Meantime, a high-profile U.S. delegation led by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke arrived in Beijing Dec. 13 for a landmark Sino-American “strategic economic dialogue, aimed at examining long-term strategic issues in bilateral trade.”
In other words, our guys are hoping to negotiate an orderly reduction in the value of the dollar -- that’s as opposed to the kind where the chief of the Federal Reserve screams and runs past you toward the wing exit, strapping on his parachute -- with a corollary strengthening of the Chinese Yuan.
Yes, that will make high-quality imported goods more expensive for American shoppers. But the idea is precisely to slow the flow of imports, reducing the American standard of living, while making it easier for our remaining manufacturers to export our own cheap but overpriced crap.
How did we come to be having trouble exporting our own cheap crap, while all the good stuff seems to be made overseas -- the dead reverse of the way things were in the late 19th and early 20th centuries, when “made in America” was the call-sign of quality, and hardly anyone overseas could compete with the high-tech efficiency and productivity made possible by America’s unrivaled encouragement of those with a gift for accruing and investing entrepreneurial capital?
My friend Harry knows the machine-tool business. Month in and month out, he goes to auctions where American businesses are closing down and auctioning off their expensive computer-controlled milling and grinding and screw machines -- the big stuff, the tools that make other tools. Almost universally, he reports, this stuff is being crated up and shipped to Asia, where better skilled workers with a better work ethic will happily operate it at lower cost.
(Hint: No one has ever had to file an “impact statement” on what it would do to any “threatened” weed or bug to drain a swamp and build a new factory in China.)
Meantime, our own former corporate giants keep cheapening their stuff so they can cover their accrued union pension costs, and our government schools -- while flim-flamming us with a bunch of Ph.D. mumbo-jumbo about self-fulfillment and multicultural sensitivity and teaching kids to recycle the lunchroom trash -- are churning out graduates coached by the NEA and my brethren of the press to ridicule America as a land of greedy rich polluters and “income inequality.”
These sneering toadlings know and care little about our political or technological history, ridicule the achievements of the skilled, and announce pipe-dream plans to make their own fortunes as disc jockeys, NBA stars, spokesmodels or news readers (no written exams, you see), while in fact their current skills and work ethic qualify them for little more than asking if you want cheese on that -- and you’re doing well if you score an 80 percent success rate at getting them to skip the ketchup.
Other nations train their best and their brightest to be machinists and engineers -- often in America’s own graduate schools, where the science programs are now largely dominated by Asian nationals. Our kids, meantime, are handed college degrees after taking courses in how to write advertising jingles and situation comedies -- jobs likely to be landed by about the same percentage of our youth as become NBA stars.
What Messrs. Paulson and Bernanke have been over there telling the bloody butchers of Beijing, in effect, is “We can no longer keep our heads above water paying these lousy workers of ours 12 bucks an hour, so at the same time we fool them into thinking they’re getting a 3 percent raise every year, we’re actually going to print enough paper confetti dollars to increase the world’s dollar supply by 10 percent a year. That’s 10 percent inflation,” -- rising prices are only a sign of inflation, remember, not its cause -- “which means a worker getting a 3 percent raise actually LOSES 7 percent of his buying power every year. We just need an orderly way to adjust our currency against yours to reflect this.”
How do we know the dollar supply is going up at 10 percent a year? We can’t be positive -- Mr. Bernanke’s gang decided last February that we peasants no longer need to see this number, known as the “M-3 monetary aggregate.” But 10 percent is a reasonable extrapolation from other numbers still reported, and from what the Fed was doing 10 months ago -- with even more furious printing activity likely to follow, as the proud authors of the Washington Fiscal Death Spiral seek to inflate their way out of the actuarial bankruptcy of Medicare and Social Security.
The same equation applies to savings and investments, by the way. Invest $100 at 3 percent compound interest and they’ll tell you that six years from now you’ll have about $120 bucks. Sure you will. With a buying power equivalent to what, in 2006 dollars? About $62? When the value of your money is going to be cut in half in seven or eight years, why save or invest at all? You’ve got to earn more than 10 percent a year to get anywhere, and most investments with that kind of return are felonies.
(Since putting all your money in gold and burying it will at least keep you whole, they’re likely to make that a felony again soon, just as Roosevelt did on May 1, 1933. They’ll call it “hoarding.”)
When I got out of high school in the late 1960s, the minimum wage was $1.75 or $1.80 an hour. To match the BUYING power of that 1968 wage, the minimum wage today would have to be $9 per hour (see the charts at http://oregonstate.edu/instruct/anth484/minwage.html.)
The problem with this, as Americans would realize if they still taught any real economics in the schools (Can you think of any reasons they don’t?) is that raising the minimum wage to $9 an hour wouldn’t guarantee a 50 percent raise to most youths currently earning $6 an hour. If their skills are worth only 6 (current) dollars an hour, such a step would just as likely cause their replacement by robots -- which is precisely what happened to the jobs of the kids who used to pump your gas and flip your burgers.
The only other means the Washington gang has thought up to enable us to compete with the Chinese is to nudge the government in Beijing into sapping the capital-gathering ability of their own economy by seizing and wasting more wealth on counterproductive social welfare schemes. You know -- like Washington does.
Hey: At least you’ll be able to tell your grandchildren that you lived to see official representatives of the U.S. government complain to the Red Chinese that they’re not socialist enough.