China, New York, and the American Way

What does the success of the “genocide” Olympics mean for the future of US politics, and even for the election in November? At first glance, this may sound like a minor foreign policy issue. After all, didn’t George Bush basically agree with people like Steven Spielberg about the need to “honestly” criticize the Chinese regime? Isn’t it true that Spielberg was able to cut ties with a government that Bush didn’t have the luxury to spurn outright? In other words, isn’t it simply inevitable that “we” can’t “afford” to divest from China, politically or economically?

Remember, however, that the inevitability of America’s economic relationship with China comes as a result of very specific trade policies. These policies have become a full-blown economic integration, and the political consequences of this should give the average American serious pause.

The facts are everywhere. The US trade deficit with China runs about 117 billion dollars a year. For much of this decade, foreign direct investment (FDI) from the United States runs at least $3 billion a year. Much more importantly, China purchased hundreds of billions of dollars of US debt during the Bush term. This was probably very helpful for the Congressional “emergency” spending used for Iraq and Afghanistan. In other words, China is basically paying for the war on terror and China now has over $1.2 trillion of US-backed assets. This is the largest currency reserve in the world and createsserious leverage for China over Washington and New York.

More ominously, last year China announced it was starting a sovereign wealth fund, like the Abu Dhabi one that recently bailed out Citigroup. They then promptly handed $5 billion to Morgan Stanley. These ties between Wall Street and Beijing are moving in directions that most American politicians can’t publicly follow. Relations between New York and Beijing elites are similar to the US corporate involvement with Nazi Germany before World War II, when the Ford Motor Company and IBM worked closely with the Third Reich.

In the New York Times, Keith Bradsher has meticulously chronicled the way Wall Street hedge funds invested in and supported all those security cameras China installed for the Olympics. There are people working at Oppenheimer and Company right here in Manhattan who successfully profited off Chinese political repression. Those talking of divestment from China should start right here in lower Manhattan.

What’s scary is that US corporate investment in China is just getting started. Google, Microsoft, and Yahoo work with the Chinese to censor internet searches, and profit handsomely. General Motors alone wants to invest three billion dollars in China. The Chinese embassy boasts about General Electric teaming up with China Life Insurance Group to “explore finance and other industries together.” General Electric is the sixth largest corporation in the world. This is the same General Electric that owns and runs NBC. NBC, of course, just made about a billion dollars on the Olympics. And the Olympics have helped to legitimate China’s rise.

The meaning of all this can’t be stated strongly enough. The US-China relationship is the most important issue, event, and story of our lives.

When we talk about the economy as a presidential issue, we are talking about China. The fact is that US corporate firms have already created a de facto American foreign policy towards China. The entanglement of US and Chinese investments, as with General Electric and China Life Insurance, means that US economic growth will become ever more dependent on Chinese consumers — not American ones.

It also means keeping the Beijing regime happy. Concessions made toward the Chinese regime must be made in order for the American economy to grow. This is the stubborn paradigm that girds the hypocritical calls for both John McCain and Barack Obama to propose “specific” policies about the economy. Newsflash: neither Obama nor McCain will ever make any major economic policy in the United States besides raising or lowering taxes. They cannot intervene in US growth globally other than, to, say, attempt to direct it more toward India.

The obvious problem with American economic integration with China is political. There is no need to rehearse China’s problematic role with Taiwan, Tibet, Sudan, or Zimbabwe here. These issues are no more important than China’s explicitly authoritarian police state, its one-party government, or its environmental policies. Just as it is impossible to separate China’s growth from Darfur, it’s impossible to separate US corporate complicity with China’s actions there or against Tibet. We have become economically dependent on a repressive state. US consumerism is now irrevocably inseparable from China. You can refuse to buy goods from businesses that deal with Sudan, but you simply cannot refuse to buy goods from businesses that deal with China. This is the “freedom” of the free market.

It may not be accidental that as US corporate integration with China has become more entangled in the last decade, since the US political system has come to resemble China’s more and more: the loss of legal rights, the rise of a surveillance culture, the enormous Homeland Security initiative, the old talk from Karl Rove of one-party Republican rule. Had the Rove plan worked, the American system would have become, in effect, much more like China’s.

There are reasons this isn’t discussed openly. The first has to do with the way we think about political categories like “foreign” and “domestic.” We put, for instance, the huge economic problems in Ohio and Michigan in a box called “domestic economy.”

Second, we can’t discuss many of the problems associated with China because it’s a gigantic ‘way of life’ issue. Just as our way of life depends now on carbon fuels from petro-states, our reliance on China for “growth,” cheap labor, cheap factories, cheap manufacturing, cheap pollution, and cheap sweatshops has basically kept the American standard of living artificially high. As with cigarettes, it took years to convince people that carbon emissions were dangerous. It would take a comparable paradigm shift to persuade folks that the freedom “deficit” in China is really tied to US corporate policies. People want to see the Nike swoosh in Beijing as a symbol of athletic power, and not as a symbol connected to Tibet and Darfur.

In a sense, the election in November will not decide the future of this issue. Instead, both Barack Obama and John McCain are trying to score points with voters in swing states like Ohio, where the credit and housing crises are the least of anyone’s problems. In states like Ohio and Michigan, jobs have been lost to China in the hundreds of thousands for decades now. US firms moved labor overseas because it was cheaper; this was a response, in part, to the success of labor organization in these regions, especially in manufacturing. In places like Flint and Youngstown, people have been dealing with the scary side of US-China integration for years. It’s more than ironic, then, that Ohio remains at the center of Democratic and Republican ad campaigns. Politically and economically, Youngstown is the canary in the coalmine of American life.

As more jobs leave, the interdependent problem of Chinese labor and American consumerism will grow. High fuel prices only compound the serious danger of falling living standards. Ask someone in Ohio and Michigan. What happens there isn’t because of any bubble or contagion. In that sense, what happens in Ohio is a leading indictor for the cultural, economic, and political possibilities for the rest of the nation. We can still think of it as a swing-vote state, but also as a microcosm of the larger potential future of the United States more generally.

To visualize this connection, picture first an abandoned manufacturing plant in Youngstown, one of the northern Ohio towns left behind when US firms began exporting manufacturing jobs. Imagine a building that looks as if it’s deeply compromised by structural decay: broken and battered windows, crumbling bricks, shuttered doors, an empty lot. John McCain stood in front of just such a place during the Republican primaries, where his message to blue-collar workers was, literally, “the jobs are not coming back.” These are the jobs that started leaving in the 1980s, and which were a prelude to the jostling over “outsourcing” that briefly became an issue in the 2004 Bush-Kerry campaigns.

These long-term structural changes reflect a consistent set of US policies which were initiated by the Reagan administration, intensified by the Clinton administration, and are now largely taken for granted here at end of Bush’s present term. You can find them on Barack Obama’s website. These policies are called “neo-liberal” because they reflect a shared set of assumptions about the self-correcting role of market economies, a notion popularized by Milton Friedman. In addition to justifying the vast transfer of wealth, jobs, and goods in the name of “efficient” and “global” capitalism, this philosophy did much to naturalize the negative effects and limited benefits of capitalism itself. It worked to repeal much of the power of government regulation, initiated during the New Deal-era, to contain and manage the serious recessions endemic to capitalism.

Neo-liberalism has returned us to a weird replay of the 19th century, where the “freedom” to purchase goods at a loss — for another’s profit — seems like perfect common sense and is widely promoted among all classes and groups. Unlike the 19th century, political alternatives like socialism, communism, and anarchism are taken seriously by only a few. In a classic Orwellian twist, the idea that profit might be re-routed back to the classes who “freely” decided to lose that money is today called “class warfare.” This new class warfare rehearses the arguments of those like Grover Norquist. His passion for tax cuts makes sense thus: we all deserve to have more of our own money. This isn’t old news. McCain is running his entire economic campaign on just these tax cuts.

But the real story involves both McCain and Obama. Importantly, the “freedom” of the free market is the “freedom” and “equality” of liberalism itself, both Republican and Democrat. It comes from the entanglement of the liberal political state with capitalism. At the center of this fiction are “equal” individuals who are “free” to spend their income on their own desires (houses, cars, etc). This money is then collected by banks offering interest bearing loans (for houses and cars). The enormous wealth gaps produced by this system are never accurately named by the most influential media outlets. Politicians like John Edwards arrive occasionally to channel some of the intense emotions of the millions who feel their lives have been damaged by this system. When politicians speak in populist modes, they often point fingers at special interests or campaign finance. These are scapegoats. It’s capitalism, stupid. The problem with democracy isn’t just unreasonably compounded by it. They are incompatible together. The myth of our freedom in this democracy is probably the most fundamental and basic structural lie in our everyday lives.

Corporations make public policy, and their surrogates now run the entire governments of New York City (Bloomberg) and New Jersey (Corzine), not to mention the office of the Vice President (Cheney). It is no longer appropriate to use the government to steer employment and intervene against corporate excess, as suggested in the once-influential work of John Maynard Keynes. The notion that the government might “manage” corporate and capitalist excess was once common sense in the post-war 20th century. By contrast, earlier this summer some House Republicans and Washington experts resisted Treasury Secretary Henry Paulson’s idea of “bailing out” Bear Sterns, Freddie Mac, Fannie Mae and troubled US firms because such actions were “socialist.”

This confused sentiment against ‘socialism’ is shocking: it ignores the billions of dollars in federal tax breaks for corporate firms, the billions of dollars in no-bid contracts for corporate firms, the billions of dollars of military contracts for corporate firms, and the billions of dollars corporate firms hide through tax shelters abroad. Between 1998-2005, tax shelters hid 2.2 trillion dollars of un-taxed business earnings. These billions of dollars given from the federal government to US business have always constituted a “socialism” as such, and sometimes jokingly referred to as ‘corporate welfare.’ This is also the hidden truth of the neo-liberal era: at no time was the ‘free’ market regulating itself.

The past 28 years of US economic policy has been a continuous transfer and redistribution of public wealth from the federal government back to corporate firms. This is also the lie of Grover Norquist and conservative advocates of low-taxes: to say the rich already pay ‘too much’ in taxes ignores the fact that many billions are re-routed back to the rich in the form of government contracts — this is, after all, the huge reason behind the prodigious growth of private military contracts in the Bush administration.

US free-market liberal capitalism has successfully normalized the idea that transferring wealth to private firms and individual tax-payers is the “right” way to spend money. The ways these attitudes seeped into everyday consciousness over the past 28 years, especially among liberal democrats like Barack Obama and his followers, is the most disturbing reality of our times. What’s more disturbing, perhaps, is that as the neo-liberal era has begun to implode today in the wake of the housing and credit crisis, political leaders cannot really imagine any new economic and political alternatives.

They can’t do this for two reasons. One, there are no serious economic advisors in either party that can think outside this system. They don’t understand anything other than the status quo of “globalization” as it’s been articulated. More importantly, the money and interests that filter US political culture simply cannot be purged through the system controlled by that money and those interests.

Two, the political system is so corrupt and delusional that any real change will have to take place outside of it. Historically, the groups that led real pragmatic change against institutional power came from anarchic networks: the Abolitionists, the Underground Railroad, the Civil Rights Movement, the Vietnam antiwar movement, and, on the other side, the Ku Klux Klan. These groups operated outside the law. Lives were sacrificed and risked. The problem with democracy is simple, and the reason capitalism corrupts it so easily is simple: institutions themselves are corrupt. They channel power. They harden power. They preserve hierarchy. The structure of our everyday life is corporate.

The process of electing leaders is itself the problem: it doesn’t matter who’s in the White House if the position itself is corrupt. If real “change” is going to happen, it simply can’t happen inside the system. This is why Obama is not Martin Luther King, Jr.

The road between New York and Shanghai goes through Youngstown. Because of this, the future of the United States can’t be visualized in midtown Manhattan. The future arrived long ago in Ohio, and echoes more and more in China. And here’s what’s really interesting: the network that cuts the tie of the U.S.-China integration might not come from the United States. It might come from China. Keep your eye on both. 

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