BLACK FRIDAY! Wal-mart, Thanksgiving, the Left, and the Poor

In Ayn Rand's Atlas Shrugged the productive, inventive minds of the world are constantly belittled and attacked by the envious and agenda-driven in a society whose squeaky wheel gets the most grease. Sound familiar? R. Galloway

The left keeping Wal-mart out of the hands of the poor for the good of the poor is at once laughable and disgusting. From Ted Kennedy no less. What does he know about working, actually paying for things through hard work?  Here's  Teddy "I can swim but she can't" Kennedy waxing poetic on Wal-mart;

We are working hard in Congress to make the Wal-Marts of the world accountable to workers, families and communities. We have introduced legislation to expose Wal-Mart's practice of dumping responsibility for health care for its employers on the American taxpayer. We have introduced the Employee Free Choice Act to give workers a voice at work and to stop anti-union intimidation tactics. We continue to fight for an increase in the minimum wage, to ensure that no one who works for a living lives in poverty. We have sponsored legislation to ensure equal pay for men and women. And we are increasing penalties against companies with dangerous working conditions.

Where does this murdering drunk get off giving business advice?

Successful business people who have made it on their own have a healthy respect for the effort and the system of capitalism that make success possible. Jack Wheeler describes it brilliantly here.

Envy-appeasement explains why Hollywood is so liberal. The vast amounts of money entertainment stars make is so grossly disproportionate to the effort it took them to make it that they feel it is unearned. So they apologize for it. The Liberal strategy is to apologize for his success, his country’s success, his civilization’s success, in order to appease the envious.

Liberalism is thus not a political ideology or set of beliefs. It is an envy-deflection device, a psychological strategy to avoid being envied. Liberalism is the politicalization of envy-appeasement.

Rich children with their unearned inheritance are easy targets for guilt mongering by the envious. So they assume a posture of liberal compassion as an envy deflection device.
"Please don't envy for my father's money ---look at all the liberal causes and government social programs I advocate!" Teddy Kennedy is the archetype of this phenomenon.

Wal-mart was forced to drop its plans for its first New York city store. And New York was the loser for it. The lower middle and middle class was the loser for it.
A "coalition"  of lefties is planning hundreds of anti-Wal-Mart actions nationwide in mid-November as the key retailing holiday season kicks into gear. The Nov. 13-19 campaign, dubbed "Higher Expectations Week," is being coordinated by Wal-MartWatch, an "umbrella group" started early this year by maverick union leader Andy Stern, head of the Service Employees International Union.

Uh, what? Wal-mart Watch? WTF? Here is the board;

Wal-Mart Watch is a 501c3 organization
'devoted to studying the impact of large corporations on society, and its advocacy arm, Five Stones [I am looking into these folks]

The Center’s Board of Directors includes:

• Andrew Stern, President, Service Employees International Union [old time labor, shocka!]
• Judy Lichtman, Founder, National Partnership for Women & Families [typical lefty feminazi ]
• Chellie Pingree, President and CEO, Common Cause ["It's a really good time to be one of the good guys when the bad guys are so bad," Chellie Pingree said.]
  
• Carl Pope, Executive Director, Sierra Club [environ-mentalists? huh?]
• Roger Wilkins, George Mason University [welfare lawyer from Cleveland, Ohio turned Pulitzer Prize-winner, Wilkins is
  best know for his role in exposing Watergate in the '70s]
• Ed Goeas, The Tarrance Group [token pollster]
  

I argue Wal-Mart would provide jobs, generate tremendous sales, and offer low prices that would benefit low-wage earners greatly.

Wal-Mart pays above minimum wage, has an excellent pay plan, always promotes from within and has an excellent benefits package. And WTF is wrong with the lowest prices in town?

An economy of abundance works! Not an economy of scarcity! Read Basquiat, Economic Sophisms.

Wal-Mart makes it possible for lower wage earners to purchase items the could never afford at regular store prices. Wal-mart enhances the quality of life for ALL AMERICANS. 
These limo libs speak for who? Not for them, they don't shop at Wal-Mart, believe me. They speak for the little guy? HA! The little guy needs Wal-Mart.

Wal-Mart is an exemplar case history of a great AMERICAN success story but the lefties hate when the American experiment works. They trot out their Lenin/Marxist bullshit and fail to mention 100 million people murdered at the hands of communists outside of war.
Market based economies work. Let the market handle inferior merchandise............people will stop buying it and buy higher quality goods, if they want to.
I believe the undoing of American competitive edge has more to do with collectivist unionizing and decimated meritocracy.

Freedom, choose freedom. Not various shades of slavery whether it be forced union membership and dues (something I experienced when I signed on to work for The New York Daily News), impossible taxation, heavy tariffs, and crippling government regulation.
I live in New York and believe me when I tell you it's a welfare state and has become increasingly IMPOSSIBLE to make any kind of money/profit here.

FREE THE PRODUCERS. CREATE AN ENVIRONMENT THAT IS FRIENDLY OPEN TO THE PRODUCER. STOP PUNISHING THE PRODUCERS.It seems to me the left is attempting to "kill the messenger"

Back in the late 70s early 80's the ILGWU put my daddy's factory out of business. Impossible demands and automatic wage increases forced him out of business. HE HAD NO CHOICE.............helloooooooooooooooo.

So what did he do? Necessity is the Mother of Invention. He subcontracted to a non welfare state (North Carolina) and then to Taiwan...............we are not talking child slavery, or slave labor here.
We must remove the shackles on the American producers. We must advocate for a FREE economy. Get the governement off our backs!  DON'T TREAD ON ME.

The key question to ask of any action, is whether it was undertaken with a gun held to the head. This is a vital question because of its economic results.

Tom, hamster motortime wrote;

If Walmart does not hold a gun to the head of a man who purchases a product, this indicates that the man is choosing to spend his money in this manner- that he is picking on option out of other alternative ways to satisfy his wants. He buys the product because he values the alternatives less. Mutatis mutandis if Walmart purchases his labor- both value his labor more than the alternative.

The Asian manufacturers who supply Walmart with products, do not hold guns to the heads of the Board of Directors. Walmart purchases those goods because they value them more than their alternative.

Now, freedom is not a key to utopia- reality imposes limits within which humans may live, and you will find that these limits prohibit precisely the utopias sought by the barrel of a gun. Do not ask whether this freedom could be better, but whether the use of force in these transactions could achieve the results you seek without negative effects greater than would occur in a state of freedom. In other words: how many people living in "subsistence wages" now, would be dead under your system of interventionism, or any variant of it?

UPDATE: NOVEMBER 27th: Apparently I have a new career here. heh heh

Comments

[Craig]

You're preaching to the choir Miss Pamela. I've written several posts on this topic.

The United Soviet Socialist Republic of California (USSRC)aka. Effing Moonbats (EB) continue to threaten WalMart with legal this and protest that. They've been successful in San Francisco and in downtown LA but the sensible ones outside the urban areas have told them to STFU.

[Kevin Mark Smith]

You forgot the unions, who are directly responsible for driving every manufacturing concern to Mexico and Asia. They are pounding on the doors of Wal-Mart and will not be satisfied until you and I pay much more for goods than we do now. And don't give me that garbage that mom-and-pop stores are paying the price. Most m&p's employ far fewer workers than the average-sized small-town Walmart, and every town to get a Wal-Mart sees rapid growth in all sectors, downtown and otherwise.

[R]ed Kennedy is a drunken trust fund baby and should shut up. He does not speak for most Americans, just the leftist swine.

[Kevin]

Uggh, the anit-Wal-Mart litany is so profoundly idiotic. One thing I like to suggest to liberals is to go to a Wal Mart, take off the PC goggles, and then just LOOK AROUND AT WHO'S SHOPPING THERE. Look at the color of their skin. Guess at their level of income.

Those stores loved by the PC crowds, like Whole Foods and (to a lesser degree) Target, serve a clientele of middle class WHITE people.

Meanwhile Wal-Mart serves a rich racial mix, a clientele of Blacks, Hispanics, poorer whites -- all the groups liberals are always fretting about.

If you launched a massive federal program to create socialized discount stores to provide quality goods at low prices to the economically disadvataged ... well no doubt that would be an appalling failure, but Wal-Mart would be the ideal you'd want to achieve. And yet it's here in the free market, already.

[monkyboy]

Maybe we could shrink the size of the federal governemnt if we weren't spending $600 billion a year on the military.

I don't see how you can call for small goverment and back a costly, worldwide war at the same time.

[Lou Minatti]

[de-lurking]
I have a problem with Wal-Mart:

http://louminatti.blogspot.com/2005/10/wal-mart-is-evil-and-is-destroying.html

When a Wal-Mart executive vice president demands that grannies work shopping cart duty, yeah, I have a problem with that. "Every employee" is how she phrased it.

I sent this Wal-Mart exec an e-mail asking when she'd come down to Houston so I could watch her gather shopping carts on an August afternoon, but (surprise!) I never heard back. She's a Wal-Mart employee. Why the hell is she too good to push shopping carts?

Wal-Mart is trying to get rid of the old folks. I find their corporate attitude repugnant. F*** 'em.
[lurking]

[FrogMarch]

Bravo!
sing it, sistah.

Wal-mart is also family run and owned. Something libs detest.
I'm curious why the libs focus so much on Wal-mart. Why not other big box stores like Target or Costco?

[FrogMarch]

Kennedy's 500 million net-worth is mostly sheltered from taxation in off-shore accounts. He personally could end starvation in nine third world countries.
I wonder what the eternal politician/bloated purple hypo-crat is doing today?

[lowandslow]

I'm not a huge fan of Wal-marts business practices myself but the fact of the matter is everything they do is legal and people like to shop there. That's the way things work in a free economy.

[suds46]

Same old story. The PRODUCERS vs. the LOOTERS.

[Ed Poinsett]

If you were a medically challenged, Senior citizen, struggling with the ever diminishing purchasing power of a fixed income, you'd welcome Wal-Mart with open arms. I shop there at least three times a week. The service and selection are outstanding and the associates are always polite and cheerful. Ted Kennedy with his personal millions, his comprehensive taxpayer paid-for health plan and over generous pension can hardly speak for those of us who must cut corners every day of the week to maintain some sense of dignity while waiting for God.

If he wants to do something for the poor people, introduce legislation repealing both free health care and generous pensions in the Congress and Government. Put them on SS and Medicare like the rest of us have-nots. Until then, don't lecture me about Wal-Mart.

[Jim]

Ted Kennedy could end starvation in 9 third-world socialist countries just by skipping lunch.

[Soak Hinson]

Better yet, Kennedy could donate his alcohol-sodden body and provide food for 9 third-world countries, PLUS a contact high.

[Almost Girl]

Hey Atlas (ohh what an Ayn Rand fan I used to be, well not that I grew out of it, but you know, not in polite society)

Add something to my Black Friday Bloggers event will you? http://almostgirl.coffeespoons.org!
You would be a welcome addition to the discussion! Wowza! Glen lumped us together in Black Friday topics so come on over and dialogue! Better late than never!

Almost Girl

[Rol]

Right On, Atlas — Great Post! Felt like I was re-reading Atlas Shrugged for the umpteenth time.

There's no question in my mind that John Galt bailed out a long time ago — probably when LBJ launched the "Great Society", if he wasn't already gone when FDR took us on giant leaps toward socialism. And just as Ayn Rand predicted, our society is in oh, so much trouble since he left.

The United Food & Commercial Workers Union has been trying, unsuccessfully, to organize Wal-Mart for many, many years and in their frustration they get more strident and aggressive every year. In a post earlier this month on rolville USA Should Wal-Mart hike prices? I commented that their annual pre-holiday anti Wal-mart campaign would kick off soon, and here it is. You'll see the NEA (teachers' union); Democratic politicians; the MSM; the usual suspects from the entertainment unions in Celebrityville on the Left Coast; and all the rest of the gaggle of AFL-CIO lackeys weigh in with documentaries, boycotts, senate resolutions, ridiculous lawsuits, and any other form of harrassment and intimidation they can come up with.

It'll be a well-orchestrated campaign and the one assurance I can give fearlessly is you'll never see the union's name mentioned in any of it.

It's interesting that the UFCWU has lost representation elections in every Wal-Mart installation they've targeted year after year after year. Gee, you think those 1.2 million Wal-Mart employees might know something?

[HoverBee]

I have been a keen supporter of Wal-mart since the early '90s when I learned that a cousin with a learning and developmental condition was employeed by Wal-mart. She continued in her employment until her retirement a couple of years ago and retired as a stock manager in her department. I am so proud of Wal-mart for giving someone with her abilities a chance. She was able to work and have a life outside of care. And I am sure the tax payers had a slightly lighter burden because of it.
Keep up the fight.

[Mike]

Monkey Boy, We have got to stop meeting like this.

You know what wold cust spending down a lot- get rid of the Socical programs, Huge chunks of the budget go to Socical security and to the depmartment of Human services for welfare.

But then again your Number of 600 Billion is wrong, Its around 350 billion and Quite frankly I see it as a good investment, we are the most powerful country, why not give the troops the best equipment.

[Merovign]

Looks like economics 101 is going to have to be an annual recertification required before people say things. Prices, wages, and costs, oh my! I'll be starting that blog Real Soon Now, I promise.

The only problems I've ever had with WalMart is to the extent they've made deals with local authorities to "eminent domain" away private property that wither wasn't up for sale or would have commanded a higher price.

I sadly haven't done the research yet to know just how mad I should be. At least my local WallyWorld was built on disused commercial property.

[ObsidianOrder]

You are absolutely right that WalMart improves the quality of life for most Americans.

However, you are absolutely wrong in thinking of WalMart as some kind of free-market capitalist success story. WalMart exists in its current form almost entirely due to a vast indirect government subsidy.

Let me explain a bit. You're probably aware of the close to $500 billion annual trade deficit that the US runs? WalMart by itself accounts for a sizeable fraction of that, with $300 billion in annual sales of (mostly) imported goods. The majority of those goods in fact come from a single source, China (unlike most other discount stores's sources which tend to be much more geographically diversified). The only thing that makes a sustained deficit possible is the decision of foreign governments, and predominantly of the Chinese government, to purchase (and hold) an equal quantity of US securities every year (mostly in T-bills). A trade deficit *must* be balanced by a caputal flow surplus, and this is the balancing flow. This is *not* a free-market decision made by a large number of individual investors, it is a command decision made by a dictatorial government. We'll get to their rationale in a minute.

First, what does this do to prices, and could WalMart exist without that? With a net profit margin of only 3.5% WalMart is extremely sensitive to fluctuation in the cost of goods. Under balanced trade conditions, imported goods would be approximately 35% more expensive (currently $1.5B imports vs $1B exports), and WalMart would not have the advantage it does. Moreover, at those price points Made-in-USA goods become competitive, considering their better quality (I invite you to do your own informal survey on this - e.g. Vermont American's http://acmehardware.com/product_detail.aspx?sku=4344339 vs a cheap import version of the same such as you may find win WM http://www.toolking.com/ProductInfo.aspx?productid=2197). WalMart's competitive advantage, and one might say the entire rationale for their existance - cheap Chinese goods - would disappear under those circumstances.

Second, why does the Chinese government choose to invest such astronomical sums in US securities? Either they are expecting a high return on investment (unlikely since it is not even clear how the principal can ever be repaid), *or* because they want to affect the global economy in a particular way. Goods which are exported to (and consumed in) the USA are goods which are not consumed in China; the Chinese government by forcing the exchange rate as it does, lowers domestic (Chinese) consumption dramatically. At the same time, goods for export must be produced somewhere and somehow - therefore Chinese capital investment in primary manufacturing capacity is increased. There is actually a multiplier effect at work since foreign investment in manufacturing capacity moves back into China (i.e. WalMart, its suppliers, and damn near everyone else is building factories there) but the beauty of it is that when they do so they *do not really affect the balance of trade* since the flow is of the form of capital goods to joint ventures, and sometimes to subsidiaries of Western companies. The overall effect is that for every ten dollars in current consumption that the Chinese people are forced by their government to forgo (as exports) a dollar or two (at a guesstimate) of new manufacturing capacity if built. This is an insanely high capital investment ratio by the way. Why the they want it? They have aspirations to being one of the top world powers, obviously.

To sum up:
1. WalMart exists *only* because of the Chinese manipulation of exchange rates.
2. The Chinese government is using US consumption to force a rapid build-up of manufacturing capacity.
3. WalMart is not evil, the Chinese government is.
4. People who make decisions based on manipulated prices are behaving in an uneconomic (wasteful/inefficient) way.

[final fashion]

I think that a balance between free market and government intervention to protect the vulnerable could be achieved, but not while both sides insist on using insults and propagandist rhetoric instead of real debate... it's a cheap way to argue a point and does nothing to help anyone. Calling western liberals "communists" is just as silly as calling free-market conservatives "nazis" - neither is true and only distracts from the points you are trying to make.

[Severely Ltd.]

Final Fashion,
A couple of liberal friends of mine toured ex-Soviet countries after the fall, and one in particular mourned his way through the 'sad failure'. He was certainly not alone, and many, many liberals maintain hopes for a collectivest world. How else do you explain their (your?) support for Castro's continuing failure?

[Larry]

Trade deficit is a phony bugaboo. We have a deficit because we can afford to buy more stuff. When we can no longer afford it, it'll have to come back into balance or surplus.

[American Mother]

Well, final fashion, you are correct in that it is not proper to call western liberals "communists"--they are really socialists.

I shop proudly at Walmart, and we are not "poor", but then, neither are we hung up on status. A good bit of the groceries are flat out cheaper, and many hard goods run at better prices as well, with no sacrifice of quality. If I shop carefully, I can find clothes which are as well-made as what I find in department stores-but actually in the colors which I prefer and which really fit my slender but not-boyish figure! What I save the family at Walmart is spent on more intangible elements of our lifestyle. If we were millionares, I would still shop there!
Let us not forget that once, one of Walmart's mottos was something to the affect of "Look for the 'Made in America' label." The question is, why has that changed? (I have heard that the changes coincide with Sam Walton's death.) They have pioneered efficient distribution systems, which government and private enterprise,alike, would often do well to emulate. Now, I do know some of the story of an American manufacturer which eventually went out of business because of the current Walmart practice of ever-tightening those prices. The company could not meet the retailer's demands and still make a livable profit, and lost its contract, which represented so much of their business that they were never able to recoup and subsequently shut down. But this begs the question: what could the company have done to protect itself from the loss of that business?...too many eggs in the same basket, eh?
Yes, China is a problem. Besides "taking" our manufacturing away, China outright steals our designs-and Walmart is not the only place those stolen product designs may be found. As a consumer,however, what am I to do? For me, value is defined by the proper product at the right price and a certain degree of quality. The "value of the dollar" means something completely different in the home than it does out in the larger world. Even my aqquaintances who were "put out of work" (there was also a nurseryman) by Walmart still shop there, not due to a lack of options, but because of price and selection.

[ObsidianOrder]

Larry: trade deficit is not a "bugaboo". Your analysis is exactly backwards: we have a deficit not because we can "afford to buy more stuff", but because someone is choosing to invest here, which enables us to buy more goods abroad. In the normal operation of a free market, if individual investors abroad liked what the US economy has to offer and chose to move their investments here, that will allow us to buy more than we normally could (for a while), and we would indeed have a natural trade deficit and investment surplus; nothing wrong with that. What is actually going on is quite different: a permanent artificial trade deficit caused by government manipulation of exchange rates. My point is that this is *not* based on people's choices (which are generally rational, and would lead to a natural equilibrium) but on the choices of a (very irrational) government. The Chinese are not the only ones doing it, every country that has wanted to build up manufacturing has been doing it, probably starting with Japan (and see what messed up economic situation they ended up in). The Chinese are just the last ones to jump on the bandwagon, but damn, they do it in such a massive way. What is wrong with it is exactly what is wrong with government intervention in general: it results in misallocation of resources.

[Merovign]

I'm having real problems getting posts to stick. I type a three-page dissertation on why the trade deficit is a bugaboo and posted it and it didn't show up. I guess I have to write all of this in a text editor before I post it from now on. Trust me, the original was better:

In brief: WalMarts goods come from all over the world, mainly from China, Indonesia, Taiwan, Thailand, South America (textiles, kitchen goods, lawn ornaments, some electronics), Japan (electronics, games), Europe (music, movies, games), and the US (music, movies, games, some electronics, tools, food, toiletries). It's not all China.

Second: The deficit is real in one sense but selectively defined in another - it's not as if we're running up credit card debt on forreign goods and services (any more than usual). We send out money and goods, we get back money and goods in balance. When you pick and choose who and what money and goods, it makes the situation look worse.

Third: The big fear is that foreign governments will dump currency and bonds, devaluing our currency. This will hurt them as much as us, which is why they don't do it. Firstly, to the extent that the devaluation will occur as soon as they start dumping, so they're trashing their own investments. Secondly, in that they lose customers, not only the US but other countries affected by the overall damage to trade.

Fourth: We make a surplus of food. We mape planes, trains, boats and automobiles. We make lumber and steel and machines and electronics and oil. If the aforementioned scenario happened, there would be an adjustment, but it would be severe only to the degree that government couldn't resist the temptation to do something stupid, like imposing price or wage controls, higher tarrifs, etc. It will be like Y2K all over again, a bit of paranoia followed by not much drama.

Fifth: If our currency was devalued, Americans, being wily folk, would take the opportunity to trade goods and services overseas to buy back our devalued foreign-held money and property at a discount rate. In the end, we would be less beholden to foreign governments.

Sixth: ObsidianOrder makes a good point that the Chinese government is irrational, but I would be more worried about imperialist aims than their leadership yanking the fuel hose off their economic engine. It's possible, of course, but as I said we'd have the opportunity to take advantage.

[ObsidianOrder]

American Mother: good points there. "pioneered efficient distribution systems" - yes, they did. A WalMart with only that as their competitive advantage would look pretty different from the one we have today, though. "China outright steals our designs" - indeed. That wouldn't be a huge problem ordinarily since with their not-so-advanced manufacturing techniques they don't have a hope of competing - unless the exchange rate is manipulated. "As a consumer,however, what am I to do?" - you'd pretty much have to make what look like rational choices to you based on the feedback (prices) you see in the marketplace. If the prices are manipulated (via exchange rates), your choices will not be optimal in a big-picture way (factories move to China), but they may still be optimal to you (cheap stuff).

I really want to point out that the Chinese people are as much the victims of this (since they have to give up a very large quantity of consumer goods they could have used domestically) as we are (since we lose jobs and manufacturing capacity). Government intervention is bad, bad, bad.

[ObsidianOrder]

Merovign: sorry I missed the long version. Let me respond quickly:

First: WalMart's goods come a lot more from a single source than those of any other retailer. I invite you to do a quick survey, pick a few hundred items at random in WalMart and record where they come from, do the same in Target or K-Mart. You may be surprised at the results. The real info (% imports by country of origin) is not in WalMart's annual reports, but my conservative estimate would be >60% China.

Second: It is exactly as though we are running up credit card debt. We send out IOU's (stocks, bonds, etc), we get goods. "Money" is not what it is, since all of the money involved (both Chinese and US) is manufactured out of thin air just before the exchange. The important point however is that there is a massive accumulation of assets (IOUs) abroad. Luckily for us those IOUs do not have a fixed value - the more of them you have, the less they're worth, asymptotically approaching zero once you have a trillon or so ;)

Third: Yes, that is the fear, and yes, it will hurt them too, but remember, they're not rational. Who knows whether the damage to their own economies will be seen by them as acceptable? It would probably hurt us worse, or at least they may think that. Besides they might be thinking to readjust to domestic consumption which would make their population more prosperous overnight (unlikely under the command economy model this will probably go with, but again they may think that). It *would* be a masterstroke of economic warfare. Even just the possibility of it is a strong deterrent, e.g. against a US response to a Chinese invasion of Taiwan.

Fourth: Agreed, we can survive it. It will be a pretty major (and painful) disruption however, more like Katrina than like Y2K.

Fifth: Agreed. Some of us are already investing accordingly ;)

Sixth: Yes, although the two are not separate, see above re: Taiwan. Economic warfare is part of the package.

[Merovign]

That was "make planes" not "mape planes," BTW .

I submit that the US is in a better position than China in the case of an economic war, and would suffer less. While there are a lot of sick minds at the top of the pyramid there, their financial planners have been remarkably lucid these past ten years or so. Doesn't mean it will continue, but China is not North Korea.

Yeah, about a Billion things can go wrong. But I'm betting that a policy of tarriffs, penalties, price supports, or anything else our government could do to "fix" the "problem" would do far more damage over a longer period than a trade war.

We're going to have to decide what to do about Taiwan when that happens. China has a history of absorbing territories and making dissidents dissappear. Most people don't know how many people in Hong Kong "went missing" after the takeover, the indications are pretty shocking. I'd hate to see that happen to Taiwan.

I'd also hate to see a full-out conflict with China. It may come to the point where we get as many people out of Taiwan as possible.

Not that anybody who makes policy listens to me, of course.

Probably for the best. :)

[ObsidianOrder]

Merovign: at the risk of being terribly old-fashioned, there *is* a quick fix to the problem: a return to some kind of convertible or asset-backed currency. It doesn't even need to be anything the government does, such a currency (or currencies plural) can be issued and managed by private parties. I know, I know, that's blasphemy in this era of structured finance, but consider it for a second ;) The temptation for governments to manipulate currencies and exchange rates is just too great; this would put an immediate end to it.

The other solution would be to "repatriate" investments to China somehow, or to limit their ability to invest here. Unfortunately our markets are a lot more open than theirs, so that is not so easy. Tarrifs and price supports or anything else that deals with the flow of goods just ain't gonna cut it, since the basic problem is with the flow of investments.

Agreed completely about Hong Kong (I have a lot of friends there) and the prospects for the same happening in Taiwan. I would station several nuclear subs in the area and make it abundantly clear to the Chinese that any invasion force will be automatically targetted with nukes. As you say, it's probably for the best that nobody who makes policy listens to me ;) Although it also may be the best/only way to make sure that nothing happens.

[Merovign]

ObsidianOrder:

I should consider an asset-based currency for a second? I've been advocating it since I was 15 years old!!! I just don't have any great expectation that it will happen. While there are very real downsides to structured finance, the people with their "magic hands" on the "magic levers" will not likely ever be convinced that they can't possibly understand the billions of pieces of information that are required to make an economy run smoothly. In the short term, the best that can be done is to insure that those in power are at least vaguely aware of the pitfalls of their policies.

Ideally, money would be directly linked to assets, and not just Gold. But like Social Security or the Post Office, when 299 Million people expect something, there's not much 1 million people can do about it. For now...

The problem with China and investments is that they don't produce a lot of capital goods (yet), it's almost all consumer goods. And since their government is a dictatorship, investment in their companies is risky. If and as their system becomes more open, I expect the problem will resolve itself. My basic contention at this point is that we should be aware of likely problems and be prepared to take advantage of them, not try to "manage" the currency like the Fed "managed" the money supply in 1929.

And we do have nuclear subs stationed near Taiwan. And while China's navy has grown to be a major force, our sub force could still remove most of it in relatively few hours (ignoring political/ethical concerns). The nuclear threat is the big problem. China has already threatened nuclear retaliation for "interference" with their plans on more than one occasion. The real problem with China is that they learned an important lesson from the Soviets - you can stomp on civil rights all you want if you have a strong commercial sector and you keep people fed. They can keep the gravy train going a lot longer than the Soviets did by that method... not forever, but longer.