|
Military homecoming
Dear Annie: I know that you have talked about this subject in your column before, but I think it is time for an update about military members returning home.
My husband has been deployed to the Middle East for a year and will soon be home. The problem is that family members on both sides want to visit us shortly after his return. This is causing a lot of stress.
Please tell parents and siblings of returning military members not to be offended that we are not ready for a visit. After a year apart, we are going to have to put our family back together, and it takes more than a couple of weeks.
We love our families, but my husband and I need to get reacquainted, too. Thank you for letting me vent. -- Burned-Out Wife
Dear Burned Out: Letting our readers vent is part of what we do. We hope parents and other family members will respect your needs and give you time to readjust. Frequent phone calls will help. Try to understand, though, how difficult it is for parents and siblings to keep their distance. They want to be considerate of your time together, but they are on pins and needles waiting for an invitation to see their loved one, who has been away from home, in a dangerous place, for a year. Don't forget to make a little time for the rest of the family to say "welcome home."
Dear Readers: Happy Fourth of July! Here's a little information on the Liberty Bell that we gleaned from the U.S. Department of State website:
In 1752, the new bell arrived safely from England, but at the first blow from a hammer to test it, it cracked. Philadelphia bell founders recast the bell twice before it was finally ready to use.
On July 8, 1776, the bell rang to mark the adoption of the Declaration of Independence. On April 16, 1783, it announced the proclamation of peace after the Revolutionary War. At every event of national importance, the Liberty Bell rang: in 1789, the election of George Washington; in 1797, the election of John Adams; in 1799, the death of Washington; and in 1801, the election of Thomas Jefferson.
On July 4, 1826, the bell was nearly three quarters of a century old, and the nation was 50. Then, on July 8, 1835, while tolling for the funeral procession of John Marshall, chief justice of the Supreme Court and one of the signers of the Declaration of Independence, the bell cracked.
Fearing that the crack would eventually destroy the historic bell, officials ordered it taken down from the tower. It was after this that the Liberty Bell received its name. Since then, the bell has been on display but has never rung. The crack that appeared on that occasion is prevented from widening by a mechanical device, called a spider, installed inside the bell.
A few years ago, the bell foundry in London that originally cast the great bell made a friendly proposal -- to ship the bell back to England, melt it and recast it at no cost to the United States. The keepers of the bell considered the offer very seriously before they decided that the cracked Liberty Bell is a cherished symbol of America's struggle for freedom. Therefore, on behalf of the American people, the officials thanked the London foundry for its generous offer but refused, adding: "We like the bell as it is, crack and all. It is an important part of our heritage."
2005.07.04
[ANN]China changes manufacturing paradigm
Six years ago, my daughters, then aged seven, learnt an important lesson about global trade. On a visit to their grandparents in the United States, the twins quickly noticed that practically all their presents were made in China. This was disappointing as we were living in Hong Kong; the girls did not think they would be traveling so far just to haul back toys from across the border. But since then, they have come to expect nearly everything to come from China.
This is not news. Not by a long shot. Every 13-year-old today knows China is factory to the world. What they may not yet comprehend is how everything has changed because of this. But neither, it seems, do some American politicians.
A bill before Congress threatens to impose a 27.5 percent tariff on Chinese goods if Beijing fails to remove its 'unfair' trading advantage - that is, if it doesn't revalue its currency. Thankfully, the bill's sponsors last week were persuaded to delay a vote. But that does not mean it has gone away, or that sense has finally blown in.
To the contrary, there remains a deep failure to appreciate that the paradigm of global manufacturing has changed inexorably, and that this is not simply a matter of a currency advantage on China's part.
By trying to tweak things the old-fashioned way, the Americans risk upsetting a new global trade infrastructure and inviting dreadful consequences. For one thing is amply clear, the bill threatens to put a brake on U.S. consumption and to adversely affect manufacturers, shippers, accounting firms and practically any other industry across the globe. China is that important.
For what is afoot in China is comparable to the Industrial Revolution. It is historically significant. At no time in history has any one economy had such a clear and overwhelming cost advantage in so large an array of manufactured goods - and increasingly, a select line of services. It is almost a universal sweep.
If Japan in the 1960s, for example, could make cheap transistor radios, China today can make cheaper than anyone else everything from low-end digital cameras to top-of-the-range electronics. Now include other goods and services from costume jewelry and diamond cutting to clothing.
If Swiss luxury watchmakers, for example, resist manufacturing in China, it is not because precision timepieces cannot be made far cheaper there; it is because they choose to remain Swiss in every sense, with all the cachet that that brings.
But if your main consideration is manufacturing cost, you have to produce in China.
China's manufacturing phenomenon is not a reprise of 1960s Japan. Or of the rise of the 'tiger economies' in the 1980s. And here lies an irony. By and large, the 'tigers' prospered through government planning targeting niche industries. But the world's largest communist regime, instead, is accomplishing massive growth through full-on market capitalism. China didn't decide to build a textile industry. The market did.
There is no industrial policy on food processing. Practically all the successful export sectors function because of market forces and arise from the sum of individual decisions by millions of local capitalists and foreign investors. The world's largest country, and largest-ever communist state, is also the world's biggest capitalist export economy.
We know this was accomplished through a marriage between technological developments from the past 10 years - principally communication advances and cheap transportation - and an economic liberalization program that unfettered a large and willing workforce. Low-end workers are comparably proficient to those in the West. But just as important, so is China's technical and professional workforce. China is the only Third World nation with technical universities and colleges that are, across the board, equal in quality to those in the West. Not even India can make that claim.
What this means is that China can replicate completely a Western-style factory infrastructure - from top to bottom - at a fraction of Western cost. No other Third World nation can do this on the same scale.
This combination of market capitalism, technology and training makes it difficult for the China story to be repeated elsewhere. India seems an ideal candidate. Yet India's own rise has not been a mirror of China's. The Chinese expansion and grip on world manufacturing is unique, and is set to get stronger as the quality of its management slowly rises. Lenovo's acquisition of IBM's PC division and Haier's bid for Maytag are important signposts.
Against all this, the contention that it is simply China's undervalued yuan that is giving its exports an unfair advantage is risible.
As a senior economist with a multilateral agency in Beijing says, Chinese wages are about 5 percent to 10 percent of those in the United States. So if China were to revalue the yuan upwards to the full 40 percent some of its critics say it should, this in turn makes Chinese labour costs 7 percent to 14 percent of those in the United States. Comparatively, still a pittance. This won't render Chinese exports terribly more expensive, nor will it rescue American or European industries.
True, Chinese-manufactured goods carry a high degree of imported parts -half or more of the total value. These parts are usually priced in dollars. In yuan terms, they have risen in cost by as much as the currency is supposed to be undervalued. But Chinese exports are also priced in dollars, so there is no material effect. Manufacturers take dollar income from exports to pay dollar bills for imports. There is no exchange effect; no pressure to revalue.
But it is not economics that is at issue in the American threat to impose tariffs. As one economist in Hong Kong put it, the measure shows the "relationship between whingeing and troubled politics and jobs in the U.S." It is always dangerous when politics takes over from good sense.
A 27.5 percent tariff on the price of Chinese exports to the United States would have a damaging impact. It would constitute the biggest tariff hike since the 1930 Smoot-Hawley tariffs - which worsened the Great Depression.
Given the pervasiveness of Chinese-made goods in American stores, this means slapping on an extra and whackingly huge layer of inflation. This tax will have a devastating effect on U.S. consumer spending. Moreover, the United States does not buy only from China, so lower consumption will see declining imports from other nations as well - including South-east Asian economies. The world's economies would be sent into a severe wobble. The United States is that important as a consumer.
Some argue that China should simply call the Americans' bluff. Revalue. But this is unlikely because China does not like appearing to bend to pressure.
How about a face-saving partial revaluation? A 10 percent or 15 percent adjustment might take off some pressure. But partial revaluations are never a good idea. It tells speculators to look forward to more in the future, and this invites them to pile in. Whatever China decides to do, it will not happen when everyone is expecting it.
Yet if inflation remains benign, need it really do anything? In the late 1990s, there was also a debate over China's currency and whether it should revalue. But back then, the yuan was considered overvalued against regional currencies. Currency traders are a fickle lot and could change their mind again, trailing politicians reciting a new mantra.
There is, to be sure, a lot that is wrong with China. Its politics stands out. But not its trade structure. China's export economy has changed the way the world works. Failure to recognize this invites mistakes with deep repercussions.
By Tion Kwa The Straits Times, Singapore Asia News Network
2005.07.06