I.O.U.S.A - Addison Wiggin [35]
Or maybe have a car. ”
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Chapter 4 The Trade Defi cit 67
Although the Chinese had different attitudes about saving their money and were much more willing to live a very simple life, without many personal belongings, there are some striking similarities between the Chinese and American people. Our visit to Shanghai showed us that Chinese people are worried about the same things that Americans worry about: their health care, their retirement, and how to boost their income. However, what scares a lot of Americans about China ’ s growing prowess — and the $ 1 trillion - plus in foreign exchange reserves — is that a lot of that money is invested in U.S. Treasury bonds and U.S. government debt.
“ A lot of people worry that A lot of people worry that some-somehow China ’ s going to suddenly
how China ’ s going to suddenly
ask for its money back and walk ask for its money back and walk away from the U.S. economy, ” said away from the U.S. economy. One Mr. Areddy.
“ One wouldn
’ t exist wouldn ’ t exist without the other, and I think, increasingly, the rela-without the other, and I think, tionship between China and the increasingly, the relationship between
United States is growing tighter —
China and the United States is grow-
at least economically.
ing tighter — at least economically. ”
— JAMES AREDDY
We Think, They Sweat
In China, the emphasis is very much centered around saving and preparing for the future. We know that in America, the opposite is true. The United States is focused on consumption and living in the now. However, if the country is going to fi nance its debt and have any chance of meeting its long -
term obligations to its retiring elderly or underprivileged, the United States should be hard at work producing more than it consumes. But, as we learned when we visited a scrap process-ing facility outside of Long Beach, California, that is simply not the case.
Kramer Metals buys scraps — we saw mostly metal and aluminum in the yard — and processes it in a form that steel mills, aluminum mills, and copper and brass foundries can c04.indd 67
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68 The
Mission
consume in their furnaces to produce new metal. This material then goes to China, Korea, Thailand, and is now starting to ship into Vietnam, India, and some into Japan. This scrap metal is being consumed by what would otherwise be a U.S.
mill — now those materials are going to foreign mills.
“ We ’ ve killed our industrial base, ” the owner of the facility, Doug Kramer, told us. “ We ’ ve killed, or are killing, what made us a great nation. We ’ re giving it to China, to India, to all the other nations of the world to produce our goods. We ’ re a net importer when we should be a net exporter.
“ The only thing we ’ re net exporting is scrap. ”
In 2007, the largest U.S. export to China was electrical machinery. Right behind it was nuclear machinery, and coming in third was scrap metal. Instead of producing things of value, the United States is consuming products from all over the world and sending back scrap.
For a time, there was a theory circulating among economists suggesting that the United States could innovate its way out of a slowing economy. “ We think, they sweat ” was a popular refrain. Unfortunately, there ’ s a lot at play in the global economy. Who ’ s to say the Chinese won ’ t think and sweat, too? As China, India, Brazil, and the Middle East economies develop their own domestic demand, they are less and less dependent on U.S. consumption to fuel their economies. The United States, however, is increasingly dependent on cheap goods from abroad.