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Posts Tagged ‘economics’

It is often difficult to speculate on the future of world trade patterns. Things change. There are many factors to consider. What appears to be a possibility in the next several years, however, is a movement away from western trade with China for trade with a country that offers cheaper goods. Perhaps, because of the decrease in the value of Vietnamese Dong relative to the increase in the value of Chinese RMB, we may see more trade with Vietnam and less with China. It is hard to say for certain; but, the consumer market will gravitate toward the cheapest products available. People will naturally move away from investments that show smaller gains.

While the Western economies are rather stagnant over the past several years, the Chinese economy has been making steady gains. The products that the west once got for cheap in China, are slowly becoming more expensive for us to purchase. Many of the goods that were once “ultra cheap”, are now just “cheap”. People who want the cheapest goods around will start asking themselves if trade with other countries, like Vietnam, will be more beneficial to western consumers than trade with China. If the possibility of “ultra cheap” can come from somewhere other than China, the market may naturally find its center there. If trade patterns begin gravitating away from the Chinese market toward the Vietnamese market, there is a likelihood that Chinese growth will slow, consumer goods in the west may get slightly cheaper, and the Vietnamese economy will begin rising.

Economic growth due to trade eventually has a tipping point. When growth leads to higher priced goods, trade patterns will naturally shift to economies that offer more lucrative consumer product possibilities.

It is only a matter of time before the Chinese economy reaches its tipping point and makes way for disinvestment. This disinvestment will eventually lead to a slower growing Chinese economy. Once the Chinese economy begins to decline again, investment will likely return if it offers the cheapest alternative. But one thing appears to be true of the nature of trade: Economic Growth depends on it.

Another factor to bear in mind in this regard is: Who will the west sell its goods to? Is it more beneficial to allow the Chinese economy to continue gains so that the West can sell its products back to it? Or will consumerist ideology allow for such mutual exchange? This is a complex question indeed. One that will surely define politics and economics in the years to come.

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In the 1980’s a group of Canada’s business elite set out to destroy government ownership of business and resources. This same group funded Brian Mulroney’s election campaign. Effectively, over the last several decades, the Washington consensus has taken a strong hold on our lives. The upper class that is so few in number fund our universities, our think-tanks, authors, the mass media…and in so doing, they effectively undermine what is best for the greatest number by educating the population that what benefits the upper class most, benefits the rest in society. This is a sham. Neoconservative and neoliberal ideologies make up the vast majority of what is there to choose from when it comes to voter choice. And when the population is socialized by those with the resources (and thus the power) to think the way that these elites want them to think, there is a SERIOUS problem with the efficacy and legitimacy of democracy as a government by the people for the people. Good government in a democratic nation ought to be contingent upon what is best for society as a whole and not just what is best for a small group with power and influence (the business elite).  As long as the population is educated to think that we must look out for the richest of the capitalist class first and foremost, society itself is on a path for disaster. Deregulation, as has happened increasingly throughout the world for the past several decades, is a path for disaster and it needs to be put into the forefront of world debate and discussion now before it is too late. Bailing out the upper class so they can remain rich at tax payers expense, when they make irresponsible financial decisions, is not good democratic government; it is a tyrannical oligarchy. The fact that there is still unsettling employment data speaks to the fact that even though the majority bailed the few out at the majority’s expense, the wealthy few are still unwilling to take some of the hit by employing  the people who lost their jobs because of the economic elite’s own negligence. We need to rethink this system; because it is not working fairly.  Why should a small few get rich if it results in a larger number growing poor?

~Justin Allen Philcox

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A stronger Chinese currency (RenMinBi (RMB) or Yuan to which it is also referred) would change the world as we know it. The US has long been trying to persuade the Chinese to increase the value of their currency with very little success. If the RMB were to rise drastically in value (becoming closer to the US currency in value), the cheap consumer goods that the world purchases from China would cost more. This would have several possible effects: we may pay more for our goods here; our goods would compete more with Chinese goods on the international and domestic markets and within China itself; some other country, besides China, with a lower currency would more than likely attract massive foreign investments; China’s growth would effectively slow due to disinvestment in favour of a country with a lower currency (perhaps Mexico???) leaving the US in its position as the sole global superpower;  China’s US foreign currency reserves would be less valuable in relative terms…etc., etc. The list of changes that could ensue is long.

Since most of these scenarios puts the US at an advantage over China, and since the losses would outweigh the gains for China, it is likely that the Chinese will not increase their currency very much; if at all.

The US is now looking to Brazil to support them in their demand that China increase the value of the RMB; Brazil would also likely serve to gain with an increased value in RMB through an increase in Brazilian exports. While having other countries back the US demand may put more pressure on the Chinese to increase their currency, it is still unlikely that the Chinese will do so.

The US is also unable to drastically lower its own currency value since this could result in many nations dropping the US currency as the stable world currency in favour of another currency like the Euro.

The US is in decline and it needs China to slow down in order to maintain its current position at the top. The latest January/ February 2011 Foreign Policy cover story suggests that the US is on a path of permanent decline. China knows that this is the case and they have demands on the US that the US is unwilling to meet. For example, China has concerns over US military presence throughout the Asia pacific region (most notably in South Korea and Japan; but the Chinese are also concerned about weapons trading between Taiwan and the US). China can continue to rise in power if it holds its currency at its current value. At the same time China knows that it can wait for the US decline to force them out of their military and geo-strategic position in the Asian-Pacific. For all of these reasons, I see it as very unlikely that the Chinese will sabotage their own gains by increasing the value of their currency so that the US can remain as the world superpower.

However, it will become an increasingly important goal of the US to do something about this situation. All we can do is wait and see what that is. It most certainly will not be war with China, and the US will have to be cautious in its approach to avoid diplomatic and trade retaliation from China itself.  How do you think this situation is most likely to play out?

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Imagine this hypothetical scenario: Willy Wonka decides to make a chocolate bar, and one of the main ingredients he decides to put in the bar is shiny metallic razor blades because they look pretty and children like pretty things. Now, this scenario might at first seem a little absurd, nobody would knowingly put a product like this in a chocolate bar and then sell it willingly. Certainly, if this were to occur the company would be held accountable for the child’s unfortunate stomach ache.

However, by today’s trade industry logic, the child would be at fault for not proving the product safe before ingesting it. It is not up to the companies selling products to us to ensure that they are safe for consumers: It is up to the consumers themselves to ensure that the products they are buying are safe.

This has been established practice for some time now and we, as consumers, have still chosen not to do anything about it. It is proven by recent events that world governments do make decisions based on popular protest. A few recent examples: Egypt’s head of state will not run in the next election; Steven Harper will over overturn the CRTC’s ruling on new unjust internet billing schemes; the Province of British Columbia will head to the polls this year in an attempt to overturn the Harmonized Sales Tax that the Liberals unjustly enacted without our public approval.

It is time that the people of this nation began a mass campaign to hold industry accountable for product safety before it hits the shelves of our supermarkets. People should not have to wonder if a product is safe for human consumption before they ingest it: If a product shows up for sale in our stores, we should not have to, as consumers, verify that it is safe for us. Industry must be held accountable for the products that we consume.

While razor blades in a Willy Wonka chocolate bar is  rather outlandish, BPA in our canned goods is comparable. How about the safety of GMO’s that are on our shelves? What about that ingredient that nobody can even read on the label? While this story is old news, we ought not to allow it to be swept under the rug for later generations. We, as a group, should put an end to this nonsensical industry injustice. If you agree with this, please copy this letter, send it to your friends, and email it to your local MLA. Let us put an end to this madness.

~Justin Allen Philcox

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For several years now China has been steadily gaining on the U.S. to become a major economic rival. A recent Foreign Policy blog posting by Joshua Keating entitled, “Did China’s Economy overtake the U.S. in 2010” ( http://blog.foreignpolicy.com/posts/2011/01/14/did_chinas_economy_overtake_the_us_in_2010 ) suggests that the Chinese economy overtook the U.S. economy in 2010. This is much earlier than what previous estimates had indicated. One interesting thing that was not mentioned in this article, however, is the growing amount of U.S. debt that China has purchased: China now owns, by some estimates, roughly 8% or near a trillion dollars in US debt; this is the largest single foreign holder of U.S. debt. With these statistics taken into account, it puts China at a major  strategic advantage, economically. The industrial revolution that put the U.S. in it’s position at the top, is the very same industrial revolution that the U.S. (and Canada) has freely given to China. The cheap products we find at Walmarts etc. are the new riches of China; and the specter of the vanished western industrial base. The west is effectively transferring to China, the very economic power base that put it on top in the first place: the industrial revolution. So long as cheaper consumer products are available in China, Western manufacturing bases will vanish one after the other. U.S. gains in cheap consumer goods comes to the detriment of the U.S. as an international powerhouse. What was the major strength of the U.S. economy has, over the past 20 years vanished due to the ideas espoused in Neoliberal/Neoconservative  ideologies and Globalization. Is it too late for the U.S. to reinvent its manufacturing base; or will countries who make the products cheaper like China, Mexico, and India take the lead in the world economy of tomorrow? Chances are, the U.S.’s decline will be long lasting and permanent if they choose not to recognize their grandest mistake. Once these “countries of tomorrow” make their big gains, what is holding their currencies from increasing to meet the U.S. currency in value? Where will the U.S. find its cheap products then? What will U.S. currency look like as their debt continues to grow to feed its hunger for the cheapest goods around?

-Justin Allen Philcox

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The first topic I chose to write on deals with quality of life in a community. One of my commenters put forth the idea that quality of life is connected to having avenues in which people can pursue and refine their talents. I feel that the Arts, and in particular, funding for the arts is a necessary part of creating a community of quality in this regard.
I also asked how we might deal with class inequality in the discussion about quality of life. Funding for the arts again helps in regards to equalizing the quality of life for individuals; regardless of socio-economic standing. Since it is the job of politicians to work for the people of this country, good government ought to entail the promotion of quality of life within our communities.

If arts funding adds to quality of life of people in our community, regardless of socio-economic standing, then Arts funding should be recieving more funding (not less); especially in times of economic turmoil when more people are forced out of work. If anything, politicians who recognize this, and add funding for the arts in difficult economic times,  are doing themselves a favor come election time. Are politicians who cut arts funding in economically unstable times commiting political suicide?

-Justin Allen Philcox

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