Like A Swarm of Locusts....
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-08-14 13:31
by Karl Denninger
in Editorial
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Like A Swarm of Locusts....
 

Gee, you think?

The signs have been imminent for some time, but in July, comments by adidas global CEO Herbert Hainer alerted the world to the cost-based shockwaves running through China’s manufacturing heartlands.

China produces about 50 percent of our shoes. This will change in the future as salaries in China become too high,” Hainer said in an interview with German magazine Wirtschaftswoche. “We have entered an agreement with one supplier in India so far. We will jointly open production facilities there. Other countries such as Laos, Cambodia and Vietnam are also on our list.” Hainer added that some of adidas’ production in China may also shift back to Eastern Europe and Russia.

Yeah.

Salaries become too high.

So now we have the truth, don't we?

That, by the way, was the threat.  It was followed through upon.

(Incidentally, Foxconn recently announced the same thing, for those who argue that this was a "one-off" or that the 2008 date on the original somehow invalidates the argument.)

There is no intent to build a middle class, to lift people generally, to employ people who then buy your products and services with their salaries.

No, this is a swarm of locusts.  The only intent is to strip-mine the labor and poison the land, air and water.  As soon as the people who you have been abusing get tired of it and start pushing back, you simply leave.

Our "trade policy" is predicated on exactly this -- we enable it while at the same time claiming to stand for "human rights."  The Libertarians are even more-galling -- as the only political party requiring a non-aggression oath for membership, the hypocrisy dripping from 90% of the candidates and the utter refusal of both national and state parties to take up strong anti-aggression language while clinging to the polemic of "free trade" in their platforms define both hypocrisy and bigotry.

It's all fine and well to prattle on about "gay marriage" and such, but the reality is that man has a long history of abusing people "over there" -- out of sight, out of mind.  The rampant pollution and slave-like conditions, often enforced with literal black-listing and state-spnsored destruction of the people's previous way of life, leaving the people a choice of sewing for the equivalent of 50 cents a day or starving, is part and parcel of the "competitiveness" that these firms seek.

No firm can get away with this sort of practice in a nation where unalienable rights are respected, there is a rule of law, and there is redress available in the courts for environmental damage and slave-like conditions.  

There are many who claimed that China was a "miracle" in lifting people from rice-paddy subsistence farming to "the middle class" in factory work.  That was and is a lie.  The former farming lifestyle was destroyed outright with pollution and resource theft, leaving the people unable to choose.  The promises made of an upward mobility in lifestyle was a lie; instead of reasonable hours and working conditions the employees are worked ridiculous hours, expected to produce at rates beyond reasonable human output and then discarded like a broken horse when the inevitable health problems become manifest.  Meanwhile the people -- including children -- are poisoned with unfiltered raw industrial waste dumped on land, air and water.

When the people have finally had enough and rebel, despite their communist government threatening to kill them all, the manufacturers simply shrug and move onward -- to Indonesia, Vietnam or somewhere else where they can find yet another group of people to screw and poison.

There is no sustainable policy here.  There is no "free trade"; this is raw abuse of people and property.  The support of such policies is the support of slavery, assault and even homicide.

To our government and the political parties, including the Libertarians, I say this: Enough.

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Mrbill
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The link is dated 2008
Genesis
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And? Facts just are. And incidentally, Foxconn announced (Reuters story TODAY) they're opening a plant in Indonesia -- something that has been rumored for months.

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Mrbill
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The link contained a threat, but the follow-through is convincing, both the Foxconn story and Adidas actually following through:
http://www.wantchinatimes.com/news-subcl....
Genesis
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Yep.

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Fraudster
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Your best post ever.

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"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte

"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
Morla
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Everybody knows..

http://www.youtube.com/watch?v=rBQYWCw8n....
Leonard Cohen wrote..
Everybody knows the deal is rotten
Old black Joe's still picking cotton
For your ribbons and bows
And everybody knows

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Fear of govt IS the government.. Statism is a pack of unbacked threats; If govt gets out of control, ignore it and go about life as you see fit. Where's your crown, King Nothing?
Mannfm11
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You can't leave out the entire Libertarian idea and subscribe to anything Karl. As long as we have a statist government and a statist organization and leveraged financial lending and fixes everywhere, none of this stuff will work. Deficit spending, rigging the landscape to favor cartels, which is what the shifting sands are in Asia, along with the multinationals, lending money out of thin air and all the other crap that goes on, free trade is a dream.

I read something put out by Franz Oppenheimer. It was really quite interesting. One reason Communism failed was the peasants were merely huddled together on factory farms and their output taken to support some other statist ideals. Oppenheimer mentioned that labor was at the mercy of how much other labor was available to bid against them. If there was full employment, there would be very little surplus value of labor available. When there is available a billion idle workers or workers stuck on factory farms in third world countries, the surplus value of labor is high. One thing about manufacturing is that in large industries, it has been mechanized to the point that there isn't a high demand for labor. Making athletic shoes might be another game altogether.

But, without western deficit spending, credit banking and other demand supporting mechanisms, the funds to buy foreign labor would quickly dry up and trade would balance. The way you balance trade is a real gold standard and balanced budgets. Prices will follow to clear the markets.

The problem in the US isn't necessarily the amount of consumer debt, but the amount of debt owed by surplus consumers. The scam artists have fixed that by telling people they need to get some bull**** degree and placing them in debt where they can't consume. The professors and bankers then get to spend all the money. Not possible without the racket known as modern banking.

This is why the base of Libertarianism is centered on banking and statism in general. These costs are levied on the productive resources, labor and capital in the domestic economy. They are in essense, titles of nobility.

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
Genesis
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You're in dreamland if you think that's where Libertarianism is focused nowdays.

I am attempting to change it from the focus on gay marriage and dope smoking -- which are the two focal points today. If I fail, then that's fine -- I will move onward.

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Trades50
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Quote:
this is a swarm of locusts.


Exactly how they operate.

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When the people fear the government, there is tyranny. When the government fears the people, there is liberty. - Thomas Jefferson
Rvacha
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China has lots of issues on its plate. I mentioned a while ago that some of my customers were looking to move from China due to wage inflation. Add to that a potential for large food inflation and any chance that China will "stimulate" is off the table now. This is going to hurt badly - and I will continue to enjoy watching it happen. **** China.

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"I suggest you panic." - Hugh Hendry
Aethor
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Quote:
I am attempting to change it from the focus on gay marriage and dope smoking -- which are the two focal points today. If I fail, then that's fine -- I will move onward.



I don't think you'll be able to fix it unless you can become a candidate for the next elections.

Now, in such a situation, you could build a platform that would make people vote for you.

And if TPTB think for a moment that you have a chance, first there will be a smear campaign from all directions, then attacks on any sources of financing you may have, and if that's not enough, in the next step you better have some serious bodyguards.

We'll cheer for you :)

Heck, I'm not in US but if you become a presidential candidate I'll send a donation.

But if you're trying to change them so that the existing Libertarian candidates and the establishment that made them candidates change their focal point... good luck with that. Ain't gonna happen.

Bagbalm
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The only bright spot is while they are busy doing it to them we aren't working sixteen hour days in toxic crud here.
Kurtosis
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Bravo Karl. You should submit this for republication at a mainstream news site.

It frustrates me to no end that we have spent the past decades outsourcing chunks of our wealth-creating manufacturing capabilities and institutional know-how for this. Such sort-sighted, unenlightened self-interest at work.

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If somebody weighs 300lbs, the right solution is to lose weight and eat your vegetables, not to "devalue" the pound.
Jackl
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Pretty bad when Chinese are being paid "too much".

If 1-5 dollars an hour is too much than they pretty much want legal slavery. No moral curtain to hide behind there.

They want effective 0 labor cost for 100% same profit margin.

Slavery is alive and well.


Architect
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Karl. You are so right (or do I mean left?) . The only way to deal with this is to tax these goods to the equivalent value that they would have if they were produced by workers earning adequate incomes in decent environmental conditions. It would stop this crap dead, overnight
Mannfm11
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I totally agree Karl. One thing for certain. The movement now has some importance, if it can recover its direction. Otherwise the establishent wouldn't be so involved in trying to capture the party.

Tom Woods hits this subject, as it was Rothbard, not the statist Milton Friedman, who wrote the modern libertarian bible. It isn't possible for most of us to see the state and its influence until it is pointed out to us. The current scheme is statism at its finest, the banker schemes, the cycle of selected rotating bureucracy in and out of selected groups, the repeated wars. Rothbard and a few others developed the concepts of the libertarian party, which outsiders like Johnson are coming in to detour into something different.

http://www.lewrockwell.com/lewrockwell-s....

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
Ptoemmes
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Add Malaysia to the itinerary of The Death Star....
Flappingeagle
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Quote:
No, this is a swarm of locusts.  The only intent is to strip-mine the labor and poison the land, air and water.  As soon as the people who you have been abusing get tired of it and start pushing back, you simply leave.


I read a few years back where someone hypothesized that the factory of the future would be a large ship. Pull in a port in a business friendly country, when conditions change, move on to the next country. All you would need is a flying ship and you really would be like a locust.

Flap

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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
"You can't build a house of cards on a shaking table." - Tony Johns
The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
Steelhead23
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Karl, I admire your willingness to see the warts of "free trade." Have you perhaps been reading Chomsky? In this post, you sound more than a tad like him.

Some on the forum envision U.S. political leaders as conspiring to establish a new world order. Would that NWO be established to ensure happiness and welfare for the planet's billions? Or is it instead, a NWO to facilitate exploitation of the planet's labor and resources for the benefit of the few? Is the NWO something yet to be achieved, or are we now living in it? Beyond these thoughts lies tin, but the facts keep lining up.

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"Give me control of a nation's money and I care not who makes it's laws" —Mayer Amschel Bauer Rothschild Benjamin Bernanke
For-profit commercial banks are a menace and should be eradicated
Jack_crabb
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Seems to me the Libertarian Party should become more...um, libertarian.

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Molon Labe

Where is Henry Bowman when you need him?
Azusgm
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Flappingeagle,

That was Jack Welch in the 1990's while he was CEO of GE.
Turningtide4536
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I've heard that the Chinese government often comes into a rural village and proceeds to bulldoze the whole thing-- houses, farms, schools, etc. Then the factory and dormitory are built, and all the villagers get "employed" to work and live there. Eventually a village may finally revolt, but how many rural villages do the Chinese have at their disposal? A lot.
Poid
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This is exactly why i cant understand all the talk of a Chinese "middle class" emerging. The only reason that companies set up shop in China is slave labour, and that precludes the massive wage rises that are necessary to truly form a 'middle class'. Once wages start rises, these companies will simply shift factories, exiting in the same manner as they arrived.

China will go the way of all other nations that use slave labour to 'grow' their economy: collapse. Given their past i dont see any way that China suddenly reforms politically and broadens the power base, ending slavery and transforming the economy. Just aint gonna happen.

Agree that dealing with such nations violates libertarian principles, as you are indirectly using coercive force to benefit from slave labour. And sadly we are all hypocrites when we buy these goods.

Steel: You're right there, and IMO it aint tin. The NWO is simply the ultimate consolidation of power, which means the total establishment of an extractive political class (extractive meaning that wealth is extracted from the rest of us peasants). Essentially they want to go back to before the Industrial Revolution when kings and lords held all the property, and the peasants (owning no property, and having no property rights) worked to produce wealth for the lords. Thats the end game of the NWO, and it means a return to 'dark ages' and stifling of humanity's technological progress (who is going to invent anything in the absence of property rights? Cuts the potential pool of innovators right down).

Pj
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Karl IMO this is your best Ticker ever. Thank You.

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When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again.” Edward Gibbon
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