"Where Will Jobs Come From?" asked a New York Times front page headline recently. Two columns away on the same front page was a story about Chinese investors coming to NY City and buying up derelict properties to build new enterprises. Doesn't the NY Times read its own stories and think about them?
Obviously the Chinese investment in those sites is small potatoes, but it will produce jobs in construction now, with more jobs to follow in the new businesses housed in the new buildings. This is good. Let's hope the Chinese expand this form of direct investment in the USA. It's one way of returning to us some of those dollars they are sitting on from the trade imbalance.
And that's the real problem in the world's economy and ours, isn't it? Too much money has sloshed to one side of the game board. Commerce is a sort of game, and we all know what happens when one player in Monopoly has all the play money: Game Over! China (and the very rich of the USA) have got to find ways to get money into the hands of the other players. The Chinese and the very rich have a lot more to lose from a Game Over situation than do any of the rest of us. That's because they have more dollars to lose than anyone else. And, if things get really bad, they have further to fall. Like into a revolution!
Already the Chinese populace is getting restive and a bit noisy. They want the chance to be consumers. China's hoarding of capital for investment keeps the Chinese from being buyers, as does China's lopsided trade policies and currency manipulation. Since it's always the middle class that makes revolutions (usually because of thwarted rising expectations), China's leaders can't afford to ignore the demands of their growing middle class. Nor can they ignore the shrinking buying power of Americans. Without us as buyers for their stuff, the Chinese are toast. And its a two-slice toaster: they lose us as customers and they risk we default on the trillion we owe them.
The rich in the USA also are in peril if things get really bad. The inhumane economic inequities of the Robber Baron/Gilded Age brought on Teddy Roosevelt's trust-busting and the enormous reforms of the Populist and Progressive parties at the turn-of-the-20th-century. The Great Depression brought on the mighty reforms of the New Deal. These reforms didn't wipe out the rich. The rich did, however, have to endure hefty regulation, a more level playing field, unions as a "countervailing force" (thank you, John Kenneth Galbraith!), and VERY high income tax rates. In my young years, the highest tax bracket was about 90%!
Warren Buffett is old enough and smart enough to know these things, to know how pendulums swing. His plea this week that "Congress stop coddling billionaires" is not without self-interest.
If more business leaders had a little more self-interest, they would stop supporting a Tea-Party-dominated GOP. As demonstrated in the recent and unnecessary debt ceiling debacle, the GOP as now constituted is bad for business because it is destabilizing. That hurts confidence. Which curtails spending and investing. What good is it to business to have less regulation and low taxes under the GOP if the economy slows and slows? Where does American business turn to make money? Overseas markets are just as fragile as the USA, perhaps more so. And what good is wealth if the stock market falls dramatically and wipes out half its value? And US Treasuries tumble? As for gold, it's a sucker's game. You can't eat gold, or wear it. or burn it for heat. Gold is only good as a trade for a currency that is stable and thus usable. There MUST be stability. Without stability, you get the Third Reich! That's not just history. That's reality. Frightened or hungry people go to extremes.
People are scared now. Not at the level of Germans in the 1930s. But if the T-P-GOP keeps up its brinkmanship and intransigence, fear will worsen. Fear brings on economic chaos. FDR pegged it: "We have nothing to fear but fear itself."
And the T-P controlled GOP.
All we have to do is win 24 House seats from the GOP in 2012, hold on to the Senate, and keep smart Obama as president. Just 24 seats going to the Democrats will deliver the GOP from the Tea Party or at least give the more moderate GOP a chance to re-emerge. Then we can get done what needs to be done for the economy! And fight global warming too!
Just 24 seats! Yes, we can! Yes, we MUST! And it all depends on YOU! China may be coming to the rescue, but God helps those who help themselves. Let's pitch in big-time next year and reclaim our country from insanity. Just 24 seats! This is your chance to be the Really Great Generation. This is your "rendezvous with destiny."