Fusion Magazine: Don't Fear the Dragon

The U.S. must slay its China-bashing to prosper in the 21st century

By Tyler Grimm

Thirty years ago, China made up a smaller portion of the global economy than Turkey does today. The nation was in abject poverty and hadn’t had much of a hit since it invented gunpowder.

The People’s Republic has since come a long way: It is now the world’s largest exporter, second largest manufacturer, third largest economy, has been growing at roughly 10 percent per year, and produces more than a quarter of all U.S. consumer goods. In Washington, international economic policy is set to become a hot-button issue this year and "What to do about China?" will be the 900-pound panda in the room. As has been the case over the last decade, policymakers will be tempted to act with resentment. After all, with best-case scenario predictions of 3 percent annual growth in the United States over the next 10 years, who wouldn’t be jealous of China’s expected double-digit growth?

A REMEDY WORSE THAN THE DISEASE

In 2009, we bought $300 billion worth of goods from China, and they imported only $70 billion worth of goods from us. The $230 billion trade deficit scares many Americans into believing that we are too dependent on China and they are taking our jobs.

In response, we are likely to hear increased calls for "protectionism"—the act of restricting trade with other countries in an attempt to "protect" our economy from losing jobs to foreign competition. Recent examples of this include tariffs put on tires imported from China and the "Buy American" provision in the stimulus. Such measures are the result of special interest lobbying, not good policymaking.

There is a near-consensus among economists that the benefits of free trade far outweigh the costs. Leave it to Washington to exercise economic illiteracy. In March of this year, New York Sen. Chuck Schumer declared, "We can’t jump-start our economy and pull ourselves out of this recession if we are putting Chinese workers ahead of American workers." Similar pandering sentiments have been echoed by many of his colleagues on Capitol Hill.

From a political standpoint, championing protectionism can be very attractive. If you represent a manufacturing state and constituents’ jobs are being lost because they can be done at a lower cost overseas, it is easy and popular to propose to save jobs by making foreign goods more expensive through tariffs.

In practice, though, things never work out as intended. In 1930, despite the objection of economists, we raised tariffs on more than 20,000 imported goods. This, by many accounts, triggered the Great Depression.

A SECRET ALLIANCE IN THE WAR ON POVERTY

The reality is that if a product can be made cheaper elsewhere it should be made cheaper elsewhere. The producing country benefits from selling the products while the consuming country benefits from access to cheaper goods, which translates to more disposable income. Economists use the term "comparative advantage" to describe this phenomenon.

Adam Smith was making this point as early as 1776: "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage."

In 2008, in response to hostility toward trade, two University of Chicago economists released a groundbreaking study that dealt with the question, "Does China Benefit the Poor in America?"

The answer: a resounding "yes." It turns out that from 1994-2005 (the period studied) the widening income gap (i.e. "the rich are getting richer while the poor are getting poorer") was actually completely offset by households buying cheaper products.

Far from hindering U.S. prosperity, China has been a driver of it. The problem is simply that the gains from trade are much harder to see than the losses. Macroeconomic indicators such as import or export levels do little to make the benefits of trade apparent to average Americans. It’s easy to understand that your neighbor’s job is now being done by someone in Asia. It’s incredibly difficult, however, to process that, as a result, the economy is more dynamic and your neighbor will almost certainly find a new job, probably in a new industry that is able to thrive because of efficiency gains. Not to mention that the job going overseas to be done more economically means that you have access to many products that would otherwise be unaffordable.

Over the last 10 years, overall prices in America have risen by 29 percent. At the same time, incomes have only risen by 23 percent. But consider the prices for major imports from China: clothes, audio equipment, televisions, and toys. Clothes prices fell by 8 percent; audio equipment fell by 39 percent; televisions fell by 83 percent; toys fell by 43 percent. This is what renowned 20th century economist Joseph Schumpeter had in mind when he wrote, "The capitalist engine is first and last an engine of mass production which unavoidably means also production for the masses."

Consider this: From the time the first VCR was sold, it took the device 12 years to reach half of American households. Compare this to DVD players: a mere six years after their introduction, 8 out of 10 households had one.

The same trend—faster diffusion rates—can be seen with almost any major technology. When you see a new expensive gadget, isn’t your first thought, "I’ll get one when the price is lower?" Prices are now coming down faster, leading to more widespread ownership.

It took 28 years for radios to reach half of American households. The iPod, which is made in China, has only been on the market since 2001 and already 40 percent of Americans own a portable mp3 player.

But what effect does trade have on China?

GROWTH, A BETTER ALTERNATIVE

Some bemoan trade with China not because it hurts America’s economy, but because of concerns about unfair labor practices. While bad working conditions are a serious and sad reality, citing them as a reason to stop trade is narrow-minded and would have the opposite of the intended effect.

China has only been engaged in global trade since 1978, when Chairman Deng Xiaoping gradually began freeing the economy from the paralyzing constraints of Communism. According to trade analyst Johan Norberg, "in 20 years, China’s economy went from equaling Germany’s to exceeding the German, French, Italian, and Nordic economies combined." The World Bank described the effect of China’s semi-liberalization as the "biggest and fastest poverty reduction in history."

Chinese workers are not forced to work for foreign companies. On the contrary, they prefer it. A poll conducted by Manpower Inc. found 75 percent of Chinese workers preferred to work for a wholly foreign-owned employer, rather than a Chinese company or joint venture.

AT LEAST SOMEBODY WANTS IT

Job losses and human rights concerns haven’t been the only driver of economic paranoia about China. The country’s status as the largest foreign holder of U.S. government debt has aroused deep uneasiness and a fear that we are financially at their mercy. The statistics alone are surely alarming: In 1970, foreigners held only 4 percent of our debt; now they hold almost half of it. China alone owns roughly $900 billion worth.

The obvious, and most preferable, solution would be that America stop accumulating somuch debt. But, considering that we’re not going to pay off our $12 trillion tab anytime soon, we should be thankful China is still willing to finance it.

In March 2007, Sen. Hillary Clinton sent a letter to then-Treasury Secretary Hank Paulson, complaining about China’s U.S. debt holdings. She wrote, "It is undeniable that the exponential growth of foreign debt in the last six years has undermined our economic standing. We have to curb these deficits and ensure foreign governments don’t own too much of our public debt and take steps to ensure that our economic well being is soundly in our own hands."

She talked a good game as a senator with presidential ambitions, but two years later Secretary of State Hillary Clinton—not having to engage in populist pandering—was playing a different tune. On a trip to China in February 2009, she praised the two countries’ "positive cooperation" and even thanked China for "continued confidence in U.S. treasuries."

The fact of the matter is that foreigners’ desire to hold our debt is a positive thing—the larger the demand for our debt, the lower the interest rate we pay on it. It’s when they’re not willing to hold our debt that we have a problem. Interest is paid with tax dollars (the federal government doesn’t earn money, it only redistributes it) and higher interest rates on the debt mean higher taxes for Americans. By 2019, interest payments are already slated to be the third biggest budget item (after Social Security and Medicare). Causing this expense to go up would have serious impact on Americans’ wallets.

At present, fortunately, China doesn’t have much of an option but to hold on to U.S. debt. The dollar remains the world’s most reliable currency and is therefore China’s best choice for stocking its foreign exchange reserve.

NOT NUMBER YUAN

China’s economy has made leaps and bounds since discovering the fruits of capitalism, but perception of the country’s economic might is far greater than reality.

According to a 2009 Pew CharitableTrust poll, when asked to pick the "world’s leading economic power" 44 percent of the public chose China, compared with only 27 percent for the United States.

China is growing rapidly, but the threat of it replacing the United States as the foremost economic superpower anytime soon is exaggerated. China’s population is more than four times the size of America’s, yet its economy is equivalent to the size of only four U.S. states. Most notably, after adjusting for purchasing power, China’s GDP per capita is $6,500, compared to $46,400 in the United States.

Even if China’s economy were to grow larger than that of the United States, the earliest this would happen is 2025. And "grow larger" does not mean the average Chinese citizen would be more wealthy than the average American, it simply means that more economic activity would take place in China than in the United States. We would, by almost any measure, remain the world’s strongest nation.

Further, despite its embrace of markets, China still self-identifies as Communist and, by and large, is still a very "unfree" and unstable nation. The joint Heritage Foundation/Wall Street Journal Index of Economic Freedom ranked China 140 out of 179 countries (1 being the most free). According to the report, China "remains a one-party state in which the Communist Party maintains tight control of political expression, speech, religion, and assembly. Any social group that can organize on a large scale is deemed a threat, as are many individual dissidents."

An added benefit of trade is that it ensures our ideological differences continue to be non-violent. Countries that are economically dependent on each other have never gone to war. As French philosopher Frederic Bastiat once observed, "When goods cross borders, armies don’t." The academic literature calls this phenomenon "peace through commerce."

WITHOUT AN ECONOMIC FORTUNE COOKIE

In March, President Obama suggested that the Democrats’ once-pro-tectionist position on trade was changing: "Those who once would oppose any trade agreement now understand that there are new markets and new sectors out there that we need to break into if we want our workers to get ahead."

Policy actions taken since the start of his administration, however, seem to indicate otherwise. The "Buy American" provision, tariffs on tires, coated-paper and steel piping, and animosity toward Chinese monetary policy have all been setbacks to a relationship the president himself says will "shape the 21st century."

On the other side of the world, Chinese leaders seem to get it. Earlier this year, Premier Wen Jiabao exclaimed, "free trade not only promotes growth of the world economy... it promotes harmony in the world and changes and improves people’s lives." He reiterated it on March 13 when he promised China would "unswervingly implement its opening-up policy." At the same time, the Red nation is continuing to slowly liberalize markets, which is fueling growth.

The big question is: What does the future hold for China’s economy?

One predictor may be the size of government. China’s government now makes up less than 20 percent of its economy. This was the same as the post-war average of the U.S. federal government’s size. Recently, however, Uncle Sam has swollen to 25 percent. Think about that. The size of government in China is shrinking to the size of the U.S. government when our country was its most prosperous.

Not to mention that, while we’re going through the worst economic downturn in a generation, China escaped the global financial crisis smelling like flowers—it is enjoying significant expansion with no sign of a slow-down. This has led many to compare China to Japan in the 1980s, when it appeared to be booming and predicted to overtake the United States.

Japan’s raging growth was short-lived as it was proven to be the result of a bubble. This resulted in a "lost decade" of Japan’s government trying hopelessly to resuscitate its economy through multiple stimulus packages. It has still not fully recovered. This time, it could be the United States, not its Asian rival, that experiences a decade of malaise from too much economic intervention.

America has everything to lose and nothing to gain by going off the tried and true path for economic growth. The United States is and will remain exceptional. This, however, doesn’t change the fact that anti-growth policies that cut off our economy from the rest of the world’s resources can affect how exceptionally we grow and prosper.



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Carter Page, a former advisor to Donald Trump's 2016 presidential campaign, found himself at the center of the Russia probe and had his reputation and career destroyed by what we now know were lies from our own intelligence system and the media.

On the TV show Thursday, Page joined Glenn Beck to speak out about how he became the subject of illegal electronic surveillance by the FBI for more than two years, and revealed the extent of the corruption that has infiltrated our legal systems and our country as a whole.

"To me, the bigger issue is how much damage this has done to our country," Page told Glenn. "I've been very patient in trying to ... find help with finding solutions and correcting this terrible thing which has happened to our country, our judicial system, DOJ, FBI -- these once-great institutions. And my bigger concern is the fact that, although we keep taking these steps forward in terms of these important findings, it really remains the tip of the iceberg."

Page was referencing the report by Justice Department Inspector General Michael Horowitz, which revealed that the FBI made "at least 17 significant errors or omissions" in its Foreign Intelligence Surveillance Act (FISA) applications for warrants to spy on Page, a U.S. citizen.

"I think this needs to be attacked from all angles," Glenn said. "The one angle I'm interested in from you is, please tell me you have the biggest badass attorneys that are hungry, starving, maybe are a little low to pay their Mercedes payments right now, and are just gearing up to come after the government and the media. Are they?"

I can confirm that that is the case," Page replied.

Watch the video clip below for a preview of the full-length interview:

The full interview will air on January 30th for Blaze TV subscribers, and February 1st on YouTube and wherever you get your podcast.

Want to listen to more Glenn Beck podcasts?

Subscribe to Glenn Beck's channel on YouTube for FREE access to more of his masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, or subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

Use code BECK to save $10 on one year of BlazeTV.

On Wednesday's TV show, Glenn Beck sat down with radio show host, author, political commentator, and film critic, Michael Medved.

Michael had an interesting prediction for the 2020 election outcome: a brokered convention by the DNC will usher in former First Lady Michelle Obama to run against President Donald Trump.

Watch the video below to hear why he's making this surprising forecast:

Use code BECK to save $10 on one year of BlazeTV.

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

On Thursday's "Glenn Beck Radio Program," BlazeTV's White House correspondent Jon Miller described the current situation in Virginia after Gov. Ralph Northam (D) declared a state of emergency and banned people carrying guns at Capitol Square just days before a pro-Second-Amendment rally scheduled on Martin Luther King Jr. Day.

Jon told Glenn that Gov. Northam and the Virginia Legislature are "trying to deprive the people of their Second Amendment rights" but the citizens of Virginia are "rising up" to defend their constitutional rights.

"I do think this is the flashpoint," Jon said. "They [Virginia lawmakers] are saying, 'You cannot exercise your rights ... and instead of trying to de-escalate the situation, we are putting pressure. We're trying to escalate it and we're trying to enrage the citizenry even more'."

Glenn noted how Gov. Northam initially blamed the threat of violence from Antifa for his decision to ban weapons but quickly changed his narrative to blame "white supremacists" to vilify the people who are standing up for the Second Amendment and the Constitution.

"What he's doing is, he's making all all the law-abiding citizens of Virginia into white supremacists," Glenn said.

"Sadly, that's exactly right," Jon replied. "And I think he knows exactly what he's doing."

Watch the video to catch more of the conversation below:

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Ryan: Trump Louisiana Finale

Photo by Jim Dale

Part One. Part Two. Part Three.

At the end of Trump rallies, I would throw on my Carhartt jacket, sneak out of the press area, then blend in with everyone as they left, filing out through swinging doors.

Often, someone held the door open for me. Just 30 minutes earlier, the same person had most likely had most likely hissed at me for being a journalist. And now they were Sunday smiles and "Oh, yes, thank you, sir" like some redneck concierge.

People flooded out of the arena with the stupidity of a fire drill mishap, desperate to survive.

The air smacked you as soon as you crossed the threshold, back into Louisiana. And the lawn was a wasteland of camping chairs and coolers and shopping bags and to-go containers and soda cans and articles of clothing and even a few tents.

In Monroe, in the dark, the Trump supporters bobbled over mounds of waste like elephants trying to tiptoe. And the trash was as neutral to them as concrete or grass. They plodded over it because it, an object, had somehow gotten in their way.

It did not matter that they were responsible for this wreckage.Out in the sharp-edged moonlight, rally-goers hooted and yapped and boogied and danced, and the bbq food truck was all smoke and paper plates.

They were even more pumped than they had been before the rally, like 6,000 eight year olds who'd been chugging Mountain Dew for hours. Which made Donald Trump the father, the trooper, God of the Underworld, Mr. Elite, Sheriff on high horse, the AR-15 sticker of the family.

Ritualistic mayhem, all at once. And, there in Louisiana, Trump's supporters had gotten a taste of it. They were all so happy. It bordered on rage.

Still, I could not imagine their view of America. Worse, after a day of strange hostilities, I did not care.

My highest priority, my job as a reporter, was to care. To understand them and the world that they inhabit. But I did not give a damn and I never wanted to come back.

Worst of all, I would be back. In less than a week.

Was this how dogs felt on the 4th of July? Hunched in a corner while everyone else gets drunk and launches wailing light into the sky? configurations of blue and red and white.

It was 10:00 p.m. and we'd been traveling since 11:00 a.m., and we still had 5 hours to go and all I wanted was a home, my home, any home, just not here, in the cold sweat of this nowhere. Grey-mangled sky. No evidence of planes or satellites or any proof of modern-day. Just century-old bridges that trains shuffled over one clack at a time.

And casinos, all spangles and neon like the 1960s in Las Vegas. Kitchy and dumb, too tacky for lighthearted gambling. And only in the nicer cities, like Shreveport, which is not nice at all.

And swamp. Black water that rarely shimmered. Inhabited by gadflies and leeches and not one single fish that was pretty.

Full of alligators, and other killing types. The storks gnawing on frogs, the vultures never hungry. The coyotes with nobody to stop them and so much land to themselves. The roaches in the wild, like tiny wildebeests.

Then, the occasional deer carcass on the side of the road, eyes splayed as if distracted, tongue out, relaxed but empty. The diseased willows like skeletons in hairnets. The owls that never quit staring. A million facets of wilderness that would outlive us all.

Because Nature has poise. It thrives and is original.

Because silence is impossible. Even in an anechoic chamber, perfectly soundproofed, you can hear your own heartbeat, steady as a drum. A never-ending war.

I put "Headache" by Grouper on repeat as we glided west. We were deadlocked to asphalt, rubber over tarface.

And I thought about lines from a Rita Dove poem titled "I have been a stranger in a strange land"

He was off cataloging the universe, probably,
pretending he could organize
what was clearly someone else's chaos.

Wasn't that exactly what I was doing? Looking for an impossible answer, examining every single accident, eager for meaning? telling myself, "If it happens and matters the next year, in America, I want to be there, or to know what it means. I owe it to whoever cares to listen."

Humans are collectors and I had gone overboard.

Because maybe this wasn't even my home. These landmarks, what did they mean? Was I obvious here? When I smiled, did I trick them into believing that I felt some vague sense of approval? Or did my expressions betray me?

Out in all that garbage-streaked emptiness — despite the occasional burst of passing halogen — I couldn't tell if everything we encountered was haunted or just old, derelict, broken, useless. One never-ending landfill.

Around those parts, they'd made everything into junk. Homes. Roads. Glass. Nature. Life itself, they made into junk.

I cringed as we passed yet another deer carcass mounded on the side of the road.

As written in Job 35:11,

Who teaches us more than the beasts of the earth and makes us wiser than the birds in the sky?

Nobody. Look at nature and you feel something powerful. Look at an animal, in all of its untamable majesty, and you capture a deep love, all swept up in the power of creation. But, here, all I saw were poor creatures who people had slammed into and kept driving. Driving to where? For what reason? What exactly was so important that they left a trail of dead animals behind them?

So I crossed myself dolorously and said an "Our Father" and recited a stanza from Charles Bukowski's "The Laughing Heart"

you can't beat death but
you can beat death in life, sometimes.
and the more often you learn to do it,
the more light there will be.

Out here, nothing but darkness. Needing some light, by God. Give me something better than a Moon that hides like an underfed coward.

Jade told me about some of the more traumatic things she'd seen while working at the State Fair.

"Bro, they pull roaches out of the iced lemonade jugs and act like nothing happened."

"All right but what about the corn dogs?"

"You do not want to know, little bro."

She looked around in the quiet. "Back in the day, the Louisiana Congress refused to raise the drinking age from 18 to 21," she said. "They didn't want to lose all that drunk gambler money. So the federal government cut off funding to highways."

We glided through moon-pale landscape for an hour before I realized what she had meant. That there weren't any light poles or billboards along the road. Nothing to guide us or distract us. Just us, alone. And it felt like outer space had collapsed, swallowed us like jellybeans.

Like two teenagers playing a prank on the universe.

In the cozy Subaru Crosstrek, in the old wild night, brimming with the uncertainty of life and the nonchalance of failure, we paraded ourselves back to Dallas. Alive in the river silence that follows us everywhere.

New installments come Mondays and Thursdays. Next, the Iowa caucuses. Check out my Twitter. Email me at kryan@blazemedia.com