The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World by Shaun Rein Read Free Book Online Page B

more expensive labor-cost landscape that boxes out factories unable to afford higher costs.
    America’s economic growth for the past three decades can be largely attributed to the willingness of Chinese laborers to slave away, underpaid, in factories that make the products Americans love—Apple computers, Nike shoes, and Gap khakis. Low wages have generated massive profits for U.S. firms that chose to relocate to or source from factories in China, like Walmart, and have made consumer electronics and clothes affordable for everyday Americans. This process fueled America’s addiction to consumption while keeping inflation low, despite loose U.S. monetary policies and an unhealthy addiction to debt that traces back to the Reagan years.
    For decades, this arrangement was seen as win-win for all involved, when the American business community and free-trade economists prevailed in their argument to reduce tariffs to promote outsourcing. Middle-class Americans filled their homes with product after product for stunningly low prices, while Chinese workers earned enough to eat and have basic shelter over their heads. But this arrangement started to unravel during the financial crisis.
    As more Americans lost their jobs, China came to be viewed as a scapegoat for U.S. unemployment, rather than for the real reasons: poor regulation of Wall Street; a bickering political system; and average Americans’ addiction to debt, which went on for far too long. Now one hears the constant refrain from politicians and commentators on TV that China is stealing U.S. manufacturing jobs and that Americans should only buy products made in America. For these talking heads, China’s rise is a zero-sum game with the United States.
    While such arguments appeal to patriotic pride, giving in to these sentiments hurts Americans more than it helps them. Without China, many American families would not be able to afford quality furniture or the latest technology. If businesses like Laura or Apple were forced to bring their factories back to America, their prices would rise tenfold, causing rampant inflation and further hurting consumer sentiment and it is even doubtful these jobs would build consumer confidence if they came back. Few Americans are willing to work for low wages in factories, as their forefathers did in the textile and footwear mills of New England.
    Even at the height of the financial crisis with 24 million Americans unemployed, with Occupy Wall Street protests erupting across America, thousands of farm jobs in America have gone unfilled, because so many Americans don’t want to work in those conditions. However, the Obama administration has deported a record high of nearly one million illegal immigrants—the very people who were willing to take those jobs. Aside from plentiful jobs causing Chinese wages to rise, there are simply fewer workers, because the one-child policy implemented in 1978 has resulted in an aging population today. The magazine Science found that 22.9 percent of the Chinese population was under the age of 14 in 2000. That number dropped to only 16.6 percent in 2010. Unless the government eases population control laws soon, or allows workers from neighboring countries like Myanmar and Vietnam to work in China, it is doubtful that the labor pool will grow anytime soon.
    Economists like Cai Fang of the Chinese Academy of Social Sciences, and Ross Garnaut of the Australian National University, have suggested that China has reached the Lewisian turning point, named for the Saint Lucian developmental economist Arthur Lewis, who won the Nobel Prize for Economics in 1979. Lewis claimed that once the supply of surplus labor in developing countries diminishes, industrial wages begin to rise quickly.
    Fewer and fewer Chinese employees are willing to work in factories, as they too want to enjoy an American-style lifestyle of consumption, and seek more comfortable jobs closer to their families. Changes to the Chinese labor pool are, for