What is Unfair about Developing Crucial National Industries?
There was a long article recently in the WSJ, about China favoring local firms in developing the solar energy industry because it sees this field as essential to long-term environmental and energy security. Then the WSJ tells us that India is not only doing the same, but shutting all foreign firms out the solar market altogether. Why not deal with this issue as well? Because India is a 'democracy', because it's 'on our side'?|
But in fact, why deal with it at all? Look at the US position on the ethanol industry, providing local manufacturers with a subsidy of $0.50 per gallon, and locking out foreign competition with an import tax of another $0.50 per gallon. Brazil in particular believes this policy to be quite unfair since it can produce ethanol at about 20% of the US domestic costs.
But 'fairness' may not be the issue, or even an issue at all. The US wants to develop a strong ethanol industry and that would likely prove impossible if foreign imports are so much cheaper. In fact, without the government support, the industry might never see the light of day.
In this case, the US is doing what it believes to be in its own best long-term interest. Why then, is it unfair, or immoral, for other countries to do the same? It would be helpful if we used the same standards to evaluate others as we use for ourselves. If you think about it, it's really childish to claim something is ok if I do it, but unfair and wrong for you. Maybe that's carrying American 'exceptionalism' a bit too far.
If China wants to ensure local content, good for them, and you can ignore the whining about trade violations. Their government is working for their people (Gee, how can a 'communist' government possibly do a good thing?).
Once again, we have the pot calling the kettle black. The US is now, and has always been, the most protectionist of all countries, preaching free trade at home while practicing ruthless mercantilism abroad. From agriculture to ethanol to autos and aerospace, the US has always written the rules in its favor.
The US is far more protectionist than China, and will always bend WTO rules if if can get away with it. But when China does this, it's a manipulation of WTO regulations, while when the United States does it, it's a necessary act of defending the national interest.
It's almost pathetic to watch Americans crying foul when the US has been the sole mercantilist behemoth for decades. Are we to believe the US never uses its enormous market (and its military) to get its way? That the US never forces unfavorable trading practices on partners like Canada or the European Union Countries?
At least, to be honest, you can't accuse China of changing the rules every time the game goes against it - the way the US does. All the rules in Gatt, NAFTA, and the WTO were written by the US to be strongly in its favor. Then when someone proves better than the Americans at something, they whine and cry 'foul' and want to change the rules.
And anyway, Why should China want to spend the rest of its life making running shoes and toasters? There is no future in being a Wal-Mart supplier. None of us would do it any differently.
In China, a small elite group rules the state which rules commerce. In the US, a small elite group rules commerce which rules the state. That produces a massive difference in terms of who benefits. In China, it's the entire nation, while in the US, it's the corporations and the rich shareholders. With the US corporations, the fate of American workers is not their concern. In fact what's good for America as a whole is not their concern. The days of "what is good for GM is good for America" are long gone.
China views the Chinese Nation in a more holistic way, government and corporations and workers pulling together for the benefit of the common enterprise. I find it interesting that the US right, which is so pro-corporation, has managed to make itself appear more "patriotic" even while it sells out the nation for the benefit of the corporations. In a multinational world, corporate and national interests will always diverge, unless the government is in charge.
So many articles and comments made are within the framework of whether or not China will surpass the US. I find this strange as this is rarely a conversational topic amongst the Chinese. Contrary to what most Americans think, the Chinese aren't sitting around in Beijing rubbing their hands at the thought of what they can do next to undermine America.
What they are in fact doing, like the educated engineers that they are, is systematically going through a long list of challenges the governance of a 1.3 billion population requires. The key difference is that they aren't afraid to make necessary but painful decisions in the short-term which may upset a segment of the population (bear in mind 1% is still 13 million unhappy people) for the benefit of the other 99%.
Chinese leaders are smart and are in it for the long term. US politicians are certainly more lustful of power and much more short-term thinking than are China's leaders. All is not rosy in China, but things are becoming increasingly gloomy in America.
Another factor is that the US' primary concern is global domination, not trade. The US spends more on its military than all other countries in world combined - about 60% of the world's total. The US government is more interested in defense research than the state of its educational system, the fate of the middle class, or the infant mortality rate of Hispanics and Blacks. China's ambitions are very different - to develop the country as quickly as possible and bring it into its rightful place in the First World.
So China invests in High-Speed Rail while the US invests in more weapons to kill faster and inflict much more misery on other nations. But that puts the US far ahead in the 'peace and freedom' department.
Two completely different systems, but one working for the good of the nation and the welfare of all, while one is concerned only with foreign domination and a few locals becoming more rich and powerful.