Saturday, July 11, 2009

Manufacturing Cost Gaps Lead to Service Sector Economies like U.S.; Obama's Policies make Great Sense to Slay the Chinese Dragon; IF Temporary...

Here's what Manufacturing.net reported in 2007 regarding China's slave wages: "In 2004, employees in China’s urban areas were compensated at a rate of $1.19 per hour, versus those employed in town and village, at $0.45 per hour. American manufacturing workers were compensated at an average hourly rate of $22.87 during the same time frame."
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We believe the Chinese govt and select private sector individuals are profiting most from slave wages, profits, and taxes. The disadvantaged Chinese laborer is forced to work for a slave wage to merely sustain his family, and feels trapped.
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Perhaps as the U.S. economy erodes due to a monster govt headlock agenda, the consumer will spend less and this will reverberate through the world, but especially through China. As the Chinese economy shrinks and their synthetic banking sector is uncovered for the world to see, the Solidarity labor movement in China will be upon us. Is it not a paradox the company who put China on the retail map, WalMart, is crazy for Cap and Trade, yet is staunchly opposed to EFCA/unionization as the Chinese laborer toils for nothing? Perhaps Obama's fiscal liberal plan behind EFCA is temporary, and temporary is all it'll take for a Chinese labor revolution to ignite.
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POTC is disturbed the masses in the media fail to address this social and economic issue of slave wages in China. Perhaps Obama understands this and we should only cheer and not jeer as his energy (cap and trade), health care (govt involvement), and Employee Free Choice Act (force unions on retail, paradoxically WalMart, and every other sector of the U.S. economy) become law. Reminding you that all this legislation would be temporary, and solidify Obama a one-term presidency.
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Why would a forward-thinking fiscal conservative not embrace 3 more years of financial suffering through a temporary dilution of our private sector IF this leads to a Chinese labor revolution. A Chinese labor revolution would accomplish two things: 1) it would mark a new beginning for the hard working Chinese, creating a larger middle class 2) it would mark the beginning for the manufacturing cost paradigm to shift and become competitive again. Without a revival and resurgence of a manufacturing sector, POTC believes the ability for the greenback to remain the world's leading currency is miniscule.
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How is the U.S. supposed to compete against wages at and below $1.00/hour? POTC's piece written June 25th, "Pres Obama's Ultimate Fiscal Policy Target in the Mayan Yr 2012 ~Manufacturing Balance~" addresses this monstrous manufacturing cost conundrum and how today's fiscal liberal policies may be the long-term solution. Perhaps free-market society's must take unorthodox measures from time to time to reinvent and strengthen their capitalistic models. Perhaps we're at the precipice of that economic evolutionary cycle today, where burning down the forest (private sector) in spite of the trees (entrepreneurs) will actually spring more life going forward. Especially if these measures change the greatest economic and social ill on the planet, China.
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Great day wished to all, your comments and e-mails are always welcome. The Psychology of the Call team promises our signature weekend piece "Psychology of the Upcoming Week's Earnings and Economic Data" next week. IF you are a subscriber, please check your boxes on July 25th.

3 comments:

Anonymous said...

Didn't read the entire june 25 piece yet. I am getting your point here though. Def interesting analysis fellas.
Mike in Seattle

Anonymous said...

I did read the piece, read it twice actually. Can see your point abt manufacturing costs, but IF you are a fiscal conservative, why then was the last president so ignorant to this issue?
I like Obama, and I see you're coming around. But you do preface your praise with the nuances of policies being 'temporary'. All very good imo, keep up the Chinese theme, I really like it actually.
J.P.

Anonymous said...

My wife and I always wondered what the average Chinese made, thank you. We cannot believe $.45 per hour was the scale just a few years ago. No wonder the U.S. manufacturing sector is in shambles.
Amy and Steve