Saturday, March 13, 2010

Stop Me If You've Heard This One Before

Doorway to China

I am of two minds about Wal-Mart and Chinese imports. There are the issues in the quality and safety of their goods, and the erosion of American manufacturing.

On the other, speaking as someone who once had a factory job, I have no trouble seeing those jobs exported to people poor enough to regard them as an improvement in their lives. When the media report on factory jobs in America they invariably show the nice clean safe well-paid unionized jobs in Detroit auto plants. Which is a ridiculous misrepresentation. Not one factory job in a hundred is anything like that. I don't know whether the media are conscious liars or just too shallow to think in anything but the flimsiest of cliches.

They sure never talk to people with actual factory jobs. In the 19th Century William Blake referred to English factories as "those dark Satanic mills".

The other is that a large part of the price advantage Chinese goods have in our markets is based on the yuan being held artificially low by their government. That makes Chinese goods unrealistically cheap here and American goods unrealistically expensive there. Which results in an artificial imbalance of trade and of payments. Which is how they wound up with literally trillions of American dollars.

Where did/does that surplus value come from, i.e. who produced those trillions of dollars of value? The Chinese workers did. They produced goods and services which were deliberately undervalued beneath their market value. Their buying power was correspondingly undercut because the currency they got paid in was undervalued. The cash difference has accumulated in the coffers of Chinese companies and the Chinese government. NOT in the pockets of the workers.

But there is another large increment of the surplus value taken from the Chinese workers. The cash difference which winds up in the various coffers of the rich and powerful comes only from the sales price of the goods sold and is only part of the value of the goods produced. The reason Chinese goods are perceived as under-priced is that they are.

I bought a steam iron at Wal-Mart for $7. A slightly better iron would have cost $30 if it had been made in the US, and a fancy one would have cost $50 if made in Europe. Absent deliberate undervaluation of the yuan and volume pricing by Wal-Mart, the Chinese iron would have cost perhaps $20 or $25 dollars.

Wal-Mart, the Chinese manufacturer, and the Chinese government divided up my $7 among themselves. Who got the value difference between the $20 the market would have otherwise made me pay for an iron and the $7 I did pay? I did. I got the steam iron I wanted and still had $13 to spend on other things.

Wal-Mart and its competitors have provided American workers an unprecedented access to inexpensive consumer goods. In spite of stagnant or declining incomes, I believe that the material standard of living of working class Americans has risen significantly on account of Chinese imports in the past 20 years. The import of vast quantities of manufactured goods from China represents an enormous transfer of wealth from Chinese workers to American workers.

The Chinese working class of several hundred million people is thus the biggest cash cow on the planet.

Even so, so far from impoverishing China, access to the American consumer market, even on deliberately unfavorable terms, has been the making of China. Incomes are up, people eat far better, housing has improved, people stay in school longer, medical care has improved, people are moving off unremunerative farms to city jobs, infrastructure of roads, schools, businesses, housing, and so on, are all being built with capital imported from America.

Much of the sneering at Wal-Mart and at Chinese goods sounds suspiciously like class animosity against the American working class, some of it covert, some of it explicit. The frequent jibe is against the image of a fat woman in stretch pants with curlers in her hair as the typical Wal-Mart customer shopping for cheap crap that "you and I" would not want. This is anti-working class propaganda and sneering.

In the long run, there is at least the possibility that Chinese goods will continue to go through some part of the transformation that changed 'made in Occupied Japan' from a guarantee that something was worthless crap, to 'made in Japan' meaning good quality and design often worth paying extra for.

What we are seeing now is the testing of the limits of transferring of so much capital between the two countries.

Enemies of Wal-Mart and Chinese imports among middle class yuppies too hip and cool to shop at Wal-Mart, and of the undervalued yuan among owners of manufacturing businesses, are no friends of American working people.

No comments:

Post a Comment