February 5, 2010

Which Way China... and the U.S.

Justin Katz

Yesterday afternoon, a coworker and I were discussing a plaster molding that was sagging off a large house's dining room ceiling. He expressed surprise that the installers would rely entirely on adhesive to keep the heavy decoration attached, and although I shared his distrust of goop, in building, I pointed out that it had held up for a hundred years or so. The conversation turned toward the impressions that future carpenters might have of our work, a century on.

We were standing in the remodeled house's kitchen, which has brand new "green friendly" bamboo cabinets, and having just read about Rhode Island students' lack of substantial progress on standardized tests, as well as this George Will column, I quipped that a future owner will feel right at home when China takes over the country:

Fogel finds many reasons for this, including the increased productivity of the 700 million (55 percent) rural Chinese. But he especially stresses "the enormous investment China is making in education."

While China increasingly invests in its future, America increasingly invests in its past: the elderly. China's ascent to global economic hegemony could be slowed or derailed by unforeseen scarcities or social fissures. America's destiny is demographic, and therefore is inexorable and predictable, which makes the nation's fiscal mismanagement, by both parties, especially shocking.

With no reason to know the basis for my comment, my coworker asked whether China's ascendancy would prove that communism had won the competition with capitalism. It's an interesting question, although I'd been thinking less in predictive terms of cultural competition than in the terms of our nation's appropriate response to trends in the present. I'd have been more prepared had Jonah Goldberg posted this reminder of an old column before my lunch break:

Ask yourself this: Why are we in this financial crisis?

Any short list of reasons would include a lack of transparency in markets and regulatory rule-making; collusion between business and government; the politicization of lending practices (including the socialization of risk and the privatization of profit through giant governmental entities like Fannie Mae); and, of course, simple greed.

Does anyone honestly think China doesn’t have these problems ten times over? It has no free press, no democratic accountability, and no truly independent regulators.

On China's end, two things are likely to happen before it overtakes the United States: Either the country will collapse of its own weight (à la the U.S.S.R.) or its culture and political system will change to be more in keeping with the U.S. tradition. My own country's side of the equation concerns me more. It's a matter of some debate whether the United States continues to be an adequate example of democratic capitalism. As China strives to build the benefits of capitalism on a communistic base, we've been striving to lash the free market to the goals and mechanisms of big government.

It may turn out that this century will determine whether either trajectory can reach the liberal promised land of Heaven on Earth, or whether both will land in that fabled ash heap of history.

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A few, hopefully connected, comments.

I was speaking with a wood dealer yesterday. In the conversation, it became apparent that most furniture manufacturing had moved to China. A review of auction notices will show a large number of "cabinet shops".

A friend does some business with China, jewelry boxes. Not the bureau top sort, the kind that rings, watches, etc. are sold in. He went to visit the manufacturer and was amazed by what he saw. Almost a complete absence of machinery and 4-5 times the number of workers you would expect. It appears that when the government supplies funding, it also mandates the number of employees which must be hired. In this case it was mostly young women who were housed in dormitories on the site.

One wonders what will happen as costs inevitably rise. If things proceed as present, they will have cornered any number of markets and will be free to raise prices.

I wonder how long we will continue to fool ourselves that we are doing well, when in fact our lifestyles are subsidized by artificially low priced goods from China.

Justin will appreciate this. The woods used in Asian furniture are not kiln dired, they are "air dried" in areas with very high humidity. When placed in an American homes with heat and low humidity, the wood has a tendancy to crack and split.

Posted by: Warrington Faust at February 5, 2010 8:23 AM

I go to great lengths to avoid buying anything made in China. I will not support a country that is waging an undeclared war against us.

Unfortunately, all notebook computers are now made in China.

Posted by: BobN at February 5, 2010 8:39 AM

"He went to visit the manufacturer and was amazed by what he saw. Almost a complete absence of machinery and 4-5 times the number of workers you would expect. "

True, but also because China has an enormous surplus of workers. One example that I recall from a TV documentary: a building had been demolished somewhere in China, and the contractor wanted to recycle the steel rebar that was entombed inside the thousands of tons of concrete rubble. A work crew, perhaps a few hundred people, were breaking up the concrete pieces by hand, with hammers, to get to the valuable scrap steel inside. I'm guessing that in the U.S. or Europe, we would probably use machinery, or some industrial process to accomplish this task (or maybe just not recycle the steel at all if it would cost too much to do so), but since China has, more than anything else, an almost unlimited supply of cheap labor, this work is done manually.

"I go to great lengths to avoid buying anything made in China. I will not support a country that is waging an undeclared war against us."

I applaud your principled stance on this issue, but Wal-Mart and Target either won't, or can't, sell American-made goods, mostly because we don't, or can't, produce mass-market consumer goods here anymore.

Posted by: Chris at February 5, 2010 12:56 PM

It is possible to find many products not made in China even at big box stores. Even Harbor Freight, infamous for importing poor-quality Chinese tools, has products made in India, Malaysia, and Taiwan (the nitrile disposable mechanic's gloves are my favorite for auto maintenance). It just takes some effort. I do avoid the Chinese tools as they break too easily and I don't believe in disposable tools.

Some other products are harder. Running shoes are very hard to find beyond New Balance. Nearly everything from L. L. Bean is now Chinese - a bummer since it used to be my primary source of clothes.

Ten years ago, Singapore and Taiwan were the primary makers of notebook PCs but I can't find one that isn't made inn China today. I have a Lenovo now (because it was the lowest price in class and budget was tight at the time). Lenovo purchased IBM's personal computer business several years ago and I've had several IBM Thinkpads. This new Lenovo has significantly lower build quality than the IBMs, and I will not buy another.

Posted by: BobN at February 7, 2010 10:30 AM
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