Competition from China

On the radio this morning, Laura Ingram was documenting the news about China from the last year - news you probably missed; I did. There were all sorts of things about weapons, blocking UN Sanctions, demographics, economics, human rights, and the upcoming Bejing Olympics. One point that resonated with me is the false values Americans put on goods because whatever we buy either comes from China or has to compete with their practically slave manufactured products. As a sole proprietor of a business dealing mostly in clothes and home decor, this infuriates me.

Take a look: I am legally prohibited from using slave or forced labor. The government even dictates a minimum wage I would have to pay any employees. To be in business I have to pay licensing fees. If I make any money, or sell anything in my state, I owe taxes. These taxes are supposed to support my government: pay government officials, repair roads, fund government buildings, salary the defense.

Originally, these expenses were minimal. So small were these costs relative to the commerce of the United States, and so eager were foreign businesses to compete in our economy, that the majority of our government funding was supplied by import and export taxes (or tariffs). In the Federalist Papers, the anonymous authors argued for the ratification of the Constitution by reassuring the people of the use of tariffs rather than taxation. Somewhere along the way, the government decided to fund things not described in the Constitution, which was illegal, and they needed more money. So they started taxing the people on their income, on their purchases, on inheritances, and on their land. When this supplied their projects, they found more projects (like regulating cottage industry into near-bancruptcy) to require additional funding. At this point the government did three things: raised taxes, went into debt, and printed more money (inflation) to pay its debts.

Today, China buys our debts. We have a trade agreement with China. Tariffs are negligible, as the government is afraid of discouraging foreign trade in our glorious capitalist economy, which despite the non-capitalist oppressions imposed by the government, has continued to thrive. Most Americans thriftily choose the least expensive offer for a good. They buy clothes made in China, toys, dishes, decorations, tools, and electronics made in China. I can't keep up. Only very nice or very principled people could "afford" to buy my goods, and I try my best to get supplies inexpensively.

What went wrong?

To God be all glory.