Andy Stern: In praise of Communist China

See also: A Stern Vision of America

Oh, the irony! If former SEIU Thug-in-chief Andy Stern tried to set up a union independent of the Chinese government, he would be thrown in prison for a very long time.

And yet, here he is on the pages of the (just whisper it, Andy) WALL STREET Journal, praising the Chinese "model" (whatever that is) and gloating over the "death" of free market capitalism:

The conservative-preferred, free-market fundamentalist, shareholder-only model-so successful in the 20th century-is being thrown onto the trash heap of history in the 21st century. In an era when countries need to become economic teams, Team USA's results-a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top 1%-are pathetic.

This should motivate leaders to rethink, rather than double down on an empirically failing free-market extremism. As painful and humbling as it may be, America needs to do what a once-dominant business or sports team would do when the tide turns: study the ingredients of its competitors' success.

While we debate, Team China rolls on. Our delegation witnessed China's people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader-Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily-including, our delegation was told, 700,000 units of public housing annually.

Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

For those of us who love this country and believe America has every asset it needs to remain the No. 1 economic engine of the world, it is troubling that we have no plan-and substitute a demonization of government and worship of the free market at a historical moment that requires a rethinking of both those beliefs.

Of course China has a "plan" - that's what Communists do. They can dictate where to invest, who wins and who loses - and the only way you're going to win is if you join the Communist party. There is no freedom of action, little entrepreneurship (the hoops they make you jump through to start a business in China are mind boggling), and a regimented labor force who can't strike, can't lobby for worker safety (the coal mining safety record is appalling), and are forced to take what the government gives them and like it.

Andy Stern is an idiot. And this proves it:

As this was happening, I was part of a U.S.-China dialogue-a trip organized by the China-United States Exchange Foundation and the Center for American Progress-with high-ranking Chinese government officials, both past and present. For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China's 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection-all while promoting social equity and rural development.

"Social equity???" In a Communist country?That is so far down the list of goals for the Chinese government it's damn near invisible. Only a moronic liberal, eager to believe anything told him by hosts who take full advantage of the mindless naivete of their guests could possibly be fooled by such utter nonsense.

I don't know whether Stern realizes what an ass he is making of himself by believing that you can actually "plan" 7% growth over 5 years. And there is so much that Stern isn't including in this hymn to central planning that it is simply outrageous to take what he's saying here without a huge grain of salt.

China is building 6 million homes because they don't have enough housing for its workers. That's because previous 5 year plans failed to account for such. They are investing in "renewable energy" largely because they have the most polluted cities on the planet.  Recall the Olympics where the IOC almost refused to allow the marathon to be run because of the choking smog that covered Beijing. Nasty air and water due to government carelessness and neglect is a fact of life in China. For them, developing an alternative to coal is a matter of life and death.

The Chinese can manufacture all they want because they can pay their workers anything they wish. No mention by the former labor leader about the low wages being paid Chinese workers and why it's against the law to agitate for more.

Stern has been taken in by the usual blather from Communists about how great they're doing. Andy evidently hasn't been paying much attention to what's happening in the world lately. This from the LA Times 3 days ago:

Backed by data showing a slowdown in the world's second-largest economy, doomsayers have taken center stage. Unbridled optimism has given way to fears over widening cracks in the Chinese economic miracle.

The gloomy sentiment has spilled into financial markets, whose investors have been running for the exits.

The Hang Seng China Enterprises index, which tracks the stock performance of major mainland companies listed in Hong Kong, is down 26% this year , making it the worst-performing market gauge in Asia.

The practice of short-selling -- betting that a stock will fall in value -- has become so pervasive among traders of Chinese equities that analysts at French banking firm Societe Generale deemed China the "world's most crowded short." For instance, nearly a third of the shares of China Overseas Land & Investment Ltd. were shorted in August and September, signaling doubts about the prospects of China's largest property developer.

"There's growing sentiment that the Chinese story doesn't make sense," said Chang, who is now invited to investor conferences and remains convinced of a looming crash.

Bears like Chang see slowing GDP growth, rising public debt and stubbornly high inflation as evidence China's problems are about to get bigger.

What about those 6 million homes the Chinese are going to build, Andy?

Now China's housing bubble is deflating. Home prices reversed in October for the second consecutive month as cash-strapped developers became desperate to unload homes. An index of 35 major cities showed 29 had experienced a decline in sales from a year ago; sales plunged more than 50% in six of them, including Beijing.

The Chinese government says it's all part of the plan. After loosening the credit spigot during the financial crisis to keep the economy humming, it's now tightening lending and clamping down on speculators.

But critics said the damage has been done. Behind China's gleaming new high-rises, freeways and bullet trains, the bears see ghost towns, empty roads and superfluous rail lines. Public debt has exploded, raising fears of an overload that could weigh on China's economy.

Sure, China can build 6 million homes. It's just that no one will be able to buy them.

Finally, what about the "99%?"

The global economy would benefit if China could rebalance its economy so that its 1.3 billion citizens started spending more. But they can't because China has structured its economy to favor big businesses over consumers.

Beijing does this by keeping its currency, the yuan, artificially weak. That benefits exporters by making Chinese goods cheap. But a weak yuan fuels inflation at home and makes imported goods expensive. Authorities also keep interest rates low so that state-owned companies get cheap loans. But that means depositors earn puny returns.

It all adds up to less money in the pockets of consumers, said Peking University economist Michael Pettis.

So what system is going to end up on the dustbin of history?