The G20 meeting of advanced and emerging economies has just wrapped up in South Korea. Picture a handful of captains of leaky life rafts shouting driving lessons at a passing freighter—specifically a Chinese one—and you have a pretty clear idea of what happened at this meeting.
China has been constantly devaluing its Yuan, driving exports. That causes problems for Europe and the Americas because when the consumer is at a hardware store and a Chinese-made hammer is about five bucks lower in cost than the one made locally … guess which one will move off the shelves faster?
China can make things inexpensively for two reasons: Workers are happy to bust their behinds for however many hours their employer asks of them, without complaining, striking, demanding more or better benefits, or any other such things that waste time and drive down production.
And China actually believes that it is still important to produce things. Ironically, the very capitalist concept of creating something of value that can be sold to someone who requires it is alive and well. Whether the Chinese are there of their own free will or whether human rights abuses are involved in keeping them there is another issue—and one that needs addressing in terms of equalizing markets and international competition, an issue as significant as any fiddling with the Yuan in which the Chinese may be engaged. But there’s no denying China’s grasp of this very basic trade concept of “profit for value” that has been so badly corrupted in western democracies through the perversion of the natural relationship between buyer and seller—typically by unions, benefit plans, taxes, and all sorts of other add-ons that serve only to complicate and obscure a logical and mathematical relationship.