Monday, May 2, 2016

Trump, China and the United States. Part one. (Part two tomorrow.)

Happy Death to you, Happy Death to you, Happy Death Dear Osama Bin Laden, Happy Death to you. It was 5 years ago today that Navy Seals executed a plan to execute a founding terrorist of today's Islamic Terrorist Jihad beheading philosophy. Apparently it took President Obama six months to make up his mind and apparently John Podesta's relentless persuasion to do it.

But today I want to discuss the Peoples Republic of China and the United States of America and Donald Trump.

The United States of America is responsible for the emergence and success of modern-day China. It buys the products that China manufactures. China has been able to produce for a materially lower cost than the U. S. There are several reasons. 1) There are millions of unemployed Chinese workers; 2) Their wages are significantly lower than the wages in the U. S., but China's costs are rising; 3) The U. S. has militant anti-business union bosses who need increasing wages to keep their jobs by keeping their dues-payers happy. No matter that unionized companies cannot compete successfully with China. 4) The U. S. has a massive regulatory regime that all by itself increases costs greatly. It is political and used to garner votes for Democrats. Included are class-action lawsuits (which courtesy of Democrat legislation is one of the large American industries, which donates solely and solely to...Democrats) , environmental rules from unelected far-left zealots, the micromanagement of executive actions, including posting government employees in the offices and boardrooms of companies. Hiring, training and retention programs of businesses are second-guessed and mistrusted as "discriminatory" -- business people are biased and need to be told how and who to hire. The Democrats as a collective do not trust business people. As well, they do not trust individual consumers to be able to make "sound" decisions in the face of misleading company advertising. 5) Too, Chinese leaders over the past decades have made a concerted effort to modernize its commercial activities, freeing entrepreneurship, opening its markets as well, and adopting many tenets of the United States' free enterprise. (While the U. S. goes back to where China was with wrongheaded central control of its economy by Democrat professorial "elites." It is diminishing the competitiveness of the U. S.)

China produces things cheaper than the U. S. Companies are able and one especially, Wal-Mart Stores, Inc., spotted this opportunity decades ago and has built gigantic retail outlets featuring broad, broad selections at lower prices. Originally store were located in rural areas where there was no competition. From one store in 1962 Bentonville, Arkansas, Walmart has grown to be  the world's largest retailer by revenues. It is attacked relentlessly by union bosses and Democrats but beloved by consumers and workers who flock to new stores ten to twenty applicants for each job.

Though Donald Trump rails against China for "currency manipulation" -- it is a misplaced attack. The almighty Federal Reserve-controlled dollar is just as manipulated as the renminbi but for different reasons. While China desires growth, the Democrats in charge of the U. S. economy -- currency valuations -- want to be reelected first and foremost. The disaster which was the Great Recession or sub-prime meltdown was caused by Democrats in government. The Clinton Department of Housing and Urban Development dictated "affordable housing" (as it alone defines it) of 30% which in essence needed people to buy houses who couldn't afford them. An arbitrary goal around which regulations were built. Quasi-governmental entities, Fannie Mae and Freddie Mae, leadership of which was populated by Democrats and which donated millions to Members of Congress, especially Chris Dodd, Senator from Hedge Fund Connecticut and Barney Frank, New York's Wall Street Congressman. They supported the Democrat managements of Fan and Fred and pushed the arbitrary affordable housing quota percentage --  continuing to slide regulations as Democrats do, to worse consequences -- to an insane and, of course arbitrary, 56%. More poor people couldn't pay. But triggering the "meltdown" was the inability of some financial organizations to refinance short-term obligations because their assets were invested those mortgages. People heading governmental agencies, including up to the Secretary of the Treasury and the President himself panicked and made decisions that made the economy worse. I believe that if it would have been left alone by politicians there would never have been the Great Recession, bad mortgages, homeowner defaults and the rest. But after all, governments are made up of emotional human beings.

True, the monumental rush of mortgage originations and refinancings created inefficiencies in the back offices. Some workers missed some steps and documentation necessary by government regulation, and, as they say: "Mistakes were made." No borrowers were affected by all this confusion.

As a result of these politicians came the big recession and a pathetic "recovery" of only a couple percent a year throughout Obama's term, the worst since the Great Depression (which from time to time had been even better!) Up to the last quarter's 0.5% growth (Q1, 2016) and an expected 2% for this entire year. Horrible. (Without all these political mortgage manipulations and dictates, Canada has had higher homeownership than America! Go figure.)

Without Democrats and their incessant push for tighter micromanagement and regulatory overreach, lawsuits from Democrat trial lawyers, and Democrat union bosses, would the cost of things in the United States be the same as China, enriching the U. S. and beggaring China? NO! But the imbalance would not be so great. Trump would not be able to use "currency manipulation" as a platform plank in his election repertory. True joblessness in the U. S. would be lower and possibly far more African Americans would have jobs.

Part two, about education, tomorrow.


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