To the Editor:
The opening ceremony of the Olympic Games is designed to be a cultural pageant in which each nation proudly displays its athletes wearing outfits which symbolize various aspects of national history and character. When it comes to the American contingent, the symbolism could not possibly be any more telling.
Ralph Lauren, the iconic U.S. clothing company, carefully designed the outfits for our athletes to reflect a classically proud Americana look. A recent investigation by ABC News, however, revealed that head to toe, these garments were manufactured offshore in China. The current American predicament simply could not be more eloquently symbolized.
The economic numbers now confirm that the largest transfer of wealth in all of human history is now occurring between China and the United States. The reason is an open collaboration between China’s well-designed predatory “capture and hold” economic strategy, the short term-oriented executive/ shareholder compensationdriven American corporate culture and finally, the even more short run-oriented “more for less” American consumer.
Our motivation to willingly enter this alliance is very straightforward. America (and Europe) exhibit an “eat the seed corn” style addiction to quick savings at the expense of long term economic vitality. It is, however, the long run economic consequences of this shortsighted, one-sided collaboration with China which is now beginning to play out after 30 years of large-scale trade. Not only is this arrangement looking less and less lucrative, the current framework for trade hits and Western selfdestruction.
The American public is told on a regular basis that low prices are good for consumers. Let’s be very clear. The price of Chinese goods are artificially low by virtue of massive statesourced subsidies explicitly designed to put those producers outside of China out of business.
Once global supply chains become China-oriented and directed, it becomes extremely difficult to compete. Remember, the flip side of the American consumer is the American worker and it is obvious that both sides of the coin must be considered. Defacing the working side of the coin damages the coin’s total value regardless of how shiny the opposite consumer side might appear.
The American public is regularly reminded that corporations are primarily responsible to shareholders and that money-saving forms of outsourcing are good for investors. In stark contrast to this rosy claim, the economic reality for corporations and their investors over the long run in this arrangement is bleak.
Western corporations that set up operations in China sign collaboration contracts as part of the deal to “access their markets”. Their Chinese partners then methodically extract insider knowledge of the business and when sufficiently confi- dent of success, they simply and without hesitation deploy that knowledge to build a rival Chinese-owned and operated firm.
Gradually the eager Western firm and its investors find themselves on the outside looking in at a new homegrown Chinese rival — one that they nurtured. In the long run, China has turned out to be the most dangerous place to deploy precious physical and intellectual Western capital.
There are now more millionaires in China than either America or Europe and it is not because they are such fantastic forklift drives. The Chinese economic system is explicitly designed to clone start-up companies from shortsighted Western “business collaborators”.
China has become quite adept at pitting American interests against each other in a diversionary manner. Consumer vs. worker. Investment class and Wall St. vs. Main St.
The Olympic athletes seem very hesitant to criticize a sponsor. The recent imposition of tariffs on subsidized Chinese solar panels has angered the domestic solar installation business sector. That is the hook of artifi cially low pricing — you befriend consumption at the expense of production.
Ralph Lauren claims this issue around outsourced uniforms is no big deal. If chess was an Olympic sport, China would have the gold medal all sewn up!