The American Left loves the Chinese Economic System despite its Inefficiencies, Income Gap and Crimes Against Humanity

Posted by PITHOCRATES - January 6th, 2013

Week in Review

The American Left looks at China with awe and reverence.  They see that huge export economy and they know how they did that.  Massive government control over the economy.  And Keynesian economics on such a grand scale that it would  even impress Paul Krugman.  Nobel-winning Keynesian economist who’s constant refrain is that the government just never spends enough.  Something no one can say about the Chinese Communists.  And that’s why the American Left loves China.  For when it comes to the economy they wield dictatorial power.  If the American Left had those powers they could accomplish so much.  Beginning with the arrest of the Republican opposition and deportation to reeducation camps.  Then they could make our economy hum.  Just like in China.  Where brilliant government bureaucrats educated in the finest Ivy League universities called all the shots.  For only those who despise free market capitalism would know how to truly optimize economic output (see Game Over for China’s Photovoltaic Manufacturers by Gao Zitan & Frank Fang posted 1/6/2013 on TheEpochTimes).

It was in October of 2011 when the U.S. and European PV companies decided that enough is enough. Over the last years they had to compete against Chinese companies selling their products below cost. As a result many European and U.S. companies had to close down. The remaining ones chose to appeal to regulators to stop the unfair practices.

Note once again who is complaining about companies selling things too cheaply.  It is not the consumer.  For the consumer never complains that they aren’t being charged enough.  It is always another business requesting antitrust protection against a company they cannot compete against.

The Chinese regime viewed solar photovoltaic production as a promising industry with rapid scalability and production, and high profits. It could add to GDP growth and employment. This is why the regime greatly promoted the growth in the domestic PV market through business-oriented regulations and incentives. Banks, local governments and other financial agencies were ordered to heavily subsidize the solar industry with cheap loans.

Starting in 2009, the regime sponsored some large-scale national PV projects. The Solar PV building program comprised 111 projects and the Golden Sun program included 275 projects. Provincial or municipal funded programs provided the framework for many other PV related projects.

This is exactly what the Left wants to do.  What the Obama administration did.  They want smart government bureaucrats to tweak market forces to make things better.  At least this is what these government people think.  Because they are so smart.  Even though they have no business experience.  So the American Left wants to do exactly what China did.  What the Americans did but on a much grander scale.  Because their communist government had the power to do it on a grander scale.  Something the American Left laments that the American government doesn’t have that kind of power.  Yet the Americans want to penalize the Chinese for unfair practices.  Despite constantly championing the Chinese way.

In 2008, there were less than 100 PV enterprises. But by the end of 2011 there were more than 500 PV companies, a five-fold increase, according to Guangzhou-based business newspaper 21st Century Business Herald…

On the surface, Chinese companies were doing well. Revenue of the PV industry was more than 300 billion yuan ($48 billion) and Chinese companies occupied five spots in the top 10 of global solar cell manufacturers, according to the report. However, the fast expansion of PV production capacity did not match domestic demand.

According to statistics of EU ProSun, in 2011, China reached a total PV production capacity of 45 GW but domestic consumption was only 2 GW. The production capacity spurred by massive subsidies and state incentives was over 20 times higher than actual demand for solar powered electricity. The only way out was exporting the surplus production…

As a result of lower subsidies in Europe and tariffs in the United States, the overproduction stimulated by state subsidies can no longer be exported. One indication is a rapid growth in inventories. Sixty-six listed Chinese PV companies of the Shanghai A-Share Stock Market showed a 20 percent increase in inventories compared with the same period of the previous year…

President of EU ProSun Milan Nitzschke said, “Chinese subsidies shield manufacturers from insolvency, and are pumped into solar companies even if they are unprofitable. Most Chinese solar companies would have gone bankrupt a long time ago if not for endless government subsidies.”

This is what happens when you have ‘smart’ government people take over the free market economy.  You build a lot of stuff no one will buy.  Just like the Soviets built a lot of tractor parts that sat on store shelves unsold while people stood in line to buy soap and toilet paper.  This is why the command economies of communism failed.  And while the command economy of the Chinese Communists will fail, too.  What Friedrich Hayek of the Austrian school of economics called malinvestments.  Which directs resources from making things people want to making things people don’t want.  Creating shortages of the things people want (like soap and toilet paper in the Soviet Union).  And overflows inventories with things people don’t want (like solar panels in China).  All because a government bureaucrat decided to make more tractor parts and solar panels instead of soap and toilet paper.

And if that wasn’t bad enough there are other costs for the Chinese way (see Never Mind the Fiscal Cliff, China is Headed For a ‘Real’ Cliff by Michelle Yu posted 1/6/2013 on TheEpochTimes).

China is dangerously close to a catastrophic political, economic, and social meltdown, according to a Chinese business scholar, who cites China’s growing income gap as one of its serious crisis indicators…

Rural versus urban inequality has long been recognized as a key factor in China’s income gap. Not only does the rural income level fall far below the urban level, but the income inequality is also more obvious within rural regions…

Another notable factor is high unemployment rate. The SUFE study suggests that China’s national unemployment rate was 8 percent in July 2011, suggesting an unemployed population of 27.7 million, which is almost twice as high as what authorities have admitted to. The unemployment rate doubles for 51-55-year-olds, reaching 16.4 percent, and is attributed to mergers and standardized bankruptcy of state-owned enterprises in the early 2000’s. (An explanation of mergers and standardized bankruptcy are available here  and here.)

Surprisingly, the unemployment rate for 21-25-year-olds who hold college or above degrees is also 16.4 percent—the same as for the 51-55-year age group. By contrast, the rate for 21-25-year-old poorly educated migrant laborers from rural areas is only 3.4 percent. A shortage of cheap labor has affected some of China’s key export industries such as apparel and electronics, especially on the east coast.

But the root cause of the income inequality and a battery of other economic problems in China can be found in the communist regime’s overexploitation of social wealth, according to Winifred Tung, an attorney and commentator from Taiwan.

The exploitation has been realized largely through preferential policies in favor of state-owned enterprises and suppression of the private sector, Tung told NTD Television, citing recent data, which says that the GDP of large-scale state-owned enterprises (SOEs) accounts for 60 percent of China’s overall GDP. However, among the different culprits of tax evasion in China, SOEs came in first place with 26-28 percent.

So this is why they can make so many solar panels (and other export goods) so cheaply.  By exploiting poor rural laborers in their big city factories.  Resulting in something the American Left say wouldn’t exist if they had control over the economy like the Chinese do.  An income gap.  Income inequality.  Something that is apparently worse in the country where the government has the power to make life fair.  But it’s more than just an income gap.

The Chinese factory workers aren’t like UAW workers.  They have low pay, no benefits and often live in dormitories in the factory compound.  And these have it good (see The Difficulty of Smuggling a Slip of Paper From a Chinese Labor Camp by Guo Jufeng posted 1/6/2013 on TheEpochTimes).

Like the person whose plea made headlines around the world, I was also in Liaoning Province, China. Twelve years ago, I was imprisoned in Huludao City Forced Labor Camp, Liaoning, for 2.5 years for practicing the meditation discipline of Falun Gong. My companion Cao Yuqiang, who was eventually tortured to death, and I were watched 24 hours a day by two criminals, so that we could not exchange information regarding the persecution of Falun Gong.

One day, I came up with the bold idea to find a way to communicate information about the persecution to the outside world.

The first obstacle we faced was that we didn’t have pen or paper. So, as more and more information was passed on to me, it became quite a challenge to memorize everything! To improve my memory, I repeated the information to myself every day, since I couldn’t communicate regularly with Cao Yuqiang.

One day, out of the blue, Cao told me he had found a refill for a ball-point pen. I suspected he must have gone through a great deal of trouble to procure it, but I did not have the opportunity to ask him for any details at that time.

Now I had a pen, but there was still the question of what to write on. I finally realized that the only possibility was toilet paper, and to avoid being caught, I would have to write the message after midnight.

I had to keep strengthening my mind to overcome fear and anxiety as any negative thoughts could lead me to give up. Questions and doubts plagued my mind: “Would this work? How could we get the information out? Would I be able to withstand the torture if it was discovered? Had other prisoners found out about my plan? Were they waiting to catch me in the act?” I was certain that if my plan were discovered, I would be tortured mercilessly with electric batons.

This is part of that Chinese economic system the American Left so admires.  An economy that is based on cheap labor.  In some cases even slave labor.  And it’s no secret.  Which is odd for the American Left who are champions of the labor movement.  Who bankrupted countless businesses (GM, Chrysler, Hostess, etc.) by demanding ever higher pay and benefits packages.  Yet here they are.  Admiring an economic system that just exploits labor in the worst ways.  Even using torture.  And it bothers some.  Maybe not the American Left.  But the Chinese themsleves (see A Young Chinese Man’s New Year Wish for His Father by Gao Zitan posted 1/1/2013 on TheEpochTimes).

As 2013 begins with an atmosphere of joy welcoming in the new year, a young man from Hubei, China, is worried about his father who is a member of the Communist Party.

The term “San Tui” in Chinese refers to the three distinct renouncements. It means to quit the Chinese Communist Party (CCP) and its two affiliated organizations: the Communist Youth League, and the Young Pioneers, which people are made to join in their youth.

In recent years, “the three renouncements ensure safety” has become a well-known saying in China, and many consider it a rational choice for mainland Chinese to guarantee themselves immunity from all the crimes perpetrated by the Communist Party when the day of reckoning comes. So family members of those who refuse to consider the wisdom of this option are very worried for their loved ones…

“The three renouncements ensure safety” has been widely recognized by the Chinese public since 2004, when The Epoch Times published the truth about the CCP in “Nine Commentaries on the Communist Party” in 2004, and began registering those wishing to make the three withdrawals.

As of Dec. 30, 2012, more than 130 million people had registered with The Epoch Times to quit the CCP and its affiliated organizations.

The American Left may be enthralled with the Chinese communist way just as they were enthralled with the Soviet communist way but those living under those oppressive regimes weren’t.  And aren’t.  China is not the China it was under Mao.  But the hard-line communists are.  But even some of these committed their crimes against humanity for a higher purpose.  To prevent the anarchy that followed in parts of the former Soviet Union when the Soviet Union collapsed.  So some may commit their crimes for good.  While a lot no doubt just enjoy the privilege that comes with being in the party leadership.  And the very comfortable lifestyle.  Much like liberals in this country.  But not the average Chinese.  At least 130 million of them.

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