A Trump Comment concerning China:
They are the greatest that ever came about; they are the greatest currency manipulators ever!
Let’s get this straight. We have elected the biggest liar that has ever ran for office, as President of the United States. PolitiFact documented that 70% of what Trump said to get elected, was either a twisted half-truth or a pants-on-fire straight out lie. So, the promises that he promised cannot be taken seriously, but here is one that he simply cannot keep. Trump’s argument that China is ripping us off, manipulating their money, or that our government has made bad deals with China does not fly with the facts. Concerning trade deficits – the money says no, I don’t think so!
In 2011, (not much has changed since then) a paper by Galina Hale and Bart Hobijn of the San Francisco Federal Reserve Bank – probably the best source to track this kind of information – details that only 1.2% of US personal spending goes into the pockets of Chinese corporations. This is rather logical since globalization is in love with the cheap labor of China, who merely service the powerhouse corporations like Apple or Nike. And even more startling since we all think that we buy too much from China, only 2.7% of American spending goes toward products that are “Made in China.” Roughly 80% of our buying is for “Made in America” with purely American parts, and another 8% for “Made in America” with foreign parts. That totals to a whopping 88% of our purchases carry a “Made in America” label.
When you buy a “Made in China” phone, computer, shoes or clothing, where does most of the money go? Well, according to researchers in the Federal Reserve, 55% goes to the American infrastructure of capitalism. America contains a vast network of truckers, rental leases, landlords, wholesalers and retail associates to display the goods. The next layer is sales and marketing to make sure you are aware of the goods, which ends up supporting newspaper revenues, directors and producers of commercials, writers, graphic designers, and the cameramen of the nation. The American list of businesses and payrolls to make sure you have a product in your hand would undoubtedly snowball into each other. Any profits that are left over eventually move up through the corporate structure to the board members of America Inc.
China’s trade deficit has very little to do with China making gobs of money off Americans as perceived by the masses. Also per the Fed’s report, China’s alleged manipulation of the yuan doesn’t affect our economy. China technically produces 1.2% of the American pie that stretches a little higher through contracted labor agreements. No matter how you add that up, China’s selling ratio to our gluttonous behavior – when compared to Americans selling to Americans – is so low that it carries no altering weight.
Moreover, I’m sure Apple and Nike have long-term labor contracts that do not fluctuate very much, no matter what the state of the yuan. So exactly where are those bad deals that government has signed, when it’s our American corporations who worked out the deal to exploit China’s labor? This also means we must view tariffs correctly. Tariffs are merely a tool that allow government to punish our American corporations who use China for labor, by adding taxes to their imports to make up for the loss of tax revenue from the American labor force. It is a simple formula: If government loses income tax from domestic labor, they will place a tariff on foreign labor to make up for the loss. This only makes the cost of our American financed Chinese goods slightly higher and equals out nothing between the actual trade deficit of 98.8% that rests in our favor.
Fundamentally, it’s impossible to call a product that is built in China by an American company, and then shipped to an American company and ultimately sold by an American company – a trade deficit. That $319 billion number that many call a trade deficit, is America Inc. making gobs money. Good job Hillary for pointing this out when Trump was dropping Twitter bombs about unfair trade deals. Exactly how did our government work out a bad labor agreement between Apple and a Chinese corporation? That fact along with others concerning the status of America’s move to automation, could have changed the election of billionaires to power.
Now that you have learned the truth concerning globalization, let’s summarize for clarity. Americans mostly buy American made products at an 88% ratio. Second place, Americans spend roughly 12% on foreign made merchandise, of which China gets between 1.2 % to much less than 2.7% depending on how you calculate. Would this position Trump’s bashing of China as a real issue, or just made up rhetoric to ignite a frenzy of votes? Clearly, it was made up rhetoric to gather votes. This also means that Trump physically cannot do anything to ease the trade deficit, for there is no trade deficit when American corporations are the final owners of the products assembled in China. As previously stated, any increase of a tariff would only place an extra tax on American produced goods, albeit through China’s labor. It’s all smokescreen talk to rile Americans into thinking that China is a big bad enemy.
Accordingly, I will make a bold statement that is exactly a no brainer: The tariff talk will subside from Trump’s camp since it has served its purpose to gather votes. Any continued use of slamming China’s trade policy is designed to keep the uninformed public believing in him. The next logical conclusion from this political blindfold of semantics. Does anyone think that a cabinet of billionaires will add or raise a tax to their money-making structure of exploiting the cheapest labor possible? Or that tariffs on China’s whopping output of 1.2% would affect things in America? Hell, Trump could make it illegal to buy a fully made Chinese product and nothing would change in America except for some clothing lines, including his. This proves that all the tariff talk as a bad deal that our government signed, to be a completely unreal conversation.
Perhaps the lopsided infection of American production and that China does not own critical technology rights – since they have invented nothing – is why they are so willing to steal America’s intellectual property as a way to increase their measly 1.2% of a $319 billion fictitious trade deficit. They also understand that the number of containers, pallets and boxes, does not matter. It’s who owns those pallets and boxes that matters. This must leave China wishing they were Apple, Hewlett-Packard, Samsung, Sony or Nike. (I’m sure the Fed stated these numbers correctly, for the obvious reason of keeping American corporations at the top of the money structure. The Fed has no intention of letting China become the major profit center on the planet.)
I’m not blaming Trump for his personality, because this is the type of person capitalism produces, and there are many of them. More than a few politicians carry aspects of the baggage listed to the left. Likewise, to bash China is to bash our American corporations who are diligently collecting the profits. Perhaps we should thank China for pitching in on Boeing’s 787 Dreamliner. Let’s hope their rudders work extra well, because those planes will fly a lot of goods and services around the world. Which only proves that Americans love to make money in every possible way, regardless of the political language used to hide our ruling class of production.
My final conclusions: It seems that the subtle fear of China would one day reign over globalization was used to control our voting. And a mechanism that the Democrats did not want to tear down either, straight from Hillary’s silence. Why would the Democrats and most in government skirt the issue? Because they like cloaking job lost under the China theme of cheap labor. I think our government has figured out that America’s production is stronger than ever through automation – and a 2.7% of products made in China sold to Americans – is less scary than our nation moving to a fuller use of automation that will devastate the middle class, of which they have no answer for. Consequently, China becomes the preferred copout to truth, under the meme that we are losing jobs to foreign powers instead of automation. Government must keep the American dream alive, and probably feel it is their duty to keep the wool pulled over our eyes.
If we dig deeper, we will find that the term “trade deficit” is invented language to keep the concept of nationalism flourishing. Our bankers are not stupid, they control the language of government. Sadly, it is all designed to keep you the average Joe, stupid, fearful, and blind. That’s the way they like it. Unfortunately, we then revert to the primitive behavior of throwing rocks and starting fires to block the inauguration route of a system that continually lies to us.
I’m surprised that the bankers released this report. We most likely will never see a future report with this much detail. Someone screwed up at the Fed. You gotta love San Francisco’s infectious nature though.