Monthly Archives: February 2011

Expensive Labor, Huge Exports

Some uplifting news:

Last year, for the second year in a row, U.S. companies got more work out of their employees while spending less on overall labor costs.

A two-year decline in labor costs hasn’t happened since 1962 and 1963.

Good news, some would say. Or maybe just desserts. US wages were too high to begin with, especially those lazy public sector employees! However, there is no reason that a nation with high labor costs can’t be globally competitive.

In 2007, Germany’s labor costs were around 40 dollars per hour, whereas the US was around 34. Yet both in gross numbers and as a % of GDP, Germany outperformed the US. In terms of productivity, however, the US is still superior. So what gives?

We have a more productive workforce, lower taxes, lower labor costs, and drastically higher unemployment. Yet we get the same party line about hiring: “We’re Waiting on Obama”. It looks like the “small businesses” of American have had long enough to squeeze the blood out of the American turnip. As Frank said: Something’s missing.


China Eyes Jasmine

Why so skittish? Apparently China’s leaky Great Firewall was unable to stop some vague microblog calls for demonstrations around China, termed the “Jasmine Revolution”, a copy of the Tunisian name.

This comes only a short time after Hu Jintao spoke about the coming challenges to “solve prominent problems which might harm the harmony and stability of the society” to a gathering of provincial and minsisterial level functionaries.

However,  it seems that things never really got off the ground, with police and journalists outnumbering protesters. China has historically been very wary of an kind of mass demonstrations, even ones against Japan, as they can cut both ways. They may assuage nationalist sentiment, but run the risk of becoming too xenophobic, as I wrote about in a paper for a class. They can also move away from nationalist sentiment and towards calls for reform, as the NYT reported was happening today.

The messages calling people to action urged protesters to shout “We want food, we want work, we want housing, we want fairness,” an ostensible effort to tap into popular discontent over inflation and soaring real estate prices.

There’s really no way that Beijing is going to allow a movement overtly calling for change (without a nationalist angle) to run its course naturally. In the past it has managed anti-Japanese protests very closely, even ordering organizers out of Beijing in 2003.  There’s no way it will treat a baldly reforming agenda with kid gloves.

If there are any demonstrations this spring they will occur without the slightest tolerance from the PRC.

China Eyes the Gulf

As Joshua Kurlantzick notes in Asia Unbound, China is not in the same boat as the current or former Middle Eastern regimes in Bahrain, Tunisia, and Egypt.

The era of Chinese intellectuals and pro-democracy activists looking clearly to the United States for guidance, if that ever existed, is over.

China’s regime has, since Tiananmen, remained pretty consistent in managing the tone of its opposition to the US. In the mid-90s, the book “China That Can Say No” was published, to great fanfare on the Mainland. It attempted to set Chinese values at odds with the trends in the West (primarily the US), and sold well for years. It relied heavily on Han nationalim, stating

In the next  century  …  Chinese  thought,  and  Chinese entrepreneurial abilities  will  deeply  influence  the world, becoming the  sole force leading  human thought

This type of thinking appeals directly to what David Shambaugh has called the “nativist” element in his paper “Coping With a Conflicted China”, comprised of “populists, xenophobic nationalists, and Marxists.” This group may not like what the CCP has done in regards to its opening up and trade with the West, but it still views the government as the best vehicle for spreading the thought leading force it views as China’s birthright in the coming years.