A sponsored Quartz post from the Lee Kuan Yew School of Public Policy: “Asia will soon be the world’s economic center—if it isn’t already” looks at the rise of nationalism:

In the wake of Brexit, ascendant European nationalism, and the US elections, much has been written about populism’s threat to global trade growth and the international economic institutions established after the Second World War. There are a number of explanations for the turn inward. Many have blamed growing economic inequality within developed economies—some blame outsourcing or technological transition.

The post then notes falling income inequality may be a challenge for the U.S. and Europe:

Others posit that a decline in inequality may be a motivating factor. Danny Quah, Professor of Economics at Singapore’s Lee Kuan Yew School of Public Policy, and Kishore Mahbubani, the school’s Dean, blame populism’s rise on improved income equality across all nations. During the 1990s, a 70% income gap stood between emerging economies and the G7. That gap shrunk to under 14% in 2016 and will disappear by 2020.

For those born in the 1940s, experiences in the U.S. labor force in the 1960s and 1970s framed their worldview. The United States was the world’s powerhouse economy after World War II, especially as the world’s number 2 and 3 economies Germany and Japan had been bombed flat, as had France, England, and Italy. In 1950 the U.S. produced 80% of all automobiles in the world, by 1960s US auto manufacturing was about half world production, and by 2000 the US produced 4 million more cars a year than in 1980, but that was one-fifth of world production. By 2015 twice as many cars were manufactured in China than in the U.S. and some 90 million were produced worldwide (according to Wikipedia page).

Screen Shot 2017-02-11 at 7.39.16 PMIf you look at 1950 in the Infogr.am chart at right from you can see how dominate the US (green line) economy was from the 1950s to 1980s.

It should be no surprise that everyday Americans along with politicians and military leaders growing up and living through those decades believed the U.S. to be the world’s major economy and society. Though the US economy continued to expand, faster economic growth in China led many to believe something had gone wrong with the U.S> economy, and many blamed “unfair” trade deals.

The chart seems to show the US economy declining after the 1950s, but that is an illusion. Instead, the US economy has expanded since the 1950s and 60s, with occasional recessions and slowdowns. From the 1960s on, Germany, Italy, and Japan grew rapidly, then later Taiwan, Hong Kong, South Korea, and the UK expanded (and Italy slowed down). The economies of China since 1980s reforms and India since 1990s reforms took off as well.  International investment and trade were  major drivers of rapid economic expansion.

In a presentation some years ago Michael Cox of Southern Methodist University asked teachers to imagine five people dropped in a jungle, and just one had a machete. The machete, a tool analogous to industrial revolution in the U.K. and U.S.–enables the lucky owner to cut a path through the jungle. But when the others pick up that trail, they can run faster and catch up. The complex technologies and factories developed in the UK, Western Europe, and the U.S. can and were duplicated for production in Mexico, South Korea, and China.

The blue line of China in the chart above soars from hundreds of millions of Chinese working long hours in “duplicate” Chinese factories, but also from new firms and factories developed by Asian entrepreneurs with new technologies and innovations (which then benefit consumers in China and around the world).

The Quartz article continues:

Whether US or Asian, industries that succeed will be those that don’t pit humans against machines but use the latter’s speed and precision to let humans perform better. Asia has learned that lesson—it’s the global hub for advanced manufacturing and sophisticated logistics.

What’s more, China is now the world’s largest consumer market for smartphones and other gadgets. And regardless of East or West, shrewd businesses will always look to capitalize on the opportunities available to them. Asia holds many.

The diffusion of manufacturing and agriculture technology have helped raise hundreds of millions out of extreme poverty over the last few decades. The people of Peru in South America have more recently found the trail and are advancing rapidly, exporting goods to the U.S., China and other Asian consumers. “Peru Leads Region in Putting New Faith in Global Trade” (Wall Street Journal, February 8, 2017), notes:

In Peru, which has emerged as South America’s strongest free trade proponent, thousands of workers are planting asparagus, mangos and peppers for export as part of a diversification effort to lessen reliance on mining. China is a key consumer. …

Increased trade and foreign investments have been central to Peru’s economic growth, allowing 9 million Peruvians, about a third of the population, to escape poverty since 2004. In recent years, Peru implemented free trade accords with the U.S., China and the EU. …

“Our big bet is on Asia,” said Luis Torres, the head of exports at government agency, PromPeru. “Blueberries are going to be the next star export, along with asparagus, avocados, citrus fruits and grapes.”

Juan José Gal’Lino, the executive director of Delaware-based Agro Vision Corp., said his workers at Olmos will ship the larger blueberries to China, where he says consumers pay a 30% premium for the bigger fruit. Smaller berries will continue to be exported to North America, where consumers don’t care so much about the size.

Screen Shot 2017-02-11 at 8.59.27 PMPeru is following the successful path opened by Chile since the 1990s. Chile was among the poorest country in South America after trying protectionist and socialist policies. A few decades after reducing trade barriers and welcoming foreign investment , Chile is South America’s wealthiest country, continues to expand agricultural exports (“Chile aims to double agricultural exports in a decade,” AgPro, November 5, 2015):

Chile, the world’s top exporter of fresh grapes and blueberries, posted record exports of food, including fruit, livestock, wine and salmon, of just over $16 billion last year. That was about three times what it shipped abroad 10 years ago.Screen Shot 2017-02-11 at 8.29.50 PM

According to Fred Landis (Investigative Reporter) on Quora: Chile has fallen from “one of the most egalitarian countries in Latin America to one of the most unequal.” He argues that President John F. Kennedy promoted egalitarian reforms which Chile’s socialist government expanded, but that President Nixon the villain, directing the CIA to help overthrow the Chilean government. But economic policies matter apart from political turmoil, Though income inequality is likely far higher in Chile now than it was in 1960, average income is far higher too. For everyday people in Chile, average income per person in 1960 was just $550 per year.  Yet by 2013 people in Chile enjoyed  average income of $16,000 per year, according the the World Bank.  Inequality can be far higher in a market economy, but even the very poor in Chile have higher incomes than people did on average in 1960.

The story so far: reducing trade barriers and welcoming foreign investment helped Chile’s economy grow rapidly, raising average per-person income from $550 a year in 1960 to $2,400 in 1990, to near $13,000 a year in 2010. Earlier posts discussed similar rapid economic growth in China after the economy was opened to private enterprise, international trade and investment

Screen Shot 2017-02-11 at 8.52.47 PMAverage income per person in China rose from $70/year in 1960 to $330/year in 1990, to $940 in 2000, to $4,340 in 2010, and to $7,930 by 2015. Income inequality in China increased a some grew wealthy far faster than average. But income inequality between Chinese and U.S. workers decreased, as productivity in China’s textile mills and factories rose thanks to access to modern technologies.

In Chile, Peru, and China before market reforms, incomes of everyday people were more equal but also far, far lower.

 

 

 

 

In the news: ” U.S. Ends Ban on China Trade; Items Are Listed“:

The President’s action lifts a 21-year-old embargo against trade with China permitting selected exports to China and the import of goods from China on the same basis goods from other Communist countries are admitted.

Why did the U.S. government relax trade restrictions with China, the USSR, and communist countries in Eastern Europe in the 1970s, but not with communist Cuba?

In an April 19, 1971 press conference, President Nixon said:

“If the want to trade … we are ready,” he said. “If they want to have Chinese come to the United States, we are ready. We are also ready for Americans to go there, Americans in all walks of life.

Chinese could visit America and Americans could visit China. Why weren’t similar doors opened for travel between Cuba and the U.S.?

By the time of the Cuban revolution United States had a long history of  “engagement” with Cuba. The U.S. military occupied Cuba from 1989 to 1902 and again from 1906 to 1909 and again from 1917 to 1922. U.S. firms controlled much of Cuban sugar and other industries.

Cuba’s political and economic history is complicated, and U.S. interventions in Cuba, as in many other countries, led to unexpected and unwanted consequences.

“Rum and Revolution”, a Washington Post review of the 2008 book, Bacardi and the Long Fight for Cubanotes problems with “help” from the U.S.:

But Cuba’s independence was stunted by the heavy-handed United States, which doubted that the republic (over half of whose population was black or mulatto) could govern itself. The United States aided Cuba’s fight but then re-occupied the island in 1906 at the request of the feckless Cuban president, Tomás Estrada Palma. A bitterly disappointed Emilio [Bacardi] left government and returned to Santiago, where he penned a 10-volume history of the city and tended his business affairs for the remainder of his life.

Some years ago a war veteran mentioned returning to Ft. Lewis, a Washington state military base, from Korea and being recruited by federal agents for a new assignment in Cuba. I asked: “So we were trying to get rid of Castro even then?” No, he said, he would be helping put Casto into power to reform the corrupt Batista government.

That didn’t turn out well.

This New York Times review (April 23, 2006) of The Man Who Invented Fidel explains how Fidel Castro’s reputation as a democratic reformer was shaped by NYT reporter Herbert Matthews who interviewed Castro in the mountains:Screen Shot 2017-02-09 at 2.18.34 PM

The front-page scoop that followed and two additional articles predicted “a new deal for Cuba” if Castro’s insurgency won and reported that the romantic revolutionary was no Communist; in fact, the local Communists opposed him. The exclusive was a sensation at the time and transformed Castro’s image from a hotheaded Don Quixote into the youthful face of the future of Cuba. Unfortunately for Matthews and The Times, it didn’t age well….

DePalma shows that Matthews was a determined liberal but not a faker like Walter Duranty, the Times correspondent who won a 1932 Pulitzer Prize for his fawning coverage of Stalin and was probably in league with the Soviet secret police. Matthews’s articles were for the most part factually accurate. But he comes across as a self-righteous and credulous analyst who sided with those who gave him access and then refused to reassess, whatever the changing facts. While other reporters who also misread Castro toughened their coverage after he began ordering summary executions, Matthews stuck stubbornly to his original myth.

Okay, maybe that’s seems too much background to the long-standing trade and travel embargo with Cuba. But Castro’s communist revolution including seizing land, buildings, and factories owned by U.S. citizens and companies.

Exports from Cuba after the 1959 revolution would have been seized and tied up in litigation since they camp from farm lands or factories that U.S. Courts would support as seized illegally.

In Talks Over Seized U.S. Property, Havana Counters With Own Claim” (New York Times, Dec 13, 2015) reports:

Some of the thorniest conversations in the long road toward full relations between Cuba and the United States have only just begun in recent days: The two sides are sitting down for the first time to discuss the American properties Cuba confiscated decades ago.

The very idea of compensation for property and businesses seized in the wake of the Cuban revolution sent a quiver of excitement down the backs of the thousands of people who lost everything from sugar mills to family homes to oil refineries.

People started dusting off yellowing deeds. Lawyers were called.

Similar property confiscation problems followed the fall of communist governments in Poland, Hungary, Romania, and other Eastern and Central European countries.

The Cuban government has claimed it is due compensation for income lost due to the long-standing trade embargo, plus from damage caused by the Bay of Pigs invasion. Hungary could on similar grounds request compensation from Russia for the USSR’s invasion and 1956 suppression of the Hungarian Uprising (Freedom’s Fury is documentary on uprising and bloody Olympics match between Hungary and USSR).

Opening trade relations with Cuba has another connection with similar challenges opening trade with China:

In 1979, China agreed to pay $80 million to a China Claims Fund, which allowed American claimants 39 percent of the value of their lost properties, according to the Brookings study. Vietnam, to normalize relations with the United States, agreed in 1995 to apply its assets frozen by the United States government to pay claimants 100 percent of the principal and 80 percent of the interest they were owed.

So, in summary, property claims from the Cuban revolution can be dealt with as they have in other similar upheavals. Time magazine’s Oct. 19, 2015 article “The U.S. Trade Embargo on Cuba Just Hit 55 Years,” begins:

It’s been exactly 55 years since President Dwight D. Eisenhower’s State Department imposed the first trade embargo on Cuba on Oct. 19, 1960. The original embargo covered all U.S. exports to Cuba except for medicine and some foods. President John F. Kennedy expanded the embargo to cover U.S. imports from Cuba and made it permanent on Feb. 7, 1962.

Although relations between the two countries warmed this year, the embargo is still in place and an act of Congress is required to remove it.

The origins of the embargo go back even further, to when Fidel Castro came to power Jan. 1, 1959. He quickly lost American support as he publicized private land and companies, and imposed heavy taxes on imports from the U.S. In the first year of Castro’s regime, U.S. trade with Cuba decreased 20%.

(When Time reporter writes “publicized private land and companies” he doesn’t mean advertise or promote.)

So ending the embargo with Cuba requires a procedure to address past seizure of U.S.-owned assets.

Also, according to “Tillerson would recommend veto of bill ending Cuba embargo,” Washington Examiner, Jan 11, 2017)

Secretary of State nominee Rex Tillerson said Wednesday that he wouldn’t support legislation to end the U.S. embargo against Cuba, a major goal of the Obama administration that now seems likely to go unfulfilled for the next several years.

The Obama administration did all it could to ease trade and travel restrictions against Cuba, but the embargo against the island nation is federal law, and can only be undone through an act of Congress. But Tillerson indicated he wouldn’t support any such move on his watch.

 

U.S. federal government policies with the People’s Republic of China (PRC) involve trade and investment plus travel for tourism, education, and employment, plus migration. People and firms in the U.S. make agreements (contracts) with people and firms in China to import or export goods and services, and to invest in companies that produce goods and services. Governments make rules and regulations limiting these investment and trade agreements between Chinese and U.S. people and firms.

Trade agreements generally restrict as well as promote trade and investment in various ways, and are influenced by lobbyists trying to protect the interests and advance the agendas of various business, union, and environmental groups.

Current and proposed trade and investment agreements tend to be complex and confusing and the interests of both China and the U.S. could be advanced by simplifying or abolishing some.

haikou-95951_1280Trade agreements like the Trans-Pacific Partnership (TPP) are shaped by interest groups advocating various social, labor, and environmental agendas. The TPP excludes China as a way to promote these social, labor, and environmental policies in China.

NSDA debaters have U.S./China policy reform as their 2016-2017 resolutions:

Resolved: The United States federal government should substantially increase its economic and/or diplomatic engagement with the People’s Republic of China. (NSDA website link)

NCFCA debaters has a similar topic for the 2016-2017 school year:

Resolved: The United States Federal Government should substantially reform its policies toward the People’s Republic of China.

And posts here started a year ago for the similar Stoa Asia Trade resolution:

Resolved: The United States federal government should substantially reform its trade policy with one or more of the following nations: China, Japan, South Korea, Taiwan. 

Early posts on the Asia Trade topic emphasized that these listed economies, along with the U.S., have become tightly integrated over the last two decades. For example Foxconn, a Taiwanese firm that assembles Apple and other gadgets, is China’s largest private employer. South Korean and Japanese firms have vast investments and manufacturing operations in China. General Motors sells more cars in China than in the U.S. And in March, McDonald’s announced:

… that in the next five years it plans to add about 1,500 restaurants in China, Hong Kong, and South Korea—up from its current count of 2,800—including more than 1,000 in China alone.

For an overview of major U.S./China policy debates, I recommend three articles (and recommend earlier posts).

On the the economic benefits of trade: Douglas Irwin, “The Truth About Trade
What Critics Get Wrong About the Global Economy” in the July/August, 2016 issue of Foreign Affairs. Valuable analysis and recent history that answers most concerns and claims in the next two articles that are critical of today’s mostly open trade policy with China and other Asian countries.

This November, 2015 post in The Conversation argues: “The Trans-Pacific Partnership poses a grave threat to sustainable development.” The key here is that critics of the TPP trade agreement want it to include “enforcement mechanisms” to advance U.S. policy preferences for gender, labor, environmental, and climate issues.

The labor-backed Employment Policies Institute says trade with China has caused extensive job losses and wage stagnation in the U.S.: “Hearing on U.S.–China Economic Challenges: The impact of U.S.–China trade” (February 21, 2014).

These three articles should give debaters a sense of the claims and clashes with U.S./China policy reform proposals.

(Revised September 4, 2016)

Additional notes and links to recent posts:

Pdf with more recent China posts: ET Report-JanuaryChina2017

Listed on NCPA Debate Central.

• China and Cuba Trade, Labor, and Migration
What issues should be on the table when negotiators from two governments hammer out what trade rules are relevant and reasonable?  …  A couple things connect the China policy topic and the Cuba Public Forum topic. First, the refugee policy that allowed those smuggled from China to be legal citizens of (then British) Hong Kong as soon as they touched land. … U.S. policy was similar and allowed those escaping communist Cuba, once they made it to U.S. territorial waters, to stay legally…revise in 1995 to a “wet foot/dry foot” policy. Then Obama Admin. shifted policy again, as part of normalizing relations with Cuba

US/China Engaging in Nationalist Policies
Apart for the money governments spend directing research and development to area they deem strategic (ballpoint pens?), such subsidies and policies stoke nationalist responses in Japan, the U.S. and Europe…

• Bootleggers and Baptists Agree to Restrict Trade with China
When the President and Congress consider trade legislation, a wide range of interest groups gather to advance their agendas. These agendas are not always obvious, and sometimes corporate and union interests misdirect the public about their motivations.

• For Still-Poor China, Coal Pollution from Home Heating
The Chinese government energy policy goals are to reduce air pollution around Chinese cities, and to reduce CO2 emissions in order to address climate change. These goals overlap, but are not the same. Wind farms and solar installations don’t emit air pollution, but neither does less-expensive natural gas combined-cycle power, which can be located closer to cities and customers. New coal power plants emit less air pollution, especially compared to the dense pollution from antiquated coal-fired power and home coal burning.

• US/China Farm Wars
In “United States Challenges Excessive Chinese Support for Rice, Wheat, and Corn” (September, 2016), the Office of US Trade Representative announced new action against China. … The U.S. government also subsidizes US farmers growing and exporting rice, wheat, and corn. Comparing government between countries is complex. … reducing and reforming farm subsidies would help rationalize commodity farm production in US and China, reduce environmental harms, and reduce financial burdens to taxpayers in both countries.

• Mismanaged Fisheries Key to South China Sea

Case outline with evidence for reforming Section 421 Tariffs. Dept. of Commerce labels China as NME (non-market economy) which opens door for US special interest groups to secure arbitrary trade restrictions.  Link to pdf at page.

There is no more important bilateral relationship than that between the United States and China. Yet the Congressional Research Service warns that ties have “become increasingly complex and often fraught with tension.” Relations appear likely to become even more fractious with the election of Donald Trump as president. Every four years the People’s Republic of China (PRC) becomes a presidential election issue, but Americans deserve [more on] U.S.-China political and economic relations than candidates’ sound-bytes.

• China’s Sustainable Agriculture: “the biggest threat to humanity?”
“How Antibiotic-Tainted Seafood From China Ends Up on Your Table,” (Bloomberg Businessweek, December 15, 2016), describes the traditional “sustainable” Chinese use of animal waste to feed fish. Since the beginning of agriculture, animal waste has fertilized crops (it’s the organic way!). But the addition of antibiotics to boost animal size and disease resistance shifts the microbe ecosystem in animal waste. Some microbes gain resistance to antibiotics, and are then flushed into Chinese fish ponds, adding antibiotic resistance to microbes in fish later shipped (or transshipped) to the U.S.. (read more)

“Foot Soldiers of China’s Shopping Boom” (New York Times, Wednesday, Feb. 1, 2017, p B1, online as For Couriers, China’s E-Commerce Boom Can Be a Tough Road, Jan. 31), looks at the low wages and long hours for Chinese delivering packages:

But for the couriers — who are largely unskilled workers from China’s interior — the work can be low-paying and difficult. It is coming under scrutiny from labor activists and legal experts who say many couriers face punishing hours and harsh working conditions.

Nearly one-quarter of them work more than 12 hours a day, seven days a week… A majority work more than eight hours a day each day of the week.

Migrants from rural China also work long hours at low wages at factories making goods for export to the United States. Should U.S. trade agreements include minimum wages and maximum hours for workers in China, Mexico, or Cuba?

A challenge for international trade agreements is scope. What issues should be on the table when negotiators from two governments hammer out what trade rules are relevant and reasonable?

hammer-1629587_640The long delayed and now defunct Trans-Pacific Partnership (TPP) was criticized by some for including labor and environmental regulations, not just trade rules. The TPP was criticized by labor unions and environmental organizations for not having strict enough labor and environmental regulations.

In Mexico, China, and Cuba, labor rates are far lower than in the United States. And not just labor rates, but rules about how many hours a day or a week employees can work, and what benefits employers are required to pay.

NSDA debaters have a US/China engagement topic, and the February Public Forum topic is:

Resolved: The United States should lift its embargo against Cuba.

The last days of the Obama Administration ended the long-standing wet-foot/dry-foot policy for Cubans (see below), and the Trump Administration wants to build a bigger wall along the Mexican border, renegotiate trade agreements between the US and Mexico (NAFTA), and also with China. The stated goal is to restore jobs lost as companies automated and shifted manufacturing operations to Mexico and China.

Lifting the trade embargo with Cuba would open doors to similar job displacements as US firms open new factories and upgrade agriculture in Cuba. Cubans are very poor after a half-century of communist rule, so Cuban demand for goods produced in the US will be minimal.

China and Mexico posed similar trade and investment costs and benefits. US consumers buy lower-cost imported goods but US workers fear manufacturing work shifting south of the border or overseas to China. Factories closing in the US are easy to spot and report on the evening news. Families are hurt when jobs disappear. Harder to see and report are the widespread gains from less expensive clothes, furniture, appliances, and cars lower and middle income Americans can purchase. The gains are disbursed and rarely appear on the evening news or morning New York Times.

Cheap goods were imported from Japan, Taiwan, Hong Kong, and South Korea in the 1960s and 1970s, made by very poor people working long hours for low wages. But these jobs allowed tens of millions to escape poverty to relative prosperity. The same prosperity gains are in process now in Mexico and China, though not yet in Cuba.

Johan Norberg‘s 2003 documentary looks at the dynamics of international trade in Taiwan, Vietnam, and Kenya. This first segment shows some of the history of Taiwan where:

…just thirty years ago people…were poorer than many Africans today. Malnutrition was widespread and there were no natural resources. Today its people are as rich as the Spanish.

The New York Times article cited above quotes a courier from rural China about his job and long hours:

“I’m here to make money,” said Mr. Zhang, a 28-year-old former coal miner from Shanxi Province who is saving money to build a home, widely seen in the countryside as indispensable in attracting a wife. “If I’m not diligent now, I’m going to regret it. I’m almost 30 and still single.”

How do we compare Mr. Zhang’s long hours delivering packages in a city to the life he had mining coal in rural China? “The World’s Deadliest Profession: Coal Miners Pay for China’s Economic Miracle” (TheWorldPost, March 4, 2012) offers a glimpse of rural China:

“… Everywhere in rural China poor people, who can no longer sustain themselves as farmers, rush to coal mines, where wages are about equal (7 to 12 dollars a day) to what they would be paid in factories in the big cities. But in the cities, workers have a rough life and get cut off from their families and homes, so they prefer to stay in their village and work in the mines. Sometimes three generations in one family have worked the same mine.” 

The Economist reports some progress in “Shaft of Light: The coal that fuels China’s boom is becoming less deadly to extract” (July 18, 2015), but work as a city courier, even with long hours, is likely preferred to rural coal mining by many young people.

The New York Times article further takes the opportunity to compare China’s low-paid couriers to growing “gig-economy” jobs in the U.S.:

Labor standards in the industry vary widely, but many couriers work under arrangements that might, for example, provide no overtime pay or no employer contributions to their government health care and pension benefits. Just as in the United States, where Uber drivers and many others work as contractors, those arrangements raise questions about what defines work and employment.

If future legislation or trade agreements allow government in China or the US mandate higher wages, benefits, or shorter work days, they will raise costs and lower demand for these jobs and services.

We can wish for higher wages and more benefits for Uber and package-delivery drivers in the U.S. as well as in China. But mandating higher wages and benefits doesn’t automatically raise worker productivity.

Across China some 50% of the working population still live in rural areas with average annual incomes of just $2,000. Migrant laborers in Chinese factories earn similar incomes on average to couriers, about $6,000 a year. Migration is how poor people can most quickly and dramatically raise their incomes, whether from rural China to cities, or from China, Cuba, or Mexico to the United States.

According to a study cited in the New York Times article, Chinese couriers earn about 15 cents per package delivered:

Most couriers make about $300 to $600 a month, according to the Jiaotong study — an amount roughly equal to the wages of China’s migrant factory workers. They can deliver 150 packages on a weekday, drivers said, sometimes helped by making mass deliveries to office buildings.

New legislation or trade agreements that try to force earnings up for delivery or factory workers in China will result in many returning to even lower-pay work in rural China.

In the Izzit.org documentary A Taste of Chocolate, Jimmy Lai describes his first days of factory work in 1960 after being smuggled as a 13-year-old into capitalist Hong Kong from communist China. The YouTube video below is queued to 2 minutes 36 seconds, when Jimmy Lai is introduced. At 8 minutes in, Jimmy Lai describes arriving after all night in a fishing boat crowded with others escaping mainland China:

And by the afternoon we arrived in Kowloon. And at that time, when you arrive in Hong Kong you touch base, you’re legalized… You’re considered legal. I was taken to my mother’s sister and she paid $370 dollars for the smugglers. Later I found out how poor my mother’s sister was…

The narrator continues: “Their poverty meant that Jimmy was sent to work the same night he arrived in the Kowloon District of Hong Kong.”  And Lai remembers that first day:

I was taken to a factory to work as a odd-job worker. And I was very happy in the morning. I smelled a lot of food that I had never smelled, the great aroma of food. And the manager gave me ten dollars. That… that was a lot of money at that time. I was very happy, as if I had arrived in Heaven. Although as a young kid we had to wake up before seven. We got to sweep the floor, finish everything, open the door before eight o’clock. People come, and then we work until like ten o’clock, but it was a very happy time. It was a time that I know I had a future… 

A couple things connect the China policy topic and the Cuba Public Forum topic. First, the refugee policy that allowed those smuggled from China to be legal citizens of (then British) Hong Kong as soon as they touched land.

U.S. policy was similar and allowed those escaping communist Cuba, once they made it to U.S. territorial waters, to stay legally. The Clinton Administration revised this in 1995 to a “wet foot/dry foot” policy. After 1995  those escaping Cuba had to get their feet on dry land before they could stay in the U.S. legally. Then in early January the Obama Administration shifted Cuban immigrant policy again, as part of normalizing relations with Cuba: “Obama Ends Exemption for Cubans Who Arrive Without Visas,” (New York Times, Jan. 12, 2017)

President Obama said Thursday that he was terminating the 22-year-old policy that has allowed Cubans who arrived on United States soil without visas to remain in the country and gain legal residency, an unexpected move long sought by the Cuban government.

Countries like the United State, China, Mexico, and Cuba engage through voluntary exchange (trade), travel and migration, as well as through international capital flows (investment). Cubans were coming in larger numbers to Mexico and once they set foot in the U.S. Embassy they could stay in U.S. legally.

Many from China also come to Mexico on their way to the U.S. “California sees surge in Chinese illegally crossing border from Mexico” (Los Angeles Times, June 7, 2016) reports:

Between October and May, the first eight months of the fiscal year, Border Patrol agents in the San Diego sector apprehended an estimated 663 Chinese nationals, compared with 48 in the entire previous fiscal year and eight in the year before that, according to data provided by U.S. Customs and Border Protection.

People from poor countries, especially young men, are often willing to migrate long distances for a chance to make a better live for themselves. Wage and work rule restrictions slow the process of poor people working long hours to escape poverty.

The NSDA Lincoln-Douglas Debate topic for 2017 Jan/Feb is:

Resolved: Public colleges and universities in the United States ought not restrict any constitutionally protected speech.

“Public” (government-owned) college and universities receive state and federal funding (most private universities also receive significant state and federal support via student loans, research grants, and tax-deductions on contributions).

The Constitution’s First Amendment bans any laws restricting freedom of speech:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Campus speech is in the news with the recent riot at the University of California at Berkeley. How should universities respond to student, faculty, or guest speakers whose talks are deemed by some as intolerant, insulting, or provoking outrage? Well, Congress is barred from making laws “abridging the freedom of speech.”

Did Congress or the State of California pass laws restricting freedom of speech at UC-Berkeley?

FIRE (Foundation for Individual Rights in Education) is critical of campus speech codes and litigates against them. FIRE’s “What Are Speech Codes?” page explains:Screen Shot 2017-02-03 at 8.59.15 AM

FIRE defines a “speech code” as any university regulation or policy that prohibits expression that would be protected by the First Amendment in society at large. Any policy—such as a harassment policy, a protest and demonstration policy, or an IT acceptable use policy—can be a speech code if it prohibits protected speech or expression.

FIRE’s statement on the Berkeley riots (February 2, 2017):

FIRE condemns both violence and attempts to silence protected expression in the strongest terms. We also urge that decisions affecting long-term policy be made only after all the facts are gathered and with appropriate opportunity for reasoned discussion.

Last week, Berkeley Chancellor Nicholas Dirks wrote a letter to the university community rightfully refusing demands that the university cancel the event ahead of time. Dirks pointed out his disagreement with Yiannopoulos’ views, but insisted that “[c]onsistent with the dictates of the First Amendment as uniformly and decisively interpreted by the courts, the university cannot censor or prohibit events, or charge differential fees.” He also warned those threatening disruptive protests in an effort to shut down the speech that the university “will not stand idly by while laws or university policies are violated, no matter who the perpetrators are.”

(Also, Sourcewatch page on FIRE here.)

But though the Berkeley administrators and campus police tried, they were overwhelmed by protesters. Then President Trump joined the controversy. The FIRE post continues:

This morning, President Trump weighed in with a tweet reading, “If U.C. Berkeley does not allow free speech and practices violence on innocent people with a different point of view – NO FEDERAL FUNDS?” It is true that, under current law, public universities that enforce blatantly unconstitutional speech codes and private universities that violate their own promises of free speech do not face the same potential loss of federal funding for censoring campus speech that they do for violating other federal civil rights laws and regulations. However, FIRE has so far seen no evidence that Berkeley as an institution made any effort to silence Yiannopoulos.

Shikha Sood Dalmia, a Senior Analyst at the Reason Foundation, posted on Facebook:

Any honest condemnation of the violence at U-C Berkeley has to begin by condemning also the extremists who invited Milo [Yiannopoulos] to speak in the first place. What IS the point of having this loathsome creature on campus except to bait and incite and flex your muscles in Trump’s America?

How do college administers decide who should be allowed to teach at or give guest talks on college campuses? Lots of presentations can sound controversial. That’s one way to get students’ attention.

I give talks on debate topics on college conferences organized by the Texas University Interscholastic League (UIL). UIL had a topic on campus speech codes a couple years ago, and in a session I asked students if anything said would be okay: “How about: A woman’s place is in the House…” Of course there was immediate commotion and noisy responses from students who wouldn’t be able to hear me continue “… of Representatives.”

Shouting down a speaker prevents audiences from hearing enough to make up their own minds. But audiences, especially students, can be drawn into worlds of violent and hateful ideas. Teachers and administers try to provide some guidance in high school and college classrooms and campuses. But what happens when teachers or college professors are accused of promoting violence…

An article on CNS News (Conservative News Service), titled “College Instructors Tell Students: America’s Founding Fathers Ran ‘A Terrorist Organization’” complains:

Instructors at the taxpayer-funded University of Colorado at Colorado Springs (UCCS) reportedly told students enrolled in their team-taught humanities class that America’s founding fathers ran “a terrorist organization” and used “violence and terror to influence opinions” in their fight for independence from Great Britain.

The CNS News post says: Benson and Lee compared the colonists’ revolt to modern-day terrorists. That may sound a controversial or hateful way to look at America’s Founding, but revolutionaries do use violence and the threat of violence to achieve their aims. They claim that the ends justify the means.

Though Hollywood is not our best source for history, Mel Gibson’s 200o movie The Patriot could have been titled The Terrorist. UK’s The Guardian was not amused, and explains in “The Patriot: more flag-waving rot with Mel Gibson” (July 23, 2009).

A more scholarly review is The Patriot: Movie Review, in the Journal of American History (Vol. 83, No. 3) which notes:

The most serious deficiency of The Patriot is its almost complete omission of the Loyalists. A significant segment of the population of the Carolinas and Georgia remained loyal, and much of the fighting there was a civil war between Tories and Whigs. Though Loyalist provincial and militia units constituted one-half of the British army in the South, the film portrays only one Loyalist soldier, Captain Wilkins (Adam Baldwin) in Colonel Tavington’s (Jason Isaacs) dragoons. …
The film gives the impression that Tavington’s regiment is British and that Captain Wilkins is the only Loyalist in its ranks. No other Loyalist soldiers appear in The Patriot.

Students may wonder why this post has drifted from constitutionally protected campus speech to patriots as terrorists in the Revolutionary War. My point is just that there is often more to controversial claims and stories, and suppressing the presentation and discussion of those stories limits our knowledge of the world.

College guest speakers or faculty with a talk on “America’s Founders as Terrorists” might get banned, fired, or shouted down before they can make their case. Students can disagree after hearing controversial claims about the past or present, but they are left living in narrow worlds without occasionally exposed to disruptive and sometimes illuminating ideas and claims.

Speech and debate competition is valuable for students to widen those worlds as they develop skills to research and articulate views as well as consider, evaluate, and agree or disagree with the views of others.

It is the mark of an educated mind to be able to entertain a thought without accepting it. Aristotle

Opposition to globalization has expanded and energized in the U.S. by both the Bernie Sanders and Donald Trump campaigns. “Globalization” sounds unappealing, like throwing goods and traditions from around the world in a blender and chopping them up. Consumers appreciate lower prices but worry about factories closing and “jobs being shipped overseas” to lower-paid workers in Mexico, China, Vietnam, or India.

Globalization, multilateral trade agreements,  and “the international order” are regularly attacked by populists and nationalists in the US and Europe. And also in China.

China leadership has shifted nationalist in recent years, as discussed in “China Protection Writ Large,” (Wall Street Journal, January 31, 2017, online title “With Pen Plan, China Etches Nationalist Economic Policy“):

Studies rank China’s economy, the world’s second largest, among the most closed. From cars to wind turbines, Beijing limits foreign participation in domestic production. Citing “food safety,” Beijing insists that almost all grains consumed in China are domestically grown, and sets artificially high prices to support bumper harvests. State media touts locally made consumer products including bidets and rice cookers.

The WSJ story begins with a discussion of Chinese state initiatives to fund Chinese steel firms to produce higher-grade steel, such as needed for the tip or point in ballpoint pens. (The WSJ article offers a nice video overview telling the story.) China’s Ministry of Science and Technology funded this “meaningful breakthrough”:

The ministry provided $8.7 million for the research, which Beifa undertook with state-owned Taiyuan Iron & Steel Group Co., China’s largest stainless-steel mill. By September, the mill produced its first fully-domestic ballpoint pen.

Fortune also runs a story “China Couldn’t Make Its Own Ballpoint Pens—Until Now” (Jan. 10, 2017), noting Chinese firms produce 38 billion ballpoint pens each year but import ballpoint pen tips from Japan, at a cost of $17.3 million a year.

Premier Li Keqiang first drew the nation’s attention to the pen tip dilemma in January last year, lamenting that China still relied heavily on imported high-grade steel despite producing more than half of world’s crude iron and steel. State media reported that Li’s inability to make the tips reflected badly on Chinese manufacturing in general.

The article says Chinese firms spent “half a decade of research” to produce the pen tips. So here is a problem with politically-directed nationalist policies. Divide the $17.3 million a year pen tip “savings” over 38 billion pens. Chinese firms making tips themselves may reduce costs by some part of $0.000455 (about 1/20th of a penny per pen).

Screen Shot 2017-02-01 at 8.39.44 AMThe Pen Addict reviews the top five ballpoint and other pens. The top rated ballpoint pens sell for $2.50 to $20 with $62 for the most expensive.

Probably there are better ways for Chinese ballpoint pen engineers to focus their attention than on that learning to make their own tips. A key challenge for ChineseScreen Shot 2017-02-01 at 8.42.01 AM firms is developing brands people worldwide will recognize and pay more for. But brand recognition usually follows innovation and marketing, not politically-directed manufacturing advances.

Why You Haven’t Heard of Any Chinese Brands” (The Atlantic, April 8, 2013) looks at the challenge China has faced developing brands:

Here’s a little thought exercise: Think of a Chinese brand. Any Chinese brand. Go on, I’ll wait. Give up? Don’t feel too bad: According to a recent poll conducted by HD Trade Services, 94 percent of Americans cannot think of a single brand from the world’s second-largest economy.

Strange, isn’t it? Japan and South Korea, countries China zoomed past in the GDP-rankings, boast globally-respected brands across a variety of industries. Even Sweden and Finland — mere minnows in comparison to China — offer IKEA and Nokia, respectively. Given China’s incredible transformation into an economic powerhouse over the past three decades, why doesn’t the country have more recognizable brands?

A key problem with nationalist policies follows from politicians supporting domestic “champions”– state-funded or subsidized firms state officials hope will succeed in the global economy. But governments have a poor track record choosing the best firms to support. Japan’s MITI tried for years to stop Honda from expanding from manufacturing motorcycles to cars, in part due to influence by successful and established Toyota and Nissan.

See also, China’s National Champions: The Evolution of a National Industrial Policy — Or a New Era of Economic Protectionism? (2013, pdf), which begins:

An increasing concern of foreign governments is the emerging pattern of industrial policies established by the government of the People’s Republic of China (PRC)…favoring Chinese state-owned enterprises (SOEs) at the expense of their foreign counterparts.1 According to the US Chamber of Commerce, concerns that the Chinese government is retreating on opening its economy to foreign direct investment (FDI) are at a 10-year high among US companies directly investing in China (Reuters, 2010).2

Apart for the money governments spend directing research and development to area they deem strategic (ballpoint pens?), such subsidies and policies stoke nationalist responses in Japan, the U.S. and Europe:

While President Xi defends globalization abroad, his nationalist policies favor state-run companies back home. Many foreign companies and governments say China unfairly restricts access to its markets while flooding markets with low-price exports such as steel, helping to stoke a populist backlash abroad against globalization.

[Update: new Foreign Policy article, “Surprise Findings: China’s Youth Are Getting Less Nationalistic, Not More” (February 7, 2017):

For the United States’ part, its policymakers’ concern about a new crop of stridently anti-American Chinese youth may be overblown. If anything, future Chinese leaders may emerge from a generation noticeably less nationalistic than those that produced Xi and his predecessors.

When the President and Congress consider trade legislation, a wide range of interest groups gather to advance their agendas. These agendas are not always obvious, and sometimes corporate and union interests misdirect the public about their motivations.

• Unions want to protect union jobs in the U.S., and extract revenues for retraining workers displaced by imports. Here is the AFLCIO’s page on why it opposes the TPP (Trans-Pacific Partnership for Free Trade), a trade agreement Congress long considered, before it was blocked by the new Administration).

• Corporations and industry associations lobby the Commerce Department for new dumping charges and for countervailing duties (AD and CVD, discussed in past post and evidence brief: Affirmative Case: Repeal Section 421 Tariffs on Chinese Imports). Recent story: “US Targets Chinese Aluminum Industry at the WTO With a New President in Town,” (MetalMiner, January 26, 2017)

• Environmental organizations work to add their environmental goals to trade agreements. Here is the Sierra Club’s page opposing the TPP (and other “dangerous trade agreements”). This page includes a Sierra Club video with claims against the TPP, including the claim that allowing exports of coal and natural gas from the U.S. would be dangerous.

• Human rights and women’s rights groups advocate trade restrictions to pressure China and other countries to reform. Here is a 2013 article focused on China: “China: The West Needs to Promote Both Trade and Human Rights.” The article notes the danger of mixing rights advocacy with trade policy:

Some, both in Europe and the U.S., are demanding a much tougher approach towards China, including the imposition of punitive sanctions and high import tariffs. But this is undeniably motivated more by a desire to protect vested domestic economic interests, rather than as a way to put political pressure on the Chinese government. Crucially, such an approach risks fueling the perception that the voicing of human rights concerns is only used as a means of criticism in order to justify protectionist measures against China.

• Christian groups consider trade policy a way to pressure China’s government to increase religious freedom. Robert Sirico, in a 1998 Cato Trade Briefing Paper notes:

The freedom of Americans to trade and invest abroad is being challenged in the name of promoting human rights. Conservative Christian activists and others seek to impose trade sanctions against nations that do not protect human rights. Proposed sanctions include the Freedom from Religious Persecution Act and the revoking of China’s Most Favored Nation status.

“Free Trade and Human Rights: The Moral Case for Engagement”  begins with an overview:

Three fundamental misunderstandings cloud the current debate over free trade and human rights. First, cutting government aid to target countries is not the same as raising barriers to trade and investment. Ending foreign aid and corporate subsidies actually promotes development by removing market distortions. Blocking trade, in contrast, hurts U.S. consumers and exporters as well as the most economically vulnerable people in the targeted nations.

Second, some advocates of free trade in the U.S. business community have weakened their case by failing to acknowledge that human rights abuses exist. U.S. multinational firms further undermine their credibility by supporting government intervention through such agencies as the Export-Import Bank and the Overseas Private Investment Corporation.

Third, Christian conservatives who support sanctions betray a lack of understanding of how trade promotes freedom and development. Economic reforms in China have transformed daily life for hundreds of millions of people who now enjoy greater opportunity, freedom of movement, material abundance, and access to Western ideas. Trade with China benefits Americans through lower prices, wider consumer choice, and greater returns on investment.

Imposing sanctions against China will disrupt this mutually beneficial relationship while doing nothing to improve human rights. Like the failed embargo against Cuba, trade sanctions isolate the victims while strengthening their persecutors. Sanctions imposed in the name of human rights also serve the interest of domestic protectionists by limiting competition. The best policy for promoting freedom and human rights remains economic and moral engagement. 

So… industry, unions, environmental, human rights, and Christian organizations lobby to restrict trade agreements. The story of the Bootleggers and the Baptists can be helpful in sorting out opposition to international trade and to trade agreements.

Climate negotiations offer an illustration of the problem, explained in this PERC page and paper. Though from 1998, the lessons apply to current trade policy issues with China:

As nations argue over global warming policies, PERC economist Bruce Yandle brings fresh insights to the discussion. In “Bootleggers, Baptists, and Global Warming,” a new paper from PERC, Yandle sheds light on puzzling features of the international negotiations over climate change.

Yandle looks at the post-Kyoto negotiations in the light of a theory that he has coined as the “bootleggers and Baptists” theory of regulation. Yandle points out that in the South, Sunday closing laws make it illegal to sell alcohol on Sunday. These laws are maintained by an inadvertent coalition of bootleggers and Baptists. The Baptists (and other religious denominations) provide the public outcry against liquor on Sunday, while the bootleggers (who actually sell liquor on Sunday) quietly persuade legislatures and town councils to maintain the closing laws.

Here is a similar Bootleggers and Baptists story from November, 2014:

In June of this year, EPA administrator Gina McCarthy announced the Obama administration’s far-reaching, anti-coal-burning Clean Power Plan. It drew wide support from the environmental community for its promise to reduce carbon emissions and mitigate climate change. Speaking for environmentalists worldwide, McCarthy said: “This plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids.” Put another way: Those who love their children and the environment would surely leap on President Obama’s anti-coal bandwagon.

Wikipedia entry on Bootleggers and Baptists.

Screen Shot 2017-01-28 at 8.16.49 AMHere similar story “Bootleggers, Baptists and e-cigarettes” (R Street, Jan. 14, 2016)

Environmentalists were happy, but so were producers of other fossil fuels that compete with coal (natural gas producers, for example). Interestingly, dirty coal producers were pleased with the new legislation too. They are the bootleggers of the story.

Before the imposition of the new requirements, producers of clean coal, which comes mainly from Wyoming and Montana, were in the catbird seat because their clean coal met high air-quality standards without the use of expensive technology. But now, with the new technology required, coal-burning plants can burn cheaper, dirty coal. Sellers of dirty coal see their business growing faster while the pace for clean-coal shippers is weakening.

All this gets more interesting when it turns out that dirty-coal producers in Obama’s home state of Illinois are chief among the bootleggers laughing all the way to the bank as they ship trainloads of coal to generators far and wide. The Obama administration’s Clean Power Plan has made lots of people happy — environmentalists, producers of clean-power technologies, and producers of dirty coal. We think the plan should receive a medal for bringing together such a disparate set of bootlegger–Baptist interests, provided it can clean the dirt off, of course. [Link to National Review article.]

Students researching the China topic should note that coal from Wyoming and Montana burns cleaner than coal mined in China and burned for energy production there. Also, shipping costs from Montana and Wyoming to South China coal plants is actually less expensive than shipping by rail to coast then shipping along China’s coast. “Cleaner” coal with lower shipping costs (though coal burning is still more polluting than natural gas, wind, solar, and hydro power).

Environmental groups strongly oppose permits and trade policies enabling Wyoming and Montana coal to be shipped by rail and river to the Washington coast, and exported to China. Dirty coal producers in China and around the world also oppose exports of clean coal from the U.S., but not for the best of reasons.

Wyoming coal: tougher sell with U.S.-China climate deal” (Casper Star-Tribune, Nov 16, 2014) notes the then recent trade agreement hurt Wyoming coal exports:

CASPER, Wyo. — Wyoming coal exports will likely suffer as a result of an agreement by the United States and China to cut carbon dioxide emissions, analysts said Wednesday.

The surprise announcement Tuesday by President Barack Obama and his Chinese counterpart, Xi Jinping, commits the world’s two largest carbon emitters to greening their respective power sectors.

And this Bloomberg News story has more, “China’s Clean-Fuel Focus Tests U.S. Coal-Export Lifeline.”  And with exports from US ports blocked, coal is headed out through Canada, “Coal company shifts to Canadian port to reach Asia markets,” (US News, October 13, 2016)

In all the above stories of special interests and trade policy, we shouldn’t impute bad motives to most of the people and organizations involved. People see the world through their own interests and often persuade themselves that policies they benefit from also benefit the world.

There are people and organization who know policies they benefit from personally and as interest groups will raise costs and limit freedoms for others. Debaters should be alert to see the bootleggers behind various proposed restrictions on trade with China.

Page 4 of 39« First...23456...102030...Last »

Acces Our Research

Health Care Policy
Tax Policy
Retirement Policy
Environment Policy

Learn More

About Us
Meet Our Experts
Meet Our Staff
Contact Us

Join the Conversation

Health Policy Blog
Economic Policy Blog
Retirement & Taxes Blog
Energy & Environment Blog

Get Involved

Attend
Subscribe
Sponsor
Donate

Follow Us

RSS
Facebook
Twitter
LinkedIn

YouTube
Flickr
Helium


Copyright © 2011 National Center for Policy Analysis. All rights reserved.
Privacy Policy | Sitemap