Why do some GOP party politicians envision a China-like America?

A few weeks ago, Huffington Post published a very interesting article titled "Emerging GOP View: Communist China Is Model for American Capitalism". The article discusses a growing trend amongst US capitalists, especially those who favor the Republican party, to view China as an example that the USA needs to follow. Here are some key quotes from the Huffington Post article:

First came Rep. Mike Coffman who wrote in May that China has "enjoyed sustained economic growth based on the free market principles that we have long abandoned in favor of the redistributionist policies of a welfare state."

Then in November, Michele Bachmann said, essentially, that China is growing like crazy because it lacks America's Great Society programs, which she'd dump.

And now yesterday, according to a tweet by AFP reporter Olivier Knox, Mitt Romney held up China as a place where people are getting rich on free enterprise and capitalism, while, by implication, Americans are watching on the sidelines getting poor

There are many monopolies in China, and a lot of state regulation (especially when it comes to "regulating" the workers rights, so that the capitalists can "freely" make huge profits). So there is not much point in seriously debating whether or not China is based on "free markets".

But still, China IS growing, and it does attract capital investments like no other country. We have discussed of course (in previous posts) how China is also heading for a crisis, as the Chinese workers are 'too poor' to buy all the products they produce, and as the Westerners can't keep buying them anymore (because they are getting poor), Chinese exports will suffer. Or that there are increasing signs of a Chinese property and housing bubble, as the workers can't buy all the houses they have built (because they are too poor). But China will probably get over any crisis in he long run, because it can attract investments (unlike the Western countries, with the exception of Germany).

We even remembered John Stapleton, an English Liberal Party politician who sat in the House of Commons between 1852 and 1874 - here's a famous quote of his: "If China," says Mr. Stapleton, M.P., to his constituents, "should become a great manufacturing country, I do not see how the manufacturing population of Europe could sustain the contest without descending to the level of their competitors." (Times, Sept. 3, 1873, p. 8.).

But hey, who cares if some workers live or die? In fact, from a capitalist's point of view, if when a crisis hits, then it makes a lot of sense to let some workers suffer or even die, as they can easily be replaced (there are billions of them). So, if some of them die, then there is no problem - on the contrary, their deaths would help keep the unemployment rate lower.

"Know your place in the universe" as the saying goes - but what is a workers place in the universe? Here is FOXCONN's CEO on the subject:

CEO OF APPLE PARTNER FOXCONN: 'Managing One Million Animals Gives Me A Headache'

According to WantChinaTimes, Terry Gou, the head of Hon Hai (Foxconn), the largest contract manufacturer in the world, had this to say at a recent meeting with his senior managers:

"Hon Hai has a workforce of over one million worldwide and as human beings are also animals, to manage one million animals gives me a headache," said Hon Hai chairman Terry Gou at a recent year-end party, adding that he wants to learn from Chin Shih-chien, director of Taipei Zoo, regarding how animals should be managed.

As WantChinaTimes put it, Gou "could have chosen his words more carefully." But Gou had indeed invited the zoo director to speak to Hon Hai's top managers in the hope that the zoo-keeper's advice would help them do their jobs better

So, why does China attracts investments? And why does the GOP want to emulate the Chinese model?

It's simple: It's not just the low wages or the long working hours. It's not even the fact that the new generation of Chinese workers is more skilled and educated than the previous ones.

It's also because the workers have no rights, not really. They pretty much do whatever the capitalists order them to do in order to increase productivity and their profits. And if they have the "audacity" to make some demands, then they are fired or the state sends in the police or the army and crack down on protesters. There is no "free speech", and the list goes on and on.

So, the Western capitalists have billions of "man-animals" in China, so they simply have no use for the Western workers, not all of them anyway. And, naturally, they just let them rot, die, while the rest have to accept "austerity measures", that force them to work longer hours for less money. They become "Chinafied" - after all, this is what the GOP members want to do, right? They don't like "the redistributionist policies of a welfare state", because there is no way to compete against China if your workers are living in relatively "humane" conditions", while the Chinese workers are treated like "animals". Capitalism has reached a point where it can only grow in a "China-like business environment" (Germany being the one notable exception).

So, if humanity is to keep forcing the workers to compete against each other, for the sake of a few capitalists, then this is what happens: If you are a worker, you'll have to accept a very low wage, working long hours, etc., or you'll have to face massive unemployment, as the capitalists can invest their capital in other places (wherever the workers DO accept living in poverty).

YES, there are some notable exceptions to this - for example Germany is doing pretty well, as it produces better quality products to make up for the relatively "high" German wages. But the general trend is clear: China is the new row model for the capitalists, and the workers have an important choice to make - They can either accept living like "animals", or they can overthrow the capitalists, who make us compete against each other, for their benefit and their benefit alone.

Here is what you, as a worker, have to compete against (from the "New York Times"):

This Article Explains Why Apple Makes iPhones In China And Why The US Is Screwed

When one reads about these working conditions — 12-16 hour shifts, pay of ~$1 per hour or less, dormitories with 15 beds in 12x12 rooms — the obvious assumption is that it's all about money:

Greedy manufacturers want to make bigger profits, so they make their products in places with labor practices that would be illegal in America.

And money is certainly part of it.

But an amazing new article by Charles Duhigg and Keith Bradsher of the New York Times reveals that there's a lot more to it than that.

Most of the components of iPhones and iPads — the supply chain — are now manufactured in China, so assembling the phones half-a-world away would create huge logistical challenges. It would also reduce flexibility — the ability to switch easily from one component supplier or manufacturer to another.

China's factories are now far bigger and more nimble than those in the United States. They can hire (and fire) tens of thousands of workers practically overnight. Because so many of the workers live on-site, they can also press them into service at a moment's notice. And they can change production practices and speeds extremely rapidly.
China now has a far bigger supply of appropriately-qualified engineers than the U.S. does — folks with the technical skills necessary to build complex gadgets but not so credentialed that they cost too much.

And, lastly, China's workforce is much hungrier and more frugal than many of their counterparts in the United States.

On this last point, Duhigg and Bradsher tell the story of Eric Saragoza, an engineer who began working in an Apple factory near Sacramento in 1995. The plant made Macs, and for a few years, Saragoza did well, earning $50,000 a year, getting married and having kids, and buying a house with a pool.

Soon, however, Apple started shipping jobs overseas, because the costs of manufacturing in Asia were so much lower. Importantly, these reduced costs weren't just about wages — they were about being closer to the supply chain and the willingness of the workforce to put in over-time.

Saragoza was soon asked to work 12-hour days and come in on Saturdays. But, understandably, he wanted to watch his kids play soccer on the weekends.

Saragoza's salary was too high for him to take an unskilled job. And he didn't have the experience and credentials necessary to move into senior management. In 2002, his job was eliminated. Apple, meanwhile, turned the Elk Grove plant into an AppleCare facility, with call-center employees making $12 an hour.

Recently, desperate for work, Saragoza took a job at an electronics temp firm. Assigned to the AppleCare plant, he was paid $10 an hour to test repaired iPads before they were sent back to customers. That job paid so little (and was presumably so depressing) that the now 48-year-old Saragoza quit and is looking for work again.

Meanwhile, in Shenzhen, a young project manager named Lina Lin coordinates the manufacture of Apple accessories for a company in the Apple ecosystem. She makes a bit less than Saragoza made a decade ago as an Apple engineer. She lives in an 1,100-square foot apartment with her husband, their in-laws, and their son. They save a quarter of their salaries every month.

Your iPhone Was Built, In Part, By 13 Year-Olds Working 16 Hours A Day For 70 Cents An Hour

• One Foxconn worker Mike Daisey interviewed, outside factory gates manned by guards with guns, was a 13-year old girl. She polished the glass of thousands of new iPhones a day.
• The 13-year old said Foxconn doesn't really check ages. There are on-site inspections, from time to time, but Foxconn always knows when they're happening. And before the inspectors arrive, Foxconn just replaces the young-looking workers with older ones.
• In the first two hours outside the factory gates, Daisey meets workers who say they are 14, 13, and 12 years old (along with plenty of older ones). Daisey estimates that about 5% of the workers he talked to were underage.
• Daisey assumes that Apple, obsessed as it is with details, must know this. Or, if they don't, it's because they don't want to know.
• Daisey visits other Shenzhen factories, posing as a potential customer. He discovers that most of the factory floors are vast rooms filled with 20,000-30,000 workers apiece. The rooms are quiet: There's no machinery, and there's no talking allowed. When labor costs so little, there's no reason to build anything other than by hand.
• A Chinese working "hour" is 60 minutes — unlike an American "hour," which generally includes breaks for Facebook, the bathroom, a phone call, and some conversation. The official work day in China is 8 hours long, but the standard shift is 12 hours. Generally, these shifts extend to 14-16 hours, especially when there's a hot new gadget to build. While Daisey is in Shenzhen, a Foxconn worker dies after working a 34-hour shift.
• Assembly lines can only move as fast as their slowest worker, so all the workers are watched (with cameras). Most people stand.
• The workers stay in dormitories. In a 12-by-12 cement cube of a room, Daisey counts 15 beds, stacked like drawers up to the ceiling. Normal-sized Americans would not fit in them.
• Unions are illegal in China. Anyone found trying to unionize is sent to prison.
• Daisey interviews dozens of (former) workers who are secretly supporting a union. One group talked about using "hexane," an iPhone screen cleaner. Hexane evaporates faster than other screen cleaners, which allows the production line to go faster. Hexane is also a neuro-toxin. The hands of the workers who tell him about it shake uncontrollably.
• Some workers can no longer work because their hands have been destroyed by doing the same thing hundreds of thousands of times over many years (mega-carpal-tunnel). This could have been avoided if the workers had merely shifted jobs. Once the workers' hands no longer work, obviously, they're canned.
• One former worker had asked her company to pay her overtime, and when her company refused, she went to the labor board. The labor board put her on a black list that was circulated to every company in the area. The workers on the black list are branded "troublemakers" and companies won't hire them.
• One man got his hand crushed in a metal press at Foxconn. Foxconn did not give him medical attention. When the man's hand healed, it no longer worked. So they fired him. (Fortunately, the man was able to get a new job, at a wood-working plant. The hours are much better there, he says — only 70 hours a week).
• The man, by the way, made the metal casings of iPads at Foxconn. Daisey showed him his iPad. The man had never seen one before. He held it and played with it. He said it was "magic."

 Nike factory to pay $1m to Indonesian workers for overtime

Shoe plant workers clocked up nearly 600,000 hours of overtime without pay over two years

A Nike factory has agreed to pay $1m in unpaid overtime to Indonesian workers in a move that could force other suppliers of multinational companies to follow suit.

"This has the potential to send shockwaves through the Indonesian labour movement," he said, adding that the victory had prepared the union to take on the fight for any workers who had been forced to work overtime without pay. "We have only just begun." 

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The ‘manure’ of history

Something has changed, fundamentally. This is evident. What is it?

Before, they all wanted to be the ploughmen of history, to play the active parts, each one of them to play an active part. Nobody wished to be the ‘manure’ of history. But is it possible to plough without first manuring the land? So ploughmen and ‘manure’ are both necessary. In the abstract, they all admitted it. But in practice? Manure for manure, as well draw back, return to the shadows, into obscurity. Now something has changed, since there are those who adapt themselves ‘philosophically’ to being ‘manure’, who know this is what they must be and adapt themselves. It is like the problem of the proverbial dying man.

But there is a great difference, because at the point of death what is involved is a decisive action, of an instant’s duration. Whereas in the case of the manure, the problem is a long-term one, and poses itself afresh at every moment. You only live once, as the saying goes; your own personality is irreplaceable. You are not faced abruptly with an instant’s choice on which to gamble, a choice in which you have to evaluate the alternatives in a flash and cannot postpone your decision. Here postponement is continual, and your decision has continually to be renewed. This is why you can say that something has changed. There is not even the choice between living for a day as a lion, or a hundred years as a sheep. You don’t live as a lion even for a minute, far from it: you live like something far lower than a sheep for years and years and know that you have to live like that.
-A. Gramsci - Prison Notebooks (hat tip LeninReloaded)

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Intellectual property rights and "patent wars"

A few weeks ago, I started writing about China, and I promised I would write a post about their moves in the monetary plain (we have already mentioned how the current monetary system is ending). I haven't forgotten my promise, but I will do it after this weekend. For the time being, we shall discuss another subject, intellectual property rights.

We have already talked about piracy and control of the internet in our previous posts. But there are many more fronts in this fight - here is a great piece from npr.org on "patent wars". Most of us have probably heard about one company suing another over pattens and intellectual property rights (for example, Kodak sued Apple and HTC over digital image patents, Motorola Sued Apple Over iPhone 4S and iCloud, and Intel bought RealNetworks' patents and video coding tech over the last month alone), but what does it all mean for us and why do patents inhibit progress, discovery and innovation?

When Patents Attack

The influential blog Techdirt regularly refers to Intellectual Ventures as a patent troll. IPWatchdog, an intellectual property site, called IV "patent troll public enemy #1." These blogs write about how Intellectual Ventures has amassed one of the largest patent portfolios in existence and is going around to technology companies demanding money to license these patents.


Patents are a big deal in the software industry right now. Lawsuits are proliferating. Big technology companies are spending billions of dollars to buy up huge patent portfolios in order to defend themselves. Computer programmers say patents are hindering innovation.

But people at companies that have been approached by Intellectual Ventures don't want to talk publicly.

"There is a lot of fear about Intellectual Ventures," says Chris Sacca, a venture capitalist who was an early investor in Twitter, among other companies. "You don't want to make yourself a target."
[...]
"I tried to put you in touch with other people in this community to talk to you about this and they almost uniformly said they couldn't talk to you," Sacca told us. "They were afraid to." IV has the power to "literally obliterate startups," Sacca says.
[...]
Imagine an inventor out there — someone with a brilliant idea, a breakthrough. This inventor has a patent, but companies are stealing his idea. And this inventor doesn't have the money or legal savvy to stop them. That's where IV comes in. It buys this inventor's patent, and it makes sure that companies who are using the idea pay for it.

When we asked for an example of an inventor in this situation, someone with a breakthrough, who wasn't getting paid for it, two separate people at IV pointed us to a guy named Chris Crawford.
[...]
So we went to talk to Chris Crawford. But that turned out to be harder than we thought — and it led us on a five month journey, where things did not quite fit the story Intellectual Ventures was telling.

When we followed up with IV to get Chris Crawford's contact info, the company told us it no longer owned Chris Crawford's patent. And Crawford probably wouldn't want to talk right now anyway, the company said, because he was in the middle of litigation.

We started digging around and found Chris Crawford in Clearwater, Florida. As predicted, he never responded to our many emails and phone calls. You'll never hear from him in this story. But we were able to locate Chris's patent — number 5771354.

He got it in 1998. And the way IV explained the patent to us, Chris Crawford invented something that we do all the time now: He figured out a way to upgrade the software on your home computer over the Internet. In other words, when you turn on your computer and a little box pops up and says, "Click here to upgrade to the newest version of iTunes," that was Chris Crawford's idea.

But when we looked at the patent, it seemed to claim a lot more than that. The name of the actual invention is "an online back-up system." The patent says this invention makes it possible to connect to an online service provider to do a bunch of stuff — software purchases, online rentals, data back ups, information storage. The patent makes it seem like Chris Crawford invented a lot of the most common things we do on the Internet.

We weren't sure what to make of all this, so we went to see David Martin, who runs a company called M-Cam. It's hired by governments, banks and business to assess patent quality, which the company does with a fancy piece of software. We asked Martin to assess Chris Crawford's patent.

At the same time Crawford's patent was being prosecuted, more than 5,000 other patents were issued for "the same thing," Martin says.

Crawford's patent was for "an online backup system." Another patent from the same time was for "efficiently backing up files using multiple computer systems." Yet another was for "mirroring data in a remote data storage system."

And then there were three different patents with three different patent numbers but that all had the same title: "System and method for backing up computer files over a wide area computer network."


Martin says about 30 percent of U.S. patents are essentially on things that have already been invented. In 2000, for example, the patent office granted a patent on making toast — patent number 6080436, "Bread Refreshing Method."

We also asked Rick Mc Leod, a patent lawyer and former software engineer, to evaluate Chris Crawford's patent.

"None of this was actually new," he told us.

Mc Leod looked to see if anyone else in the field was already doing the thing Chris Crawford claimed to invent in 1993, when he first filed his patent. Here's what he found:

There were institutions, both academic and businesses, that used computers in this way, and I think it's a very interesting collection of things that were well known in the 1980s, with the exception that it adds the word "Internet."

Mc Leod said he didn't think the patent should have been issued in the first place.

For a long time, the patent office would have agreed with Rick Mc Leod. For a long time, the patent office was very reluctant to grant patents for software at all.
[...]
In the 1990s, the Federal courts stepped in and started chipping away at this interpretation. There was a couple big decisions, one in 1994 and another in 1998, which overturned the patent office completely.


A flood of software patents followed. A lot of people in Silicon valley wish that had never happened, including a very surprising group: computer programmers.
[...]
That same afternoon, we talked to a half dozen different software engineers. All of them hated the patent system, and half of them had patents in their names that they felt shouldn't have been granted. In polls, as many as 80 percent of software engineers say the patent system actually hinders innovation. It doesn't encourage them to come up with new ideas and create new products. It actually gets in their way.


Many patents are so broad, engineers say, that everyone's guilty of infringement. This causes huge problems for almost anyone trying to start or grow a business on the Internet.

"We're at a point in the state of intellectual property where existing patents probably cover every behavior that's happening on the Internet or our mobile phones today," says Chris Sacca, the venture capitalist. "[T]he average Silicon Valley start-up or even medium sized company, no matter how truly innovative they are, I have no doubt that aspects of what they're doing violate patents right now. And that's what's fundamentally broken about this system right now."
[...]
And, in fact, that's what's happening with Chris Crawford's patent. Intellectual Venures sold it to a company called Oasis research in June of 2010. Less than a month later, Oasis Research used the patent to sue over a dozen different tech companies, including Rackspace, GoDaddy, and AT&T.


We called Oasis several times, but no one ever answered the phone.
[...]
There was hardly any public information about Oasis Research. No way to know who owned it, or how many employees it had.

One of the few details that was available was an address: 104 E. Houston street, suite 190, Marshall, Texas.

So we went to Marshall. The door to Oasis's office was locked, and through the crack under the door we could see there were no lights were on inside.

It's kind of a cliche to knock on the door of the empty office. But we'd flown a long way. So we knocked. No one answered.

The office was in a corridor where all the other doors looked exactly the same —locked, nameplates over the door, no light coming out. It was a corridor of silent, empty offices with names like "Software Rights Archive," and "Bulletproof Technology of Texas."

It turns out a lot of those companies in that corridor, maybe every single one of them, is doing exactly what Oasis Research is doing. They appear to have no employees. They are not coming up with new inventions. The companies are in Marshall, Texas because they are filing lawsuits for patent infringement.


Patent lawsuits are big business in Marshall, which is part of the eastern district of Texas.

Many people say that juries in Marshall are friendly to patent owners trying to get a large verdict.
[...]
Oasis is a company with no operations, no products, and, as far as we can tell, no employees, that is using a very broad patent from 1998 to sue over a dozen companies.
[...]
All the big tech companies have started amassing troves of software patents — not to build anything, but to defend themselves. If a company's patent horde is big enough, it can essentially say to the world, "If you try to sue me with your patents, I'll sue you with mine."


It's mutually assured destruction. But instead of arsenals of nuclear weapons, it's arsenals of patents. And this was a problem Intellectual Ventures founder Nathan Myhrvold said he was trying to solve when he first started the company.
[...]
The pitch he heard was, basically, Intellectual Ventures helps defend against lawsuits. Intellectual Ventures has this horde of 35,000 patents — patents that, for a price, companies can use to defend themselves.

Technology companies pay Intellectual Ventures fees ranging "from tens of thousands to the millions and millions of dollars ... to buy themselves insurance that protects them from being sued by any harmful, malevolent outsiders," Sacca says.

There's an implication in IV's pitch, Sacca says: If you don't join us, who knows what'll happen?

He says it reminds him of "a mafia-style shakedown, where someone comes in the front door of your building and says, 'It would be a shame if this place burnt down. I know the neighborhood really well and I can make sure that doesn't happen.' "
[...]
One former IV patent was used by an NPE to sue 19 different companies, a broad assortment that included Dell, Abercrombie & Fitch, Visa, and UPS.

These companies all have websites where, when you scroll your mouse over certain sections, pop-up boxes appear. The NPE said, "We have the patent on that." Which would make pretty much the entire Internet guilty of infringing the patent.
[...]
In early July, the bankrupt tech company Nortel put its 6,000 patents up for auction as part of a liquidation. A bidding war broke out among Silicon Valley powerhouses. Google said it wanted the patents purely to defend against lawsuits and it was willing to spend over $3 billion to get them. That wasn't enough, though.

The portfolio eventually sold to Apple and a consortium of other tech companies including Microsoft and Ericsson. The price tag: $4.5 billion dollars. Five times the opening bid. More than double what most people involved were expecting. The largest patent auction in history.

That's $4.5 billion on patents that these companies almost certainly don't want for their technical secrets. That $4.5 billion won't build anything new, won't bring new products to the shelves, won't open up new factories that can hire people who need jobs. That's $4.5 billion dollars that adds to the price of every product these companies sell you. That's $4.5 billion dollars buying arms for an ongoing patent war.

The big companies — Google, Apple, Microsoft — will probably survive. The likely casualties are the companies out there now that no one's ever heard of that could one day take their place.

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SOPA, PIPA, ACTA, private property and internet monopolies (part 1)

Wikipedia was one of the many sites that protested the SOPA act

While I had to spent a few weeks in the hospital, taking care of my sick mother, many things happened in the world - after all, we are in the middle of a crisis, so events tend to unfold very rapidly (and they certainly won't wait for my sick mother to recover)

Iran is always on the news, Europe sanctions against Iran (something that particularly hurts the weaken European economies that are very much dependent on Iranian oil - Greece in particular is committing economic suicide as a state, in order to please its rulers), Iran sells oil to India in exchange for gold, China is ready to do even more business with Iran, as they could become Iran's only client if the West goes ahead with its sanctions. China may even benefit from this situation, as Iran will probably be forced to sell its oil at a cheaper price.

Furthermore, the West is even trying to launch an attack against Syria, the only neighbouring country left that isn't under Western rule. If the West succeeds, Iran will be completely surrounded - but Russia (and China) are vetoing this attack (for obvious reasons).

But hey, who cares about this boring stuff? Maybe we will start caring if (or rather, when) we stop being able to buy oil at "reasonable" prices. For now, let's talk about something else, something that is REALLY serious, SOPA, PIPA, ACTA and all those other weird laws that inhibit piracy on the internet. I mean, you take away whatever you want, except our "free" internet and our "right" to watch, listen, share and download stuff without having to pay any money for it, right? :-)

Let's face it, we are all hooked in this "culture of free", especially when it comes to the internet: Free movies, free music, free books, free information, free news, free TV shows, free sports live coverage, free porn, you name it, it's there and it's for free.

And not only is it cheaper, but it can also be better that the paid version if it (for example, the newspaper provides a much slower coverage of the news, and you can't use any video, etc. So, the internet is a much better medium). Furthermore, the internet is an entirely "new realm", and this means that there are many "unexplored regions", and room for innovation. It also means that it hasn't yet reached the stage of the "game" where a few oligarchs control it (whereas the "real" world HAS reached this stage, and there are monopolies and oligopolies wherever you look, controlling everything - banking, oil, media, telecommunications, even the food we eat (think Monsanto)).

Of course, the ruling class is trying to "establish its authority" on the internet, and a few oligopolies/monopolies are already being formed. And the rich oligarchs are trying to buy whatever they can get their hands on - for example JP Morgan wants to invent a lot of money in Twitter and other internet projects (and so does Goldman Sachs and all the other "big players").

 So, a familiar pattern emerges: A few "players" start owning everything, and there is no real need for to create something, as they can just own it and demand to be paid by the rest of us for the usage of their property (much like the Monopoly board game).

But let's be fair, the internet is not yet monopolized, or at least it isn't as monopolized as everything else. This is why we like it, because we can still innovate, and use it for our benefit (for example, we can share music, videos, books, etc. We can even find cool blogs and sites that provide a much clearer view of world that the traditional media, or use tweeter and facebook to better coordinate events such as "the Arab spring"!).

Was all this "too good to last"?

Gutenberg died on February 3, 1468

Here is an interesting tidbit from a Telegraph article:

One of the most important technological advances in the past thousand years was Gutenberg's printing press. As one Italian bishop put it, it would take three printers working for three months to produce 300 copies of a book – but it would take three scribes a lifetime each to complete the same number.

Yet it wasn't only the speed of the printing press that made it so revolutionary – it was its ability to produce practically perfect copies of written text. No longer would students have to worry about errors or omissions introduced by scribes working off second or third-hand copies – they could instead rest assured that their copy was as accurate as the original master.

Ideas could spread faster, farther, and with more fidelity than ever before – not for nothing does Elizabeth Evenden, a lecturer in the history of books, call the new technology "the internet of its day", with information no longer "coming purely from the pulpits or disseminated by governments."

Over five hundred years on, we can now make 300 copies of a book – and send them across the world – not in three months, but in the blink of an eye. This advance has led to the flowering of online commerce and the exchange of new and diverse ideas between people who would never otherwise have been able to talk, let alone meet [...] 

Yes, we all now have a "printing press" in our very houses, and it is a much better one than the one created by Gutenberg! All it takes is a computer and electricity.

Of course, the fact that now ideas and news can spread at a much faster pace and reach broader audiences doesn't mean that that "we are more wise than ever". In fact, the world seems to be more complicated and difficult to understand than ever before, as lies can also be spread faster now than ever before. The key to knowledge is not just having more information, but it is having a coherent vision of the world, in order to correctly process all the data you receive from it. To put it in another way, what's the point of having a lot of TV stations, if their content is crap, or if your tv is not working, because it's can't decode the signal it receives?

Internet provided the people with a powerful - granted, it hasn't always been used very wisely, but still it enables us to listen to alternative opinions except the usual "talking heads" of the "big media". And it also allows us to share things like music or movies, and even enhance them (for example, you can use the information you found on an article to create a better article of your own, etc.).

This is all great and all, but how can the capitalists ensure that the founding principle on which their system is based will be respected?

Capitalism is a system based on private property. This is something that everyone knows, yet surprisingly few people seem to be able to understand what this means. Here is a very interesting chart + commentary from azizonomics:

[...] the rising trend of file sharing has given media companies the sense that they are “losing revenue”:

Private property: This is what it comes down to. What the "media companies" are essentially saying is that they own this song, this TV series episode, this e-book or this movie. They paid some money in order to acquire this particular "square" on the real-life "monopoly board", and now they want to collect rent everytime someone steps in their square. This is how the system works, isn't it? I mean, what's the point of buying a square on the Monopoly board, if the other players aren't going to pay you if they step on it? What's the point of financing the creation of a movie or a TV series, if the viewrs ("clients") refuse to pay any money for watching it?

This is very bad for you, the owner of this particular square. And this is why you must stop this sort of behaviour, which goes against the very core of the system (private property). I mean, the people do respect private property when it comes to paying their electricity bills, or paying the barber who cuts their hair. But when it comes to paying for watching movies, or reading a book, they don't. This is not just an financial matter of "lost revenue", it is also a political and ideological battle:

The people "must" be taught to respect private property laws on the internet, otherwise they might get some "strange ideas" about abolishing private property all together, thus ending all the monopolies that now control their lives and replacing them with a system the producers of wealth cooperate and share everything, from mp3's and movies to...food and electricity, "from each according to his ability, to each according to his needs".

Here are some more interesting comments by the azizonomics article i mentioned earlier:

[...] The trouble is file sharing isn’t “lost revenue”. There is no guarantee whatever that a file downloaded is somehow a substitute for a sale. It’s a fundamentally different kind of transaction. For a start, it’s free. Consumers will take things for free that they would never buy, because it costs them less to do so. More importantly, it’s not stealing; it’s copying, and there is a difference. It’s not taking a physical product that someone has manufactured. There’s no direct lost revenue. And ultimately, if enough people copy it, it builds exposure for a product. 

This last point is actually correct - piracy is a good way to build exposure. But this is not as important as respecting private property, as it is the cornerstone upon which capitalism is built on. The article claims that downloading something for free is "not stealing; it’s copying, and there is a difference. It’s not taking a physical product that someone has manufactured". But this is not correct:

Capitalism treats everything as "products" that can be sold or bought (for a profit), or at least that's its "natural instinct". NOTHING is free. You have to fight for every little thing in this life ("there is no such thing as a free lunch" in capitalism as the neoliberals famously -and rightly- declared). Movies, books, music songs, all these things are products -the fact that they are not physical doesn't really matter much. In fact, this is a big problem for the capitalists, as the "digital age" is still new, and the people haven't yet been taught that they must respect private property laws on the "digital products" (whereas they have been taught that they must respect private property laws on the "physical products", as they have been around for many years).

Here's another good point made by the azizonomics article:

[...] There are still many ways for big media to monetise their products in this new world: the music industry can stop concentrating on record sales, and started concentrating on concert tickets. Newspapers can move their businesses online, or use Apple’s tablet distribution model. Movie distributors can focus on high-definition content like Blu Ray, which is hard to redistribute online. That’s just off the top of my head.

But of course, this is creative destruction. Times change, societies change, fortunes will be made and fortunes will be lost.

So it’s in the interests of the big media elite to harness the power of government to create draconian laws to snub out the copy and paste new media culture that has developed, because that opens up a whole new revenue stream: litigation. If you can’t earn your millions, you might as well litigate your way to them [...]

This is correct, and if you click the article's link, you will find a lot of interesting graphs about this "creative destruction", as the "old media" are falling, and the "new media" are rising, as they are better, cheaper and they are not as controlled by a few rich oligarchs (who inhibit creation in order to get rich by asking us to respect private property - something that makes a lot of sense for them, the owners of pretty much everything, but makes no real sense to us who have (next to) nothing and are about to go bankrupt, just like it happens on any Monopoly game).

Here is a great article from the people of Pirate Bay (some of them got arrested today). It accurately describes a "cycle of events" that always leads to the formation of monopolies, that control our lives and inhibit growth and creation. This cycle must finally be broken - but this can only happen if our system of private property is replaced by a system run by those who work and actually produce wealth, not by those who own it and use it to control everyone else, with their own profits as their only "moral guide" in life. Today's system has trully reached a point of incredible decay, as it gives people the inceptive to fight against each other in order to survive. A few people will survive only by destroying the lives of many others.

This is what we are witnessing today before our very eyes - the internet is but one of many fronts, although its "digital" nature makes it a more compelling case, as the people haven't yet been taught to "respect private property" and they try to "make up excuses for their disobedience" ("it's not stealing; it's copying", etc.). But true victory can only come for the people only if and when they abolish private property all together - otherwise, they will over and over again be destined to repeat this vicious cycle:

A Message from the People at ThePirateBay.org

 Over a century ago Thomas Edison got the patent for a device which would “do for the eye what the phonograph does for the ear”. He called it the Kinetoscope. He was not only amongst the first to record video, he was also the first person to own the copyright to a motion picture.

Because of Edison’s patents for the motion pictures, it was close to financially impossible to create motion pictures in the North American east coast. The movie studios therefor relocated to California, and founded what we today call Hollywood. The reason was mostly because there was no patent.

There was also no copyright to speak of, so the studios could copy old stories and make movies out of them — like Fantasia, one of Disney’s biggest hits ever.

So, the whole basis of this industry, that today is screaming about losing control over immaterial rights, is that they circumvented immaterial rights. They copied (or put in their terminology: “stole”) other people’s creative works, without paying for it. They did it in order to make a huge profit. Today, they’re all successful and most of the studios are on the Fortune 500 list of the richest companies in the world. Congratulations — it’s all based on being able to re-use other people’s creative works. And today they hold the rights to what other people create.

If you want to get something released, you have to abide [by] their rules. The ones they created after circumventing other people’s rules.

The reason they are always complaining about “pirates” today is simple. We’ve done what they did. We circumvented the rules they created and created our own. We crushed their monopoly by giving people something more efficient. We allow people to have direct communication between each other, circumventing the profitable middle [men, who] in some cases take over 107% of the profits (yes, you pay to work for them).

It’s all based on the fact that we’re competition. We’ve proven that their existence in their current form is no longer needed. We’re just better than they are.

And the funny part is that our rules are very similar to the founding ideas of the USA. We fight for freedom of speech. We see all people as equal. We believe that the public, not the elite, should rule the nation. We believe that laws should be created to serve the public, not the rich corporations.

The Pirate Bay is truly an international community. The team is spread all over the globe — but we’ve stayed out of the USA. We have Swedish roots and a Swedish friend said this:

The word SOPA means “trash” in Swedish. The word PIPA means “a pipe” in Swedish. This is of course not a coincidence. They want to make the Internet into a one way pipe, with them at the top, shoving trash through the pipe down to the rest of us obedient consumers.

The public opinion on this matter is clear. Ask anyone on the street and you’ll learn that no one wants to be fed with trash. Why the US government [wants] the American people to be fed with trash is beyond our imagination, but we hope that you will stop them, before we all drown [...]

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How's that for competitiveness? Jon Stewart's video on the Foxconn workers and more

Sorry for not posting during the last few days, but i had to deal with a medical emergency (my mother was in the hospital), so there was no time for me to write. I will resume writing about China, in the third and final post on the subject, where we shall discuss China's moves on the monetary plain, as it seeks to end the dollar's rain as the world reserve currency.

But for now, let's talk about something else - let's talk about my sick mother who went to the hospital and got better:

You see, if you get sick, you can (?) go to the hospital and get well. But what happens if you you have no or little money? Then you obviously or you are forced to carry this medical problem/injury for a long time, maybe even forever.

Not everyone is supposeed to make it - in fact the system relies on NOT everyone making it, as it tries to rationalize why a lot of people "should" die (mass murder) just because they were born in poverty, or because they just happened to be born during a war or a generalized capitalistic crisis.

The system has been very good at "rationalizing" this muss murdering process for a long time - in fact, there are many people who are genuinly surprised that the capitalist system is now leading them to their death or to mass poverty, as they don't even understand that this is not a failure of the system, but a necessary process for it to continue to function.


Think of it like monopoly:

Monopoly is a great simulation board game for the capitalist system, as it is based on the concept of private property (of course, the real thing is much more complicated than the board game).

In the early stages of the game, all the little squares of the board that represent streets, airports, the electric company, etc., are for sale. So, all the players can buy them. It's fun, isn't it?

But as game progresses, then sooner or later a few players (those who are luckier and/or better investors) will end up owning almost everything, forming powerful monopolies/oligopolies. As for the rest of the players, they end up going bankrupt one by one, as they own less and less, and they have to pay rent to the rich players on almsost every turn, as the rich players end up owning all the squares of the board. This is NOT a "failure" of the game, it is in fact its purpose. I mean, how can you play monopoly without bankrupting most of the players? It is simply not possible, and it is only a matter of time before it happens.

Real-life capitalism is of course a great system for creating new, better "squares" in order to replace the older ones, especially through technological advances (for example, M. Zuckerberg  created Facebook, an entirely new "square in the board" and he now earns a lot of money ("rent") as everyone wants to use it).

So, the real-life "board" is constantly changing, and it does provide opportunities for someone to create a new "square". This makes the real-life game much more "interesting", and it also helps in delaying the inevitable bankruptcy of a lot of people. But, especially it times like these, when there aren't a lot of new "squares" being created, the process of bankrupting a lot of players cannot be stopped. It is the nature of the game - a lot of players must go bankrupt, so that a few oligarchs can own everything.

Sure, there are plenty of squares to go around for everybody - in fact, this is what marxism is all about: Abolishing private property, as it is the only way for the working class people, the majority of the population, to actually be able to produce without having to live in poverty, when at the same time a few oligarchs are living like kings. And, surprise surprise, they seem to prefer it of the workers live in poverty, just like the oligarxhs of the past, the oligarxhs they once violently overthrew during the Frech Revolution. Capitalism has created a lot of wealth, enough for everyone - and we whould praise capitalism for this great achievement. But capitalism has also helped a tiny minority of the population to control almost all the squares of the board. So, most of us will have to suffer greatly, or we have to abolish private property, so that all the squares of the board are free for everyone. This will of course NOT go down well with the oligarxhs, who will never accept this. But if they are not aliminated by us, then a lot of us WILL be elimited by them. This is a process that is becoming increasingly clear as time goes by. And let's not forget this very important fact: In the earleier stages of the "game", the palyers that were eliminated were usually people from the poorer countries (Third world countries, etc.). But now that the global workforce also includes the Asian workers, there are a lot of Western people who are deemed "not-competitive". So, for the first time in years, a lot of the people that are going bankrupt are Westerners, not just "unimportant" people from "unimportant" places.

Let's take a closer look at what it takes for a worker to be "competivie enough" to stay in the game and not go bankrupt. After all, the capitalists want us to give them incentives to do business in the West, instead of Asia, right? So, it would be a good idea to check out what is it about the Asian workers that they like so much:

Cage dogs of Hong Kong: The tragedy of tens of thousands living in 6ft by 2ft rabbit hutches - in a city with more Louis Vuitton shops than Paris

Hong Kong, one of the world's richest cities, is abuzz with a luxury property boom that has seen homes exchanged for record sums.

But the wealth of the city has a darker side, with tens of thousands priced out of housing altogether and forced to live in the most degrading conditions.

These pictures by British photographer Brian Cassey capture the misery of people - some estimates put the figure as high as 100,000 - who are forced to live in cages measuring just 6ft by 2 1/2ft.

Unscrupulous landlords are charging around US$200 a month for each cage, which are packed 20 to a room, and up to three levels high. Cockroaches, wall lizards, lice and rats are common.

And if that isn't enough, you should definately check out Jon Stewart's latest video from "The Daily Show", about the Chinese workers at Foxconn:
How's 

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Fear Factory
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

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On 100 Year Anniversery of 'Bread and Roses' Strike, Many Draw Connections to Today's Hurdles

Repost from "Common Dreams":

Bread and Roses Strikers March

January 12, 2012 was the 100 year anniversary of the 'Bread and Roses' textile workers Strike in Lawrence, Mass. The dire conditions leading up to the strike remind some of the current socio-political climate and offer lessons for workers' struggles today.

The Boston Globe reports today:

The action, known as the Bread and Roses Strike, not only called attention to horrific conditions in the mills, but also to the concentration of wealth and power in the United States, an issue that 100 years later would spur protesters to Occupy Wall Street, Boston, and other cities across the country.

The essence of the Lawrence strike resonates loudly in today’s Main Street vs. Wall Street fight, with income disparities brought to light by the 1912 walkout reexamined through the lens of high unemployment, a shrinking middle class, and the view that most economic benefits have flowed to the wealthiest Americans. [...]

The desperation that drove poor textile workers to abandon their jobs for the picket lines is echoed in the frustration that drove people to camp out in financial districts across the country.

James Green, a labor historian at UMass Boston, sees similarities to the 1912 uprising in many recent events, not only in the Occupy movement but in the Tea Party, the aggressive tactics of striking Verizon workers last summer, and customers railing against new Bank of America fees.

Steve Early recently examined contemporary Lawrence for In These Times:

Lawrence remains a city of the working poor, better known for its sub-standard housing, high unemployment, political corruption, and troublesome street crime. Ninety percent of its public school students are Hispanic and few speak English as a first language. Although not condemned to factory work at an early age, these children struggle to learn under tenement-like conditions. A recent report by the teachers’ union describes “crowded classrooms and physical infrastructure in distress: leaking roofs, poor air quality, persistent mold problems, crumbling walls and rodent infestation.” Demoralized teachers have been working without a new contract for two years; student performance is so dismal that a state take-over the school system has been actively considered.

When worker solidarity prevailed over corporate power in the icy streets of Lawrence a century ago, it made the promise of a better life real for many. The Bread and Roses strike became a consciousness-raising experience, not only for textile workers and their families, but the nation as a whole. Nevertheless, at centennial events in Lawrence over the next several months, it will be hard not to notice that many immigrant workers there still lack “bread and roses”—in the form of living wage jobs, affordable housing, and better schools.

But that injustice will not be cured until U.S. workers and their allies, in Lawrence and elsewhere, find a way to make history again, not just celebrate it.

Writing for Common Dreams last week John de Graaf and David Batker remind us:

The strike is commonly referred to as the “Bread and Roses” strike, because some women were said to have held up a banner declaring, “We want bread, and roses, too!” [...]

Hearts starve as well as bodies.  We do not live by bread alone.  It’s an old message with wellsprings deep in our religious traditions, and one the Bread and Roses centennial calls back to our attention.  And it’s a message we should not forget.

***

Here's another interesting article from the "Washington Post":

Study: Americans believe conflict between rich, poor is growing

About two-thirds of the public now believes there are strong conflicts between the rich and poor in America, making class a likelier source of tension than traditional flash points of race or nationality, a study from the Pew Research Center found.

“It is kind of amazing,” said Richard Morin, a senior editor at Pew who authored the study. “This is people not only sensing conflict, but people sensing an intensity of these conflicts — that’s what makes it striking and politically important.”

 

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On China-Part 2: Is China a bubble? What about all those poor Chinese workers?

This is a "before and after" picture of Shanghai that we found via the Atlantic magazine. It depicts the city's extraordinary growth within the last 20 years (1990-2010).

When the Berlin Wall fell, a whole new world was assimilated by the capitalists: The countries of the former "Soviet bloc" and, of course, China.

We have already discussed how this process of "globalization" affected the West (here) - as John Stapleton, British M.P., argued back in 1873 "If China should become a great manufacturing country, I do not see how the manufacturing population of Europe could sustain the contest without descending to the level of their competitors".

But how did "globalization" affect China? The picture we posted above is a great example of how good capitalism is at assimilating other societies that are using inferior modes of production:

Today, there is much more wealth being created in China than ever before - but of course inequalities are also greater than ever before.

This is because capitalism is based on the exploitation of the workers by the capitalists. China was like finding a "goldmine" of cheaplabour. So they started exploiting this "goldmine", by off shoring production to China at an amazing pace.

In the early stages of this process, the Chinese workforce was not skilled, so the only companies that could go to China were companies that only needed manual labour and very little specialization from their workers (for example companies that were making clothes, shoes, etc.). We' ve all seen the documentaries and we' ve all read the
articles that talk about the conditions there (horrible for the workers - great for the capitalists), so there is no need for me to repeat them.

But as China started accumulating more and more capital, the government build new schools and universities, and now a part of the Chinese workforce is skilled and can perform (almost) anything that a western worker can (and at a lower "price" (wage) too...).

So, now even the "white collar" jobs are being off shored to China, and there are Chinese companies that are competing against the Western companies even in sectors of the economy like solar-power (China is #1 in that sector worldwide), or telecommunications (Huawai, a Chinese company, is now Ericsson's main competitor).

Here's an article from the BBC:

China attracts record foreign investment in 2010

The country attracted $106bn of foreign direct investment - which excludes investments in financial instruments such as shares - up 17.4% from 2009, according to the Ministry of Commerce. That was enough to more than reverse the 2.3% fall seen during the previous year caused by the global recession.

Over a fifth of the money went into China's property sector. The Chinese authorities have been trying - with limited success - to head off a perceived bubble in property prices. 

We shall talk more about this "bubble in property prices" soon. But for now, as capital continues to pile up in China, it is no wonder that the country has 3 of its banks in the top-10 of the world's biggest banks. Via The Economist:

Here are a few more of China's "accomplishments" - here are some infrastructure projects for example:

China to invest $106b in railways in 2011

China builds world's longest bridge

ANOTHER RECORD: China Is Now The World's Largest Shipbuilder

China, Colombia in talks over Panama canal rival
CHINA is in talks to build a 'dry canal' linking Colombia's Atlantic and Pacific coasts by rail, Colombian President Juan Manuel Santos was quoted as saying on Sunday.

And if you have keep getting bigger and bigger, then it obviously "makes sense" for you to expand, much like all the other the colonial/imperial powers of the past:

China beats out World Bank as biggest lender to Africa

As China increases its economic ties in Africa, has the continent entered a new era of colonialism?

And of course, as China grows into a great imperialist force, as any growing capitalist nation would do, they build up their military forces. After all, how can you become the world dominant force, unless you have a strong military? Who's going to protect your lands and investments? Who's going to fight for you, in order to gain control of
more lands and resources? Soldiers and weapons are necessary, as the imperialists have to "fight it out", as they always do, about "who gets what".

China Takes Aim at U.S. Naval Might
China is building a new class of ballistic missiles designed to arc through the stratosphere and explode onto the deck of a U.S. carrier, killing sailors and crippling its flight deck

China is even trying to end the dollar's rain as the world's reserve currency. This is pretty important, as the current monetary system is about to end, as we've mentioned in previous articles. But we shall discuss this topic in our next article.


So, let's get back to what we were saying for now, as China continues to grow and grow. It even surpassed Germany as the world leading export nation, and the USA as the world biggest consumer of oil.

At the same time of course, there are millions and millions of Chinese workers who are working incredibly long hours for just a few dollars/month, barely enough to keep them alive so that they can return to work the next day (after all, even if some of them don't
survive, who cares? There are plenty more workers that can take their place - in fact, it is a "good" thing for the capitalists if some of them die due to an accident or by killing themselves, because it helps keep unemployment levels down, and thus it is easier to control all the social unrest).

There are thousand of strikes each year in China, but "so far so good" for the capitalists, who don't even allow for "democratic elections", or for a free press in China. This is "great" for them, as it helps their authority to remain unchallenged.

An entire village (named Wukan) recentlyrevolted against the government's decision to take away the lands of the people, and of course everyone now knows about Foxconn, the Chinese company that makes all these gadgets we use, as it employs 1.000.000 workers who often commit suicide (or threaten to do so), due to the "ultra-competitive" working conditions.
Even as we speak, some of them are about to commit suicide, with Microsoft "investigating this issue", as they "had no idea" about the
conditions at this factory (in reality, of course they know, but who give a damn about the workers? After all, there are plenty more where they came from, right? So let's pay them 1$/day, and we'll make a fortune by selling them to the western consumers until they've run out of money).

Imagine if those 1.000.000 Foxconn employees would organize and revolt - they would form one of the largest armies in history! But they are "too poor" to realize their potential - and the same goes for almost all the workers in China. When you barely have enough money to eat, then it is not that easy to think about organizing a revolution, especially when your employer and the State are prepared to fire you or send the police and the army against you. Then again, when you barely have enough money to eat, then it is a good time to start thinking about a revolution, isn't? Unless the Chinese workers fight back against their oppressors, in order to at least improve their lives a bit, then not much can be done on a worldwide scale.

But there are "internal" problems as well: As we mentioned before, there are signs of a real estate bubble in China, and it seems to be a "hot" topic amongst the "investor's community", as some of them predict a "rosy" future for China, whereas others predict a huge crash because of this bubble. Here's a great piece on the subject:

China 2012: The Year of the Bull (Rogers) or the Bear (Chanos)?

Jim Chanos famously said that China's real estate market is "Dubai times 1,000 -- or worse." He's been saying that for over two years. Chanos points to a credit bubble, and says he's early and sticking with his short positions. Rogers insists "China is not in a
[credit] bubble," rather it's been in a price bubble in urban, coastal real estate, and to compare China to Dubai is a false analogy. Jim Rogers is bullish on China's long term prospects: "China is going to have many serious problems along the way as it rises, but 'Dubai 1000 times over'?!"

According to Rogers, China will have many set-backs as it grows, as did the U.K. and the U.S. He notes "the U.S.'s many Depressions in the 19th century, a devastating civil war, periodic massacres in the streets, and little rule of law, few human rights, and several military governments. As recently as 1907 the whole system collapsed just as the U.S. was on the verge of becoming the greatest success of the 20th century. Yet the U.S. did a good job for a long time."

This is a picture from one of China's "ghost cities". There are many cities (or malls and other infrastructure projects, etc.) in China that have been build, but the people don't have enough money to actually use/buy them.

This is the root cause of all crises: The capitalists are accumulating more and more wealth for themselves, leaving very little wealth for the workers. But the workers are not just creators of wealth, they are also supposed to consume some of it, otherwise the products will not be sold, and the shops that sell them will go bankrupt, then the factories that make them will also go bankrupt, etc.

The Chinese workers have almost no money to spend - so they cant afford to buy all these homes that they have built. The ruling class gave out a lot of loans and spent a lot of money in order to "keep the economy going", as the workers would have no jobs if there were no building/infrastructure projects. That would lead to even more social unrest, so they built "ghost cities" instead. The workers were relatively "happy", as they at least had a job, but now noone can afford to buy these houses (and the US real estate bubble shows us what happens when the bubble "bursts").

The Chinese government is aware of this, and they' ve been trying to give out less loans and "contain" the problem. They also decided to stop announcing home price data, in order to keep the whole thing as quiet as possible. But if they don't give out a lot of loans, then there is no growth, as you cant start a business if you don't get a loan. So, China is between a rock and a hard place, and banking lending is not really showing signs of any significant slowdown.

But, like Rogers says, China will face a big crisis, but it won't be "terminal". It will be more like the crisis the USA experienced before becoming the world's leading power. Even the Great Crash of 1929 didn't "kill" the USA - in fact, 15 years later, they were the Western world's leader. Of course, a lot of people suffered, especially the workers, as they went through 10 years of high unemployment and then they went to war, so many of them died (this is always how capitalists solve the "rising unemployment problem" if anything else fails).

Furthermore, the western consumer is "dying". The capitalists have been using a very effective model for maximizing their profits for the last 20 years or so: They would employ the cheaper Asian workers in order to actually make the goods, and they would sell them to the western workers, who spent all their money, and them some more through heavy borrowing (this is why the western workers are referred to as "consumers" instead of "workers", as this is their function in the world economy. If they don't consume, the world economy doesn't work).

As the age of the "western consumer" is coming to an end, who is going to buy all these products that are made in China?

The Chinese workers are "too poor" in order to do that. And the capitalists don't really like giving a raise to the workers, do they?

So, China has a big problem, as noone has the necessary "purchasing power" in order to buy the goods they export. This is after all the reason why trade is collapsing on a worldwide scale.

What can China do?

It can "create some consumers of its own". That is, to create a "middle class", so that there are some Chinese people with enough money to buy some of the things that used to be exported (these people must also have a "consumer-mentality", which is also very hard, as these people must be educated in such a way to "be addicted to shopping").

In order to do that, China must increase the wages of some workers (it is already doing so), either in a direct way, or in an "indirect" way (ie revalue the Yuan, its currency. This is also happening, but at a "slow pace". We will talk more about the Yuan in our next post)

Here's what Spiegel reported on the subject a while ago (Germany in very interested in this, because they are also a big exporting nation, and they are facing similar problems, as the western consumer is dying. So, the too want China to create a middle class that can consume their goods as well as China's. We shall talk more about China and Germany coming together in future posts):

How Beijing Plans to Turn the Chinese into Consumers

Exports fueled the initial stages of China's ongoing economic boom. Now, however, the government in Beijing is placing a greater emphasis on domestic consumption.

The arrival of Western chain stores symbolizes the beginning of China's next revolution. The country's rising middle class has embarked on a collective spending spree, at least in the affluent belt along the country's east coast, from Beijing to Shanghai and down to Shenzhen in the south.

The shift is a delight to Western brand-name companies. "Now is precisely the right time for us to enter the Chinese market," says Redmond Yeung, the head of the Gap's operations in China. Yeung plans to open another store in Shanghai and two in Beijing almost simultaneously. Competitors, such as the apparel retailers H&M and C&A, already have outlets in China.

China is becoming a promising market for Western corporations, particularly in light of the warm welcome they often receive from government economic planners. Consumption has become an acceptable form of patriotism. [LOL - it's amazing how the capitalists can name anything that suits them as "being patriotic" and force the masses into accepting it - my note] International experience, Vice Premier Li says, teaches us that "any major power's development process must be led by domestic demand."
[...]
"Many citizens of our city cannot afford the products that are on display, at least not yet," says one saleswoman there with a shy smile. "I can't afford them either." Most customers are high-ranking officials or business executives. "When they go shopping," she adds, "they spend 10,000 yuan or more, all in one go" -- more than she makes in an entire year.

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