While America, Chile, Russia, Argentina and a dozen other nations were experimenting with (and being devastated by) Milton Friedman's neoliberalism, China's Deng Xiaoping decided instead to adopt Alexander Hamilton's plan.
I spent a month in China in November 1986, and it was deeply impoverished, just beginning to recover from Mao's revolution and the famines that brought. It was that decade that they rejected Friedman's advice and went with Hamilton.
The tallest building in Beijing, where I lived and studied, was a 10-story Hilton (as I recall) hotel; the air was thick with smoke from millions of tiny coal fires people used to heat a single room in their homes; standing in Tiananmen Square I watched a river of black bicycles flow past every day on the major highway nearby. Every ten minutes or so a single black limousine would pass.
But that was 1986 and this is now, after China's 35 years of using Hamilton's "American Plan." China's rejection of neoliberalism and adoption of Hamilton's plan transformed that nation into the world's second richest in fewer than 30 years: the most rapid transformation in the history of the world.
And, as we buy Chinese goods, they get our dollars. Dollars that eventually must return to America in the form of what's called "direct foreign investment." In other words, they're taking our money for the products they make and then buying our country with it.
Have you seen what housing prices are doing? Foreign purchases of US housing were over $11 billion and made up 4 percent of all sales last year. It's slowed down a bit recently: it was over $100 billion a year through most of the previous decade. In just 2017 and 2018, Chinese buyers alone picked up over 80,000 US residential properties.
Foreign buyers now own 30 million acres of American farmland (an amount that has doubled in the past 2 decades). Remember the massive Smithfield Foods, where Donald Trump ordered meat packers to go back to work even thought there was a pandemic? It's Chinese-owned.
Fully 40 percent of the asset value of all companies in America is foreign owned: that's the "wealth of nations" outside our country being used to buy our country. Chinese own over $1 trillion in US Treasuries, our national debt.
We've moved so much manufacturing to China that we can't make much of anything - from missiles to cars to airplanes - without Chinese parts.
And this doesn't begin to touch the damage China could do to America if they were to decide, for example, that they'd cut off all exports and begin to dump our treasuries because we were defending Taiwan - an increasingly likely scenario. If you think we're having a crisis today, imagine if within two months every Chinese product was gone from every American store.
Reagan, Bush and Clinton's implementation of Milton Friedman's neoliberal "free trade" agenda has gutted the American middle class, sold off our companies and real estate to foreign interests, and is now causing "supply chain disruptions" that threaten any semblance of an economic recovery.
There's too much finished product coming into America and not enough leaving our factories for foreign shores: this is called our trade deficit. To quote NPR's Planet Money headline, it's "Too Much Import, Too Little Export."
As noted in Forbes: "So, we send dollars abroad to pay for those things made by foreigners. Very few of them set fire to those dollars, they near all use them to do something with."
Our trade deficit last year was over $610 billion and averaged around $700 billion a year in the lead-up to the Great Recession of 2008.
In 1975, we had a $16 billion tradesurplus($81.5 billion in today's dollars). We had a $13 billion trade deficit when Reagan came into office in 1981. By the time he left office in 1988, the cumulative trade deficit for his presidency was $685 billion ($3.4 trillion in today's dollars).
That deficit was offset by foreign entities buying US real estate, US companies, US land, US securities, and US debt. That made a lot of already-morbidly-rich asset-selling Americans a lot richer, but what did it give average workers? Bupkis. Less than bupkis, actually: fewer than half of Americans are eveninthe middle class anymore.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
