New Op-ed: Wall Street Elites Made Us Dependent On China
As America faces possible shortages of antibiotics, face masks, iPhones and various other items now produced in China, it’s time to consider how we got here.
Although it looks like the blame lies with thousands of businesses in different industries, in this case, we’d do well to round up the usual suspects, a smaller number of players operating in one particular industry: big finance.
The financialization of the economy gave Wall Street primacy over the productive economy. Financiers drove the consolidation of various industries into fewer and fewer hands, harvesting billions of dollars first through the sell-off of productive assets in a mania of mergers, private equity, and leveraged buyouts, and then through global labor arbitrage as they drove (what was left of) America’s industries offshore.
Wall Street bet on substituting well-paid American labor with Communist China’s regimented cheap labor and replacing sales to a (once) prosperous American middle class with sales to China’s managerial class.
Affinity to one’s place of birth, fellow citizens, or culture did not fit in their MBA spreadsheet.
They first justified the calculus that created the largest transfer of wealth in human history with the Cobdenite utopian fantasy that as China grew more prosperous, it would also become more democratic, less militaristic, and so forth.
When that outcome did not materialize, the financiers found a new rationale: manufacturing (or coding or whatever) should be done in China because … shareholder value! Boards of directors of publicly traded companies demanded it. Venture capitalists forced startups to accept it.
The slick telegenic sharks of Shark Tank were so cocksure of the prevailing conventional wisdom they told a pickup truck driving entrepreneur committed to hiring Americans to build his product, “Get lost.”
And as big banks gobbled up smaller regional banks, lending to local manufacturers—the backbone of what was once the U.S. manufacturing supply chain—dried up.
Meanwhile, the management consultants, financiers, and politicians in both parties told us working with China was a win-win. We were beyond the era of competition; this was now a non-zero-sum game.
Wrong again. It is zero-sum.
Every dollar invested in China is a dollar not invested in America.
Every dollar invested in developing the skills, talents, and workforce of China is one not developing the skills, talents, and workforce of America.
Nor can we kid ourselves and believe an ascendant China will do the job of building up America. If you think that’s credible, watch “American Factory.”
The Obamas’ Oscar-winning documentary shows the clash of Chinese Communist authoritarianism and American values when a Chinese company takes over an American auto parts factory.
That takeover occurred thanks to the Obama Administration’s Wall Street-driven auto industry bailout. The financiers who engineered that bailout believed it didn’t matter who owns factories or even where they are. If the spreadsheet says it’s “more efficient” to make widgets in China, so be it.
Michael Boskin, chairman of the Council of Economic Advisers under President George H. W. Bush, captured the worldview from beneath a green eyeshade perfectly when he declared, “It does not make any difference whether a country makes computer chips or potato chips.”
But now we’ve learned what we should have known all along. Of course it matters.
And it especially matters when a hostile foreign power has a monopoly on those computer chips, medicines, and other essential commodities.
Fact is, choosing to invest in China versus the United States is not a simple dollars-and-cents, bottom-line calculation. Certain “externalities” enter into the equation. Externalities such as national security. Externalities such as the continued existence of the United States. Externalities such as the continued existence of freedom of thought, freedom of religion, and individual liberty in this world.
By now it should be crystal clear to anyone but the willfully blind that the communist party ruling China holds and promotes values antithetical to our own.
It does not believe in free speech or God. It believes it should control every aspect of life and has constructed a technological surveillance apparatus to enforce the subordination of individuals to the state, euphemistically termed “the harmonious society.”
Even worse, the Chinese Communist Party is not content with imposing its totalitarian vision just on its own citizens. It is intent on exporting its governance model to the rest of the world.
Beijing demands allegiance from other governments and anyone it does business with including most notably American businesses. We’ve seen that with the NBA, Google, and Hollywood among others.
We must disabuse ourselves of the notion that the Chinese Communist Party is in any way friendly to our way of life.
China wants to replace the United States as the world’s superpower. It wants the world to emulate its totalitarian model, not American ideals of individual liberty.
We know this because China says so.
The late Israeli prime minister Menachim Begin said when the enemy tells you he wants to destroy you, believe him. Don’t doubt him for a moment.
China has told us what it wants to do. Are Wall Street and Washington listening?
Curtis Ellis is the Senior Policy Director for America First Policies.