Wednesday, February 28, 2007

Made In China - Communistic Capitalism


I'm for free trade - but this is getting ridiculous.
Everything, and I mean everything, I see in the stores now is made in China.

Just as a matter of preference I avoid buying anything made in China because
1. I don't want to support a Communist government's economy and their slave labor practices and
2. I prefer to support businesses in the USA.

Unfortunately, because hardly anything is made here at home anymore this is difficult to do at best. But there are websites that support products Made in the USA and will point you to US businesses, here and here.

Needless to say the trade deficit we have with China is enormous. It was reported:
The department said the US deficit with China rose 15.4 percent last year to $232.5 billion, the largest imbalance ever recorded with a single trading partner. China's official trade figure concerning the US, usually much smaller, is not made public yet.
Additionally, the Chinese central bank, buys a great deal of Uncle Sam’s debt. Coupled with the trade deficit this is a cause of concern to many. Here's what one article says:
The trade imbalance with China places the United States in a potentially dangerous security situation. The outflow of U.S. dollars to China has enabled the Chinese to buy more and more government securities. This has given China tremendous leverage over the United States, since a quick sell-off of these securities would send interest rates spiraling up.

The Chinese of course are unlike to do this, not only because the U.S. government could retaliate by blocking Chinese imports, but because it would also have a negative impact on their economy. Low interest rates help Americans buy cheap credit, and it is in large part the use of credit that enables the United States to be such a rabid consumer of Chinese products.
Perhaps we ought to be more concerned with the USA racking up the amount of debt that it does in the first place. Our government spends like mad and then apparently just prints up more money to cover it.

Still one only has to look at the impact that the Shanghai market has on our own stock market to see that things can get dicey. Just yesterday we had a huge drop in our stock market precipitated by downward fluctuations in the Chinese market. It was the worst day of trading since 9/11 and the Dow fell 546.20, or 4.3 percent, to 12,086.06 before recovering some ground in the last hour of trading to close down 416.02.

Some say this trade is good for everyone involved. Here's a good article about this. Americans get cheap goods and the Chinese grow their economy and end some of their poverty (which no doubt Communism caused in the first place). I wonder why we ought to be helping them grow their economy anyway.. how much of their dollars will go into their military?
Cato Institute says we shouldn't worry.
Same thing from the Heritage Foundation.

Free trade is good - but I prefer to buy American and keep jobs at home and support our own economy.