America Is Dangerously Out of Balance and Needs Self-Reliance

I’m typing this into a computer made in China, reading it on a screen made in China. The WiFi router that’s connecting me to the internet was made in China, as is the cable modem my internet service provider put in my house. The external keyboard and backup drives are made in China, as are most of the lamps, bulbs and other appliances on my desk.  My eyeglasses and the shirt I’m wearing were made in China (the pants are from Malaysia, the shoes from Korea), as is the coat I wear outside. The one medication I take is made in India out of ingredients from China.

Meanwhile, this is the year — 2022 — that the government of China has ordered that all “government offices and public institutions” nationwide must “remove foreign computer equipment and software.”

This is, wrote Yuan Yang and Nian Liu from Beijing for the Financial Times back in December of 2019, “part of a drive for China’s government agencies and critical infrastructure operators to use ‘secure and controllable’ technology, as enshrined in the country’s Cyber Security Law passed in 2017.”

Thus, the effort to purge American cyber products from China began in 2019 and is supposed to wrap up this year.  The nation is becoming digitally self-sufficient.

Given that pretty much everything you see in any American store was made in China, it’s a safe bet that the country long ago became self-reliant in everything from clothes to building materials to electronics to toys and household furnishings.  And, of course, military hardware and weaponry.

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There are those who suggest that China is moving quickly to become self-reliant in that final arena of computers and software because they’re preparing for a war with the US over Taiwan. 

That scenario, well within the realm of possibility, means China could throw the US into utter and devastating chaos simply by stopping the export of everything we’re now buying from China.

They wouldn’t even need to attack us militarily: they could bring America to our knees with a single trade decree.

Look at how a few supply chain slowdowns have created chaos and inflation here: imagine if the Chinese cut us off like the Arab countries did with oil back in the 1970s when they were pissed off at us for supporting Israel in their war with Egypt. 

We had mile-long lines for gas, inflation hit almost 20 percent, and chaos reigned in our cities as supermarket shelves emptied out in days when the trucks stopped rolling (partly from fuel shortages; partly from protests over high fuel prices).

Clearly, when a superpower who’s threatening your friends and “practice bombing” your aircraft carriers controls the majority of your entire economy, you’re in no position to make threats or demands.

Imagine if when Pearl Harbor was bombed and we entered World War II there were no American ladies’ nylon factories to convert to parachute manufacturing; no American-owned car factories that could be converted to making tanks and bombers; no domestic garment industry that could make uniforms and tents.

China is looking at their interdependence with us through a national security lens, and we should, too.

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But beyond that, there’s the issue of America simply being able to supply its own needs during normal times.  We’re now dangerously out of balance.

While thousands of container ships come into American ports filled with every product imaginable (and purchasable at Walmart or on Amazon), most go back to China empty.  When ships are carrying things westward, it’s typically logs, coal and iron ore that China will turn into packaging, electricity, and appliances they’ll sell back to us.

We were sold Milton Friedman’s neoliberal “free trade” as something that would end wars.  If every nation was interdependent with every other nation, he said, it would make exactly zero sense for any of those countries to go to war and cut off parts of their own supply and revenue streams.

Neoliberal wonks like billionaire Thomas Friedman helped the sales pitch with books like The Lexus and the Olive Tree, as every industry in America was salivating over 30-cent-an-hour Chinese labor replacing their unionized American workers. 

As I lay out in The Hidden History of Monopoly: How Big Business Destroyed the American Dream, when Reagan stopped enforcing 100 years of antitrust laws in the early 1980s, an explosion of mergers and acquisitions resulted, converting every consequential industry in America into a functional monopoly controlled by, at most, a small handful of massively wealthy CEOs.

And those now-giant corporations, once made up of hundreds of small, local businesses but post-1983 having evolved into national and international behemoths, were in a huge hurry to get rid of their US employees with all their pesky pension plans, insurance costs, union hassles and OSHA workplace rules.

Ronald Reagan bought in 100% and revived the moribund General Agreement on Tariffs and Trade (GATT), which would give birth to the World Trade Organization (WTO) in 1995, as well as his and his Vice President’s administrations negotiating the North American Free Trade Agreement (NAFTA) that they handed off to Bill Clinton to sign.

Throughout America’s peak neoliberal period (1980-2020) both Republicans and a thin majority of Democrats continued to assure Americans that if we just let our country’s biggest manufacturers shift their production overseas, the cheaper price of goods would far outweigh the devastating loss of tens of millions of manufacturing jobs.

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It was, of course, for lack of a better word, utter bullsh*t. 

Had trade been thoughtful and balanced, as Adam Smith envisioned in Wealth of Nations, where different countries specialized in different things and traded them, it might have worked out. 

If British wool was traded for French wine and both were exchanged for Swiss cheese, for example, everybody wins and everybody gets to drink a nice glass of wine with their cheese while enjoying the cool evening in a warm sweater. Trade and interdependence can be good things.

But “comparative advantage” was not at all what Reagan and the American industrialists funding him had in mind back in the 1980s when this all started.

Instead, morbidly rich CEOs and shareholders wanted to rip every penny possible out of the American middle class so they could fill their money bins and their families could revel in dynastic wealth for generations to come.

In the process, they’ve not only impoverished our middle class but created a massive security risk for our nation and the countries (like Taiwan and Australia) that depend on us.

Thanks to neoliberal “free trade” policies, we can’t build aircraft or cars or even advanced weapons without components sourced from China, a situation that was very much not the case in 1980.

If bringing our jobs home to help American workers and revitalize our economy isn’t enough incentive to reevaluate our trade policies, China’s decision to purge their nation of American tech products this year should be. 

And not just with regard to trade with China: we need an actual national trade policy that considers all products and all trade partners, like was established by Alexander Hamilton in 1793 and followed until Reagan abandoned it in the 1980s.

It’s time to wake the hell up.

(For the “Daily Audio” of Thom reading this article, available only to paid subscribers, check the “Daily Audio” tab on HartmannReport.com.)

Originally posted at The Hartmann Report