Thursday, September 29, 2011

Now we know!

“Secretary of the Treasury Timothy Geithner said recently that China is holding to its decades-old strategy of stealing American intellectual property, in a pointed statement reflecting U.S. officials’ growing impatience with Beijing.”  (Huff Post, September 25, 2011)

Mr. Geithner said “China is very, very aggressive in stealing U.S. technology”.

The Huff Post report continues:

“They, China, have made possible systematic stealing of intellectual property of American companies and have not…(moved)…to put in place the basic protections for property rights that every…economy needs…”, Mr. Geithner told a forum in Washington.

“We’re seeing China continue to be very, very aggressive in a strategy they started several decades ago, which goes like this:  you want to sell to our country, we want you to come produce here…if you want to produce here, you need to transfer your technology to us”, Geithner said.

Although unusually direct, Geithner’s comments echo a common refrain from U.S. officials and (business) executives.  The new U.S. Ambassador to China, Gary Locke, who has assailed China in the past for its trade practices, has put the defense of U.S. intellectual property among his chief priorities.

(Related to) Washington’s dissatisfaction with Beijing’s trade policies, leaders in Washington have long argued that China’s yuan currency is undervalued, giving Chinese companies a price advantage that costs U.S. jobs. 

Ed Farkas comment:

The issue of intellectual property “started several decades ago” and leaders in Washingtonhave long argued” that China’s yuan is undervalued.

Putting it in a nutshell, the U.S. government is saying that China is dealing in a very unfair way with America, and the situation has continued for decades.

This being the case, why do we keep on buying from China? 

On a net basis, we are currently sending money to China at the rate of $273 billion per year.  (Official figure; probably the real figure is higher).  We are rewarding China for its unfair behavior by sending China hundreds of billions of dollars every year. 

It is completely insane to send huge amounts of money to China every year over “several decades” while they are dealing very unfairly with us.  If China hasn’t corrected its behavior over “several decades”, obviously it is never going to happen.

Consider a typical ordinary American citizen.  Let’s call her Mrs. Jones.  Mrs. Jones buys food and many other items to feed her family and run her home.  If she finds the store she is dealing with is treating her unfairly, is she going to continue to deal with that store over “several decades"?

Obviously not!  She would have to be insane to continue dealing with that store.  In a lot shorter time than “several decades”, she would find alternate arrangements for her purchases.

Our insane behavior of rewarding China for its unfair practices has continued for more than “several decades”, through successive Republican and Democratic administrations, and generation after generation of members of House and Senate. 

What is the cause of this insane situation?

Good question and simple answer.  The American “business community” has a dream that it will be able to sell to over one billion people in China.  Despite a lot of evidence that this dream will never be reality, the business community continues to pursue this dream. 

In pursuit of this dream, the business community has corrupted the U.S. government so that the government will keep China happy through unrestricted free trade. 

The business community is unconcerned about the “collateral damage”: an impoverished America, 25 million people unemployed and the American dream destroyed.  We can now understand that all the suffering of the ordinary working men and women of America has occurred in support of the vain hope that the business community will be able to sell to one billion Chinese consumers. .

Evidence is found in the same Huff Post report. The report goes on to say “A coalition of 51 U.S. business groups has sent a letter to senators” who are trying to get legislation passed to force adjustment of the yuan to a fair level.

The letter “urges (senators) to focus more on China’s inadequate protection of intellectual property rights and restrictions on market access”.

Ed Farkas comment:

The “51 U.S. business groups” are clearly and blatantly putting their own selfish interests ahead of the interests of 312 million Americans, and are putting pressure on the government to accommodate those selfish interests.

If “51 U.S. business groups” are finding it difficult to succeed in China, why don’t they pack up and come home to America, hire Americans, and be happy to sell to 312 million Americans?

It is unbelievable that “51 U.S. business groups” have vainly pursued their dream of selling to one billion Chinese consumers for more than “several decades” but still have not given up their dream. They are continuing to pursue their dream at the cost of complete destruction of the American economy.

Further Ed Farkas comment

The problems in dealing with China must be very serious to cause Secretary Geithner to come out and make the comments he made.  Geithner is not usually seen as a rebel or as a reformer.

Contrast Geithner’s dark view of China with Secretary Clinton’s cheerleader happy speech concerning China, which she presented in January 2011.

Does Secretary Clinton ever speak with Secretary Geithner?

Click on link immediately below to see my analysis of Secretary Clinton’s nonsensical speech:

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