When Will The Chinese Economic Agenda Be Noticed In Washington? (Part II)

by Jack Lifton on November 15, 2008 · 2 comments

in China, European Union, Metals & Minerals

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On November 4, 2008, the European Commission issued a press released entitled “European Commission proposes new strategy to address E.U. critical needs for raw materials.” The press release title and summary says it all:

European Commission proposes new strategy to address E.U. critical needs for raw materials

“Raw materials are an essential part of both high tech products and every-day consumer products. European industry needs fair access to raw materials both from within and outside the E.U . For certain high tech metals, the E.U. has a high import dependency and access to these raw materials is getting increasingly difficult. Many resource-rich countries are applying protectionist measures that stop or slow down the export of raw materials to Europe in order to help their downstream industries. Many European producers suffer from such practices. On top of this, some emerging countries are becoming very active in resource-rich countries, particularly in Africa, with the aim of securing a privileged access to raw materials. If Europe does not act now, European industry is put at a competitive disadvantage. In response to this challenge, the European Commission launched today a new integrated strategy which sets out targeted measures to secure and improve the access to raw materials for E.U. industry.”

The European Union has recognized the accelerating growth of Chinese resource hegemony and the impact that this Chinese agenda will have on the future of local industrialization in a global economy. The E.U. has started on a path already adopted by the more farseeing governments of Japan, Korea, and India, for example, to preserve their domestic economies in a diversified enough configuration to maintain self-sufficiency. The E.U., unlike the U.S., recognizes that once a powerful economic competitor dominates a critical material, it also dominates the choices of where that material goes and the choice of where the industry based on that raw material is located. The E.U. also recognizes that economically powerful, and independent, nation states are in the long run only those that are self-sufficient.

I view China as a nation that openly operates on a long-term, national strategic agenda as prescribed by Marxist philosophy. China manifests its policies in an openly published successions of five-year plans, the implementation and success of which are China’s government’s measure of its own success in moving forward to first a socialist and then a communist society.

America’s short-term thinking elites, interested only in instant gratification, are divided into two equally myopic groups. There are those who think that a society with no national economic goals other than an arithmetically defined “growth” with a lightly regulated economy— which is as close as reasonable to a free market economy—is best. And, supposedly in contrast, there are those who think that government’s purpose is to level incomes for everyone but the elites. To accomplish this goal of “fairness for everyone else” the national government must be involved in as much of the economy as possible—through detailed regulation and micro-managerial control of all aspects.

Historically we called the first group “Republicans” and the second group “Democrats.” The second group’s stated purpose is always to improve the environment or save the middle class from exploitation by the greedy elites—of course the latter are always others—or some such fair-and-balanced treatment agenda. It has now become very difficult to distinguish between these two groups of elites.

I do not think that America’s hereditary House of Representatives or House of Lards, the Senate, actually can understand how the Chinese system of self-interested government could be an economic threat to their life styles. In their fantasy world, all global economic agendas are created and led by the American economy. It’s an America comprising only 4% of the world’s population, that today creates over 30% of the world’s annual wealth. The Senators seem to fail to notice that these numbers were 2 ½% and 40% in the last quarter of the 20th century.

Astoundingly, the Europeans have figured out what has eluded the American governmental and Wall Street elites: that we are on the cusp of a transition to a world where other nations, or groups of them, also set economic agendas for the entire world. These agendas do not include the United States remaining as the leader forever.

Europe has recognized the urgency of one of the most dangerous current global trends, one which is almost totally ignored by the U.S. The E.U. is moving towards avoiding the consequences for itself, of a foreign hegemony over natural resources. Europe is acting in its own self interest to preserve its diversity of its industry. The U.S. has acted against its own self interest in the same matter and has already lost its industrial diversification.

U.S. production of automobiles and trucks is done by the highest-paid, most highly-benefitted group of workers the world has ever seen. So, before you decide whether or not U.S. taxpayers should subsidize carmaking, note that Japanese-,  Korean- and German-owned and operated car makers build their products profitably in the U.S. In doing, so they pay their workers excellent wages, provide good benefits, pay property taxes in many American cities and states, employ American construction companies and contractors to build and maintain their plants, generate thousands of thriving small businesses in the form of product dealerships. Only then do they repatriate after-tax profits from their operations. No American owned-and-operated car maker has done any one of those things for the last five years or more.

Every dollar of profit made by GM in the Chinese domestic market is reinvested in China to grow the Chinese economy. GM, for example, did not charge its Chinese partners and suppliers one cent for giving them the technological benefit of the tens of billions of dollars of engineering development and the billions of man-hours expended, which had made American mass produced cars among the best in the world. Chinese industry saved huge sums by not having to develop engineering skills, so the profits were poured back into the Chinese domestic economy–effectively by the short-sighted total misjudgment of GM’s managers, among others. Chinese companies, with the backing of their government and their banks, filled with hard currency, are working day and night to develop the Chinese natural resource industry. And an added goal is to buy control of foreign natural resource production so as to permanently cement Chinese natural resource hegemony.

The Europeans have decided to go on their own to preserve their self sufficiency and independence in access to natural resources. In doing so, they may have fatally weakened America’s chance to do the same thing, that is if and when Washington ever wakes up to the danger of being a supplicant for fuel, minerals, and metals.

The Chinese have to simply look on in total disbelief as Washington moves to subsidize the Volt Dolts in Detroit and hand the future of supplying a global economy, with heavy industrial and high tech goods, to a contest among a late-starting European Union, India, and China.

Perhaps the most unbelievable part of American myopia can be found in the four metals that the European Union chose to name in its press release as representative of the 40 metals it is classifying as critical:

  • Lithium;
  • Tantalum;
  • Cobalt; and
  • Antimony.

Each of these could be—and has been—mined in North America in quantities such that the U.S., Canada, and Mexico—the NAFTA alliance—could be self-sufficient or competitive. Yet today the U.S. is wholly dependent on foreign sources for tantalum, 86% for antimony, 78% for cobalt, and the USGS does not list lithium as one of the selected imports to monitor in its annual survey! Both tantalum and cobalt in fact are smuggled from the Democratic Republic of the Congo. mainly to China. where electronic devices, magnets, and cutting tools, for example are made for export to the U.S. where “concerned environmental activists’ get to enjoy the fruits of child labor and slavery while they give and listen to speeches about the evils of mining in the American West.

Europe is coming awake. America slumbers on in hypocrisy and utterly criminal disregard of the consequences of misguided environmentalism for the future economic security of the U.S.

America has not passed the buck it has passed the torch.

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