Mao Exonerated – by Chinese Capitalism

How much more foolishness from the Bush Administration can we expect before next year’s elections?

US Treasury Secretary John Snow’s visit on the heels of the DPRK talks was a failure. He met with a few toadies and was sent on his way amidst a hail of protest from Chinese and foreign economists who see a call for the appreciation of the yuan as a politically motivated blunder ensuring mutual destruction.

This article by analyst Jack Crooks puts it into good perspective, as does this one in the American Prospect.

What companies all over the world have realized and what the Bush Administration either doesn’t know or is choosing to ignore, China is engulfed in raw capitalism. The rawest form, the like of which the US hasn’t seen since the early 1900s.

The government cannot force even the most basic economic function: taxes. 96 of the 100 richest men in the PRC have never paid taxes and there are dozens of businessmen on the lam, dodging the tax authorities.

Labor conditions, though, provides the real picture of capitalism in China. The NYT has run a series complete with multimedia on the plight of factory workers and migratory peasants and the Washington Post has covered it as well. The mainstream media has caught on, why not the politicians?

These migrants are reason why American workers are out of jobs. I have written often of pipe puffin peasants chiseling stone of cliffs and chipping them down into blocks, or carting truckloads of garbage on an old bike, or hawking miscellaneous trinkets and toothbrushes on the streets. They call out in a nasal voice and whip out rhymes. Most live on the construction sites in temporary shacks. Many of the "soft-ear" (relating to the power of a man’s wife) bike taxis sleep on the bikes or in the parks.

What they all have in common are paltry wages and a tendency to save. Construction workers building a new class room building with administration offices and such in Sichuan University get paid 40rmb per day – the foreman might get as much as 1000rmb a month. Rickshaw drivers, bike taxi fellas and garbage-haulers get a few hundred a month. Barmaids maybe 600rmb; more often than not the boss rents out a small room for several employees and pays a low salary while demanding 12-14 hours shifts in return. (exchange rate is roughly 8.25rmb = $1)

One enlightened Chinese economist offered the Bush Administration an alternative to whining for a stronger yuan: Support the Little Man.

The US call for free trade all over the world is being answered. Economics even a baffled layman such as myself can understand call for economies to focus on comparative advantages. China’s advantage lies in its population. Mao’s ideas on this matter have been exonerated, for the time being.

Wages will not increase anytime soon. Every big supermarket in China, from Trustmart to Carrefour to the "People’s Gigantic Super Mall" has an army of identically clad women standing around looking bored or chatting amongst themselves. Occasionally someone needs to be helped, then its back to money for nothing. There is no shortage of young people from the countryside or the "suburbs" with little education and nothing else to do with themselves.

Chiseled old peasants in Mao-era blue or fatigues line up to carry heavy bags of concrete or dig up the foundation of a building he helped build last year.

Along with the sweat and blood of the migrants, Foreign corporations are happy to choose amongst the thousands of computer programmers, engineers, MBA graduates and other desirables pouring out of China’s universities every year.

Chinese students don’t have the luxury of studying Cultural Studies and Comparative Literature for four years. The majority of Chinese students are very pragmatic and focused, if not necessarily ecstatic, about their future careers. They study the latest design software as diligently as they study English – because the goal is security and stability and, if luck prevails, fortune.

Western students have been rebelling en masse against market place-influenced educations since the 1960s. So much so that the companies have chosen to go to the universities instead of picking amongst the best applicants. In Asia and India, foreign companies have rediscovered this luxury.

That’s why my new "hometown" can land this contract with Intel and many more in the future.

This is also why the Bush Administration will have to find another red herring to wiggle in front of an increasingly disgusted public.

Read more by Sascha Matuszak