Category Archives: Trade

Upcoming Trans-Pacific Partnership Looks Like Corporate Takeover

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You will be hearing a lot about the upcoming Trans-Pacific Partnership (TPP) agreement. TPP’s negotiations are being held in secret with details kept secret even from our Congress. But giant corporations are in the loop.

TPP is a “trade” agreement between several Pacific-rim countries that is actually about much more than just trade. It will be sold as a trade agreement (because everyone knows that “trade” is good) but much of it appears to be (from what we know) a corporate end-run around things We the People want to do to reign in the giant corporations — like Wall Street regulation, environmental regulation and corporate taxation.

One-Sided Process

The TPP process appears to be set up to push corporate interests over other interests. The TPP is being negotiated in secret, so what we know about it comes from leaked documents. Even our Congress is being kept out of the loop. But 600 corporate representatives are in the loop while representatives of groups that protect working people, human, political and civil rights and our environment are largely not in the loop.

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Beware the New Corporate Tax-Cut Scam: LIFT Is A Big LIE

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First it was Fix the Debt, with tax-dodging corporations “leading the charge for massive new corporate tax cuts paid for with cuts to Social Security, Medicare, and Medicaid.” Now there’s a new “LIFT America coalition,” pushing for massive, massive corporate tax cuts, without bothering about cutting benefits. LIFT stands for “Let’s Invest for Tomorrow,” but as Citizens For Tax Justice (CTJ) points out, it really ought to be called LIE, for “Let’s Invest Elsewhere.”

The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.

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Important Bipartisan Currency Bill Introduced In House

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A new bill was introduced in the House today to fight currency manipulation, including China’s. The bipartisan Currency Reform for Fair Trade Act was introduced by Representatives Sander Levin (D-MI), Tim Murphy (R-PA), Tim Ryan (D-OH), and Mo Brooks (R-AL). This bill would treat undervalued currency as a subsidy under U.S. trade law, meaning we could apply tariffs to goods from countries that do this.

A nearly identical bill passed the House overwhelmingly in the 111th Congress and had 234 bipartisan cosponsors in the recent 112th Congress after passing overwhelmingly in the Senate. But Speaker Boehner refused to allow a vote, and the bill did not become law.

Currency Manipulation

Some countries go to great lengths to keep their currencies “weak” relative to where currency markets say they should be set. This means goods from these countries cost less than goods from countries with “stronger” currencies. This gives companies making things in these countries a competitive advantage in world markets, and the jobs and factories flow to those countries. It costs these countries money to accomplish this, but they get it back by gaining all those jobs and sales of goods and services.

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Is Ths Where The (Middle-Class) Money Went?

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Tuesday’s post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, was updated with this chart:

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Now, here’s another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late 70′s / early 80′s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

Correlation isn’t causation, but just sayin’…

In the post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, I wrote this about that:

This means the gains went … somewhere else. See if you can guess who got them? (Hint: it’s the 1%; this is one driver of the terrible income and wealth inequality.) This breakoff of wages from productivity growth is partly (largely?) the result of trade agreements that pit Americans against exploited workers in non-democracies. This weakened the bargaining power of unions, moved factories and industries out of the country, devastated entire regions of our country — and gave the giant multinational corporations, Wall Street and the billionaires the leverage they needed…

(*Click charts for sources.)
–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Tom Friedman Explains The Problem With The Economy

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Tom Friedman says the way to get the economy moving is with a “grand bargain” that “slows the growth of both Social Security and Medicare entitlements” along with “reform” that cuts taxes for the rich and corporations.

Tom Friedman says this will provide “certainty,” so companies will have “confidence” and will invest and hire.

You see, the problem isn’t high unemployment leaving people out of the economy, resulting in businesses not having enough customers coming in the door. That is not the reason businesses don’t feel confident enough to expand and hire.

And the budget problem isn’t because Bush doubled the military budget after Reagan did the same, after cutting taxes on the rich… And never mind that the budget didn’t have a deficit before those things… And never mind that they said they were “cutting the government’s allowance” and “starving the beast” in order to manufacture a deficit crisis so they could scare people into cutting the things we do to make our lives better. Never mind that they said that was the plan…

The real problem with our economy is that regular working people have too much, and the wealthy and their corporate masks have too little.

And we need a “Grand Bargain” imposed on us from the top, instead of just going with the results of the election we just had or all of the polls in which people said they want JOBS, higher taxes on the wealthy and corporations, military spending decreased, and better retirement and health care packages for regular people…

Tom Friedman thinks the wealthy people at the top should be making the decisions, not the people.

Surely anyone can see the wisdom in that, right?

And yes, this post is in the category “Plutocracy”

Update: TRADE DEFICIT. Dean Baker at CEPR says the problem is the trade deficit, in The Educate a Cab Driver, Educate Thomas Friedman Campaign:

Our cab driver could also explain to Thomas Friedman how a trade deficit of 4 percent of GDP (also $600 billion in annual demand) affects the economy. The national income accounting that students learn in intro economics is that GDP = consumption + investment +government spending + net exports. If we have a trade deficit of $600 billion then we need to have the other categories fill that gap to get the economy back to full employment.

In the last decade the demand created by the housing bubble filled the gap created by the trade deficit. In the 1990s the demand created by the stock bubble filled the gap created by a somewhat smaller trade deficit. Now we have nothing to fill the gap. And if anything Friedman’s remedies go in the wrong direction.

Fix The Trade Deficit, Fix The Economy.

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Yet another report is out showing how the trade deficit is costing us millions of jobs and hurting our economy. This report has specific numbers: between 2.2 million and 4.7 million U.S. jobs, between 1 percent and 2.1 percent of the unemployment rate and a gross domestic product increase of between 1.4 percent and 3.1 percent.

These are real numbers that were carefully calculated. This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. And there are real solutions available to fix the problem.

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Reporters: Ask About The TRADE Deficit

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Government spending is We, the People doing things to make our lives better. Trade deficits are caused by billionaires and their giant corporations pitting America’s working people against exploited people who have no say, so they can drive down our wages and pocket the difference. Have you noticed that the people who are making the most noise about the budget deficit tend to be the same crowd that’s benefiting from the ruinous trade deficit?

Budget vs trade deficit… You can learn a lot about how our country’s media and policy apparatus works by taking a good look at the way the two are handled. One — pushed by the billionaires and their giant corporations — gets all the attention. The other — the cause of the destruction of our middle class — gets none.

Reporters and others: you should ask policymakers what they plan to do about the trade deficit — that’s the one that really is hurting the country.

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If You Want To Reform Something, Reform The Trade Agreements

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When you hear anyone from the big multinationals or Wall Street using the word “reform,” watch out! The way they use the word, it means give them more and We, the People get less. They want to “reform” Social Security, “reform” Medicare and “reform” the income tax code. And now they want to “reform” the taxes corporations pay on money made outside the US. It’s like “reforming” an oak tree with an ax.

$420 Billion In Taxes Owed

American corporations are holding a lot of (their shareholders’) cash “outside of the country.” (But not really outside.) HOW much money are we talking about? Approx $1.2 trillion as of last March. This is money these companies have made in international profits, owed to their shareholders or potentially used for investment in US jobs, facilities and equipment. But they won’t bring the money back to the US because they would have to pay taxes if they did. Instead they are holding it “outside of the country” and pushing for “reform” — meaning let them out of their tax bill. If this $1.2 trillion were repatriated and taxed at the full corporate tax rate of 35% this would bring an additional $420 billion to the treasury for We, the People to use to rebuild our infrastructure, etc.

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Why Voters Need To Know About #Sensata

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Right now a company named Sensata is moving equipment out of a factory in Freeport, Ill. and shipping it to a factory in China. Sensata will be laying off all of the American workers, but first they are making the workers train their Chinese replacements. The workers’ last day is the day before our election. Here’s the thing: this company is owned by Bain Capital, and Mitt Romney — who says he is against shipping jobs to China — will make a fortune from the move to China.
The Sensata employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. These soon-to-be-jobless workers have asked Romney to come help them.
This is a tremendous opportunity for Mitt Romney. As the former head of Bain Capital and with all the visibility of a presidential campaign, he could step in and help these workers. It offers him the chance to demonstrate to voters that he means the things he says on the campaign trail, and is not just saying these things to get votes. But Romney has refused.
Mitt Romney says on the campaign trail that he will crack down on China and is against companies shipping jobs to China. These are very popular positions to take — the public overwhelmingly wants to see things made in America again, and understands that China’s trade cheating is costing us dearly. So a candidate for president would certainly say he is for doing this. But when it comes time to show that he will actually means it and will do something about it, it looks as though Romney is not doing it. These workers have asked for his help, but he won’t do it. Voters should know about this, and make up their own minds about whether Mitt Romney means what he says, or just says what he needs to say to win.

Bain Capital And Sensata

Mitt Romney started the “private equity” firm Bain Capital. Bain’s business model is to purchase companies using “leveraged buyouts” that borrow huge sums using the purchased company’s own assets as collateral, uses the borrowed money to immediately pay itself, then cuts costs by doing things like sending jobs to China, cutting wages and manipulating tax rules to cut taxes owed, along with standard big-business practices like consolidating business units, taking advantage of economies of scale not available to smaller competitors, squeezing distribution channels for price cuts, and other practices that bring competitive advantages. (See So DID Mitt Romney Really “Create Jobs” At Staples? and Truthout: Romney & Company Shipped Every Single Delphi UAW Job to China.) After reorganizing the purchased companies and cutting costs — namely: you — Bain then “harvests” them for profit.
One company that Bain Capital purchased — after Romney’s time as CEO — is Sensata, a sensor manufacturer that makes key components for our automobile supply chain. Sensata then announced it is closing the factory in Freeport, Ill., and sending all of the manufacturing and jobs to China. This is significant because China is engaged in an effort to capture the automobile manufacturing supply chain, and sensors are a key strategic chokepoint. China built a factory for Sensata, and offers other incentives to the company to move manufacturing there.
So Bain is currently moving all of the equipment out of the Freeport factory, preparing to shut it down and lay off all of the American workers. Bain/Sensata brought in Chinese workers and made the Freeport workers train them. Bain/Sensata is moving the equipment out of the Freeport factory and shipping it to China right now.
The Sensata employees heard Romney on the campaign trail, and somehow got the idea that he opposes sending our jobs to China just because he says that he opposes sending our jobs to China. So the Sensata workers asked him to come to Freeport/Bainport and help them. Read on to learn about Romney’s response to the Sensata workers, and how Romney is actually making big money right now from shipping their jobs to China.

“The week before they came they took the American flag down outside the plant. The week after they left they put it back up.”

Romney Making A Fortune From Sensata Sending Jobs To China

While Mitt Romney no longer manages Bain Capital, he still has millions of dollars in Bain funds and will personally make a fortune from this company moving to China – both from profits and from tax breaks. (What you and I consider a fortune, Romney might consider a drop in the bucket.)
A must-read news report by Sharon LaFraniere and Mike McIntire in The New York Times explains. As Romney Repeats Trade Message, Bain Maintains China Ties (emphasis added, for emphasis),

Mr. Romney also has millions invested in a series of Bain funds that have a controlling stake in Sensata Technologies, a manufacturer of sensors and controls for vehicles, aircraft and electric motors that employs 4,000 workers in China. Since Bain took over the operation in 2006, its investment has quadrupled in value. Bain continues to own $2.6 billion worth of Sensata’s shares.
Two years ago, Sensata bought an operation that made automobile sensors in Freeport, Ill. At the first meeting with the plant’s 170 workers, Sensata managers announced that by the end of 2012 all the equipment and jobs would be relocated, mostly to Jiangsu Province. Workers have staged demonstrations, pleading for Mr. Romney to intervene on their behalf.
Chinese engineers, flown to Freeport for training on the equipment, described their salaries as a pittance compared with Freeport wages. Tom Gaulrapp, who has operated machines at the factory for 33 years, said he fears he will go bankrupt after he loses his job on Nov. 5.
“This goes to show the unbelievable hypocrisy of this man,” he said of Mr. Romney. “He talks about how we need to get tough on China and stop China from taking our jobs, and then he is making money off shipping our jobs there.”

Please read the entire New York Times report, As Romney Repeats Trade Message, Bain Maintains China Ties. There is much more there about Romney, China, Bain and the huge gap between what Romney says on the campaign trail, and how Romney made his current $400,000/week income and how Bain Capital still makes its money.
Also see this Huffington Post report, Mitt Romney Gets Tax Break Off Firm Sending Jobs To China,

According to his recently released 2011 tax returns, Romney transferred $701,703 worth of Sensata stock to the Tyler Charitable Foundation, a 501(c)3 tax-exempt nonprofit controlled by Romney. The gift is listed on page 323 of the pdf, on form 8283 (below).
Moving the stock to his nonprofit brings Romney twin benefits. First, he gets to deduct the full value of the stock. At a 35 percent tax rate, that’s nearly a $250,000 benefit. At 15 percent, it’s just over $100,000.
Second, Romney is able to avoid paying capital gains taxes on the stock price increase. Romney’s returns list no cost for the stock, and indicate he obtained them as part of a partnership interest in Bain. Avoiding capital gains taxes on the full increase would save an additional $100,000. In 2010, Romney gifted $170,000 worth of Sensata stock to his charity, saving $25,000 in capital gains taxes that year.
Cheryl Randecker, a Sensata worker facing an imminent layoff, said, “I could pay off my house with that [$25,000], and he doesn’t need it anyway.”

So there you have it. Mitt Romney says he opposes sending jobs to China, and says he will “crack down” on China. But he refuses to do things that he could do right now that would make an actual difference right now. And it turns out that right now he is making big money from Sensata and other companies that are sending people’s jobs to China right now.
Laying off American workers – usually shipping the jobs to China – and pocketing their wages for themselves is the story of the rise of the wealth of the 1%, and the decline of the American middle class. It is the Romney/Bain/Sensata business model. And the remaining workers have to do the jobs of the laid-off workers, often for lower pay, and are threatened with losing their jobs, too, if they don’t like it.

Economic Traitor?

This is an advertisement titled “Economic Traitor,” that is being aired by superPACs Workers’ Voice and Patriot Majority, based on Sensata:

Click here to see all of CAF’s coverage of Sensata.
Bain Of Our Existence – The Go-To place for stories and info about Bain Capital.
For more information, photos and stories from the Sensata workers, please visit bainport.com.

For Fun

From UnitedNY, if Bain Capital was your psychologist:

PATIENT (LYING DOWN on couch): I think he’s depressed. I mean, he is a good kid but he just keeps to himself. I can’t get him to talk or spend time with the family and barely does any chores.
BAIN: Have you consider outsourcing? (hold shot of PATIENT)
PATIENT (confusion) You want me to outsource my son? (TURNS HEAD towards BAIN in surprise)
CUT to Bain face
BAIN: Yes, you can find some very obedient children in China or Bangladesh, even the Philippines.
(P.S. The reason I use #Sensata in the titles is because on Twitter the “hashtag” helps get the word out.)
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Trade Alert! Another Job-Killing Trade Agreement Heading Our Way

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The trade agreements we have entered into over the last few decades have greatly enriched the already-wealthy 1% but not worked for the benefit of most of us. They have created massive trade deficits that drain our economy. They have cost millions of manufacturing, textile and other jobs. They have empowered huge, multi-national corporations to break unions and force pay and benefit cuts. Now the Trans-Pacific Partnership (TPP) agreement is coming up, and once again things don’t look so good for most of us. Maybe “look” is the wrong word to use, since We, the People are not even allowed to know what “our” government is proposing!

The TPP Trade Agreement
The Trans-Pacific Free Trade Agreement is a major trade deal for Pacific Rim countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam. Japan, Mexico and Canada have said they plan to sign on later. Other Pacific Rim countries including Indonesia, Russia, the Philippines and possibly China are also expected to join. So this is a big deal.
So far there have been eleven rounds of negotiations. Reports say that the United States has introduced proposals for the rest of the agreement. The 12th round of negotiations for the TPP start today in Dallas.

Another NAFTA-style Trade Agreement?

The NAFTA-style trade agreements we are familiar with have been used as weapons by the already-wealthy and their huge corporations to break unions and force working people to accept pay and benefit cuts, resulting in the “hollowing out” of our middle class. They have turned democracy — with its good wages & benefits and environmental protections — into a competitive disadvantage in world markets.
These agreements are sold as “opening up trade” into new markets. This supposedly helps us by increasing exports, which supposedly should open up lots of jobs in the exporting industries. But now we see how these agreements have really been used. While increasing some exports like agricultural products and raw materials they have increased imports more, costing us jobs, factories and entire industries. The resulting trade deficits have literally drained our economy. The resulting movement of good-paying jobs has hollowed out our middle class.
These trade agreements have empowered companies to break unions. Companies cut pay and benefits, telling workers their jobs can be offshored. This forces other companies to do the same whether they want to or not.
The Citizens Trade Campaign, in What Corporations Want with the Trans-Pacific FTA, worries about TPP, saying,

If it continues on its current course, the Trans-Pacific FTA will serve two primary purposes:
1. Making it easier for corporations to shift jobs throughout the world to wherever labor is the most exploited and regulations are the weakest; and
2. Putting checks on democracy at home and abroad by constraining governments’ ability to regulate in the public interest.
… Here, specifically, are examples of what corporations want with the Trans-Pacific FTA:
* Cheaper Labor Costs. … (click through to read)
* New Tools for Dismantling Environmental Laws. …
* Longer Drug Patents. …
* Further Financial Deregulation. …
* Caps on Food Safety Protections. …
* Concentration of Global Food Supplies. …
* Greater Access to Government Contracts. …
* Lower Taxes. …

Why The Big Secret?

We, the People are not allowed to know what our own government is proposing in these trade negotiations! But corporate lobbyists are working with the negotiators and are able to review drafts of the agreement.
U.S. Trade Representative Ron Kirk, — formerly Mayor of Dallas, candidate for US Senate, lobbyist for Energy Future Holdings Corporation, which was created by KKR, TPG Capital and Goldman Sachs in a $45 billion 2007 leveraged buyout — has refused to release any of its negotiating proposals for public scrutiny. At the same time approx. 600 corporate lobbyists have been given “cleared advisor” status.
Why are our own country’s proposals kept secret from We, the People? They are not a secret to the other governments involved in these negotiations, nor to the corporate lobbyists who have “cleared advisor” status.

TPP Concerns

Several chapters of the proposed agreement have leaked, raising questions about who this agreement will benefit. The Citizens Trade Campaign, “a broad and diverse national coalition of environmental, labor, consumer, family farm, religious, and other civil society groups” has a list of questions about the TPP:

  • Labor rights: Will the Trans-Pacific FTA include labor standards based on International Labor Organization conventions, and if included, how will they be enforced?
  • Investment Provisions: Will the Trans-Pacific FTA include so-called “investor-state” provisions that allow individual corporations to challenge environmental, consumer and other public interest policies as barriers to trade?
  • Public Procurement: Will the Trans-Pacific FTA respect nations’ and communities’ right to set purchasing preferences that keep taxpayer dollars re-circulating in local economies?
  • Access to Medicines: Will the Trans-Pacific FTA allow governments to produce and/or obtain affordable, generic medications for sick people?
  • Agriculture: Will the Trans-Pacific FTA allow countries to ensure that farmers and farm workers are fairly compensated, while also preventing the agricultural dumping that has forced so many family farmers off their land?

Buy America Banned?

“Buy America” procurement preferences for federal procurement contracts are one of the few tools we have left to make sure that We, the People benefit when our own tax dollars are spent. Currently and since the 1930s, American-produced goods have received preferential “buy America” treatment in federal procurement contracts.
It has been leaked that the TPP agreement grants the TPP countries the same privilege. In other words, Buy American in federal procurement will give these countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam — the same preferences as American-made goods. The idea is that these countries will then have to give American producers equal access to their own government contracts. Of particular concern is that Chinese-based firms in these countries will be able to bid against American companies for these government contracts.
This would force American producers to compete with countries that do not have minimum wage laws or environmental protections, undermining our own such protections.
A group of 68 House Democrats and one Republican sent a letter to President Obama last week, urging him to reconsider any potential ban on Buy America preferences.

Actions You Can Take

Occupy Wall Street: Occupy TPP: Dallas, TX – May 8-19,

via Texas Fair Trade Coalition:
International trade ministers and corporate lobbyists will be descending on Texas from May 8 to 18 for a critical trade summit aimed at rushing the secretive new Trans-Pacific Partnership (TPP) Free Trade Agreement toward completion. The Texas Fair Trade Coalition and our allies are planning to welcome them — and we need you to join us.

Occupy Dallas: Take Action for Fair Trade!
Public Citizen petition: Derail the Trans-Pacific Partnership – No backroom deals for the 1%
Friends of the Earth: Demand transparency in the Trans-Pacific free trade agreement!
Citizens Trade Campaign: REPORTERS’ MEMO: Former Mayor Brings Controversial Trans-Pacific Trade Negotiations to Dallas, USTR Ron Kirk Urged to Publicly Release What His Office Has Proposed in Americans’ Names
Leo Hindery, Jr.Chairman, U.S. Economy/Smart Globalization Initiative at the New America Foundation: Free Trade Run Amok: The ‘TPP’, (this is a must-read!)

I believe that TPP could very likely dwarf the negative impacts from all prior FTAs combined, including the still notorious multilateral NAFTA (which went into effect in 1994) and the multilateral CAFTA (signed in 2003).

Lori Wallach, director of Public Citizen’s Global Trade Watch: A Stealth Attack on Democratic Governance
Tim Robertson, California Fair Trade Coalition: Why Is the TPP Such a Big Secret?
Michael Brune, The Sierra Club: What Are They Trying to Hide?
Public Citizen’s Tradewatch
Public Citizen’s Global Trade Watch
Eyes On Trade, Public Citizen’s Blog on Globalization and Trade.
Public Knowledge: TPP Info
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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China Is Very “Business-Friendly”

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China is very, very “business-friendly.” Corporate conservatives lecture us that we should be more “business-friendly,” in order to “compete” with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay — even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be “business-friendly” enough to compete with China, and here is why.
Workers In Dormatories, 12 To A Room, Rousted At Midnight
China is very, very “business friendly.” Recent stories about Apple’s manufacturing contractors have started to reveal just how “business-friendly” China is. Recently the NY Times’ Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple’s Chinese suppliers, in How the U.S. Lost Out on iPhone Work. They describe how China’s massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, “Those jobs aren’t coming back.”

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. … New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift. And the corporate conservatives criticize America for this, not China, saying we are not “business-friendly” enough to compete. This is because we are a place where We, the People still have at least some say in how things are done. (Don’t we?) Later in the story,

The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones.

“Business-friendly” = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.
Forced Labor Is The Real “Business-Friendly”
Arun Gupta at AlterNet, in iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months’-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.
… Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.
… The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlterNet piece, iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think. These things are not “costs” that we can compete with by lowering our wages, these things are something else.
Not JUST Low Taxes — Massive Government Subsidies
These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies. The Chinese government is very “business-friendly.” They hand money to businesses so they are much more able to “compete.” They are so friendly to business that they even own many businesses.
Trade Secret Theft
Another area where China has very “business-friendly” policies is when their own businesses steal from non-Chinese businesses. This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the “unbelievably endemic” problem of Chinese theft of “intellectual property” — the trade secrets that keep businesses competitive. In this case China’s Sinovel sole the software that ran an American company’s products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China’s Sinovel, the world’s second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor’s wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm’s revenues.
… Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don’t have to pay them and you can just make the things yourself. When you get in bed with a very “business-friendly” country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating “market.”
Trade Deficit Drains Our Economy
As a result of our ideological blindness, refusing to understand China’s game, we have a massive trade deficit with them. This means hundreds of billions of dollars are drained from our economy, year after year. And to make up for this we borrow from them in order to keep buying from them. But this does not cause their currency to strengthen in the “markets” because China loves this game the way it is going, and intervenes against the markets to keep their currency low. And so it continues, year after year. We believe in “markets” they believe in rigging markets so they come out ahead…
Markets Can’t “Compete” With This
Corporate conservatives tell us we need to be more “business-friendly” to “compete” with China. But at the same time Steve Jobs was being a realist when he said “the jobs are never coming back” because he understood that the current political climate, controlled by a wealthy few who benefit from China’s “business-friendly” policies will not let us fight this. Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices? Why should they, unless We, the People tell them they can’t do that to people, and that we won’t let them profit from it?
As long as we continue to think that this is about “markets” competing, we will lose. China sees itself as a nation, and they have a national strategy to continue to be so “business-friendly” that our businesses can’t compete. Our leaders and corporations may have “moved on” past this quaint nation thing but China has not.
We, The People Need To Act To Fix This
As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose. But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem. Maybe the companies they manage won’t be around later, but that is not their problem. Others are concerned, but are forced to play the game because no one can compete with national systems like China’s.
When everyone is in a position where something isn’t their problem, or where they can’t do anything about it on their own, it means this is a larger problem, and this is where government — We, the People — needs to get involved. It is our problem but we have been convinced that we — government — shouldn’t interfere, or “protect” our industries, because “the markets” don’t like “government” — We, the People — butting in. This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.
We Need A Plan
In U.S. must end China’s rulers’ free pass at Politico, AAM’s Scott Paul writes, Read it, read it, read it!)

We shouldn’t fear China’s citizens. But we should be worried about the actions of its authoritarian — and, yes, still communist — regime that tightly controls the People’s Republic. And we should be downright terrified by some of our own leaders’ attitudes toward China.
… China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.
[. . .] History didn’t do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites — and seduced them into believing these policies were no longer necessary.
… There has been no strategy, no effort to prevail economically.
… No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China’s intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan. We need to understand that China is not competing with us in “markets’ they are competing with us as a nation. We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.
It’s not just price, it is things a democracy cannot allow. We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People — the 99% — are in a real fight here to keep our democracy, or we will lose what is left of it.
Democracy Is The Best Economics
When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job. We need more of that, not less of that. We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.
As long as we let democracy be a competitive disadvantage, We, the People will lose.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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