motivation of money, profit, self-aggrandizement. Oh sure, its defenders can rave on indefinitely about its values, but in the end it comes down to, “greed is good”.

So even while freedom and democracy are normally and casually paired with capitalism as mutually dependent concepts, the capitalists themselves have no compunction about doing their manufacturing in a place that produces value by exploiting its workers, and China is extremely adept at that.

Much of the work in China of construction - where workers often have to wait till the project is finished before they get paid - and manufacturing is done by migrants. They number over 100 million – about 10% of the population. These people have literally been driven out of the countryside by extreme hardship and poverty. China has some 800 million people who eke out hardscrabble lives in its farms and villages. Their needs are largely ignored by Beijing, so they have little choice but to migrate to the big cities.

There they often live packed in dormitories, receive a pittance for their long hours of labor and enjoy no rights whatever, neither as workers or even citizens. China has a registration system for all of its people, which dates back to times when the state exercised total control: until the nineties Chinese had to get permission to travel outside their home districts. They are now completely free to roam the country, but the registration regime still stands. In effect, when they leave their home jurisdiction they have no rights or privileges of citizenship. For instance, if they have kids they are not entitled to attend public school. In the past, during the time of the “iron rice bowl’’, Chinese enjoyed cradle to grave security. There isn’t a whole lot left in the realm of public services in China today, but whatever does exist is not available to migrants. This registration rule even applies to people who move from suburb to city. And it takes a hefty bribe to change registrations.

China likes to tout its governing philosophy as “socialism with Chinese characteristics”, but there’s really no socialism left outside of communism’s dictatorship of the proletariat and the corollary desire to manipulate the economy, control all media and stamp out political opposition. That is the China that western capitalism has bestowed $1.3 trillion dollars on.

That is also a result of the so-called level playing field supposedly created by the WTO and the many corporate-oriented trade deals foisted on the world recently. In fact the ‘level playing field’ is only for corporations; individual countries and people get short shrift. How can there be a level playing field with Chinese workers when American workers actually have to be treated with some respect? How can there be fair competition when Chinese factories can pollute at will?

The biggest problem may be production of CO2. Something like 80% of China’s electricity comes from coal burning and it’s done very inefficiently so that a lot more CO2 is created per unit of production than in developed economies. Individual Chinese suffer the local and immediate effects of pollution (with no redress in the form of demonstrating, protesting or even criticizing government policy) but the world pays the price in massive increases in greenhouse gases.
By transferring so much of its industrial capacity to China the West has essentially exported its pollution and increased its amount.

And here is the greatest irony: America, strongest voice for “free trade”, has the largest trade deficit, now running at about $800 million, a full 6% of GDP. The US is forced to borrow that money from outside to maintain its obsessive consumption. This of course is one of the primary causes of the dollar’s downward plunge and the corollary rise in the price of oil, since in most cases oil is priced in US currency.

This does not bode well for the US economy, since the falling dollar will result in Americans paying more for consumer goods, especially considering how much of what they use is now imported. It also puts policy makers in a bind since they feel they need to lower interest rates to combat recession brought on by the mortgage fiasco, but that will simultaneously cause the value of the dollar to fall further (and cheapen the value of my Social Security).

Meanwhile China, seeing the value of its dollar assets fall is hedging its bets by buying equities. Multinational corporations long ago gave up on the idea that they owed allegiance to any one country or its workers. However, it will not be the same for a corporation in which the government of China holds a large stake; it will mold its decisions to the benefit of that country in contradiction to the prevailing corporate ethos. Let’s be clear, China does not play by the same rules.

Now I personally have no problem with globalization spreading the work around; with outsourcing jobs around the world. The US is way too wealthy and much of the world is way too poor and I’m happy to see democratic countries like India and the Philippines benefit at US expense. However, the idea of a powerful country, dictatorially controlled by a tiny clique, which strongly curtails basic human rights and freedoms, in which citizens have no voice in trying to prevent or mitigate environmental catastrophes, which felt no compunction about killing hundreds of its own citizens in order to maintain its power, well that’s a different story.

American corporate culture is bad enough even as it operates on its own turf and tries to look responsible by giving lip service to fundamental rights, but in the service of dictatorship, it can only end badly. America has literally sold the family farm for cheap plastic crap made in China.

When that farm is owned and operated by Communist China there will eventually be hell to pay.