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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (20579)	7/29/2007 11:10:15 AM
From: carranza2	Read Replies (4) \| Respond to of 220194

Kyros, the Smiley Chart has a lot of implications, even for trade surpluses. I know you read the Fallows article, so you of all people cannot ignore it as others have. The wealth created by manufacturing largely, in enormous measure, does not go to the manufacturer. It goes to the brand owner, retailer, and designer. And the longer the Chinese play games with their currency, the more the profits balance swings to the West. China's surpluses and reserves have been built on the backs of the poorly paid workers who manufacture. Their needs cannot be ignored. Once the workers begin to achieve a relatively better life style two things will happen. First, the manufacturing advantage will weaken and disappear in some sectors. Other countries will take up the slack, undergo the same development cycle as China and its predecessors, SK, Japan, etc., underwent. Growth will inevitably slow. Second, China will devote significantly more of its resources to promote internal consumption, social services, cleaning up the incredible environmental mess it has on its hands, etc. In other words, the hallmarks of a more developed nation will be the objectives. The development model is the same, just on a bigger scale. And as I have said before, the loser will be Europe, not the US. Whether we like it or not, the US and China are two sides of the same coin. One supplies the manufacturing, the the other the brands, designs, and markets. Both are incredibly successful in their own spheres. Both recognize that the US utterly dominates the more profitable sphere. That is where the competition lies but for now each need each other. This is what the denizens of this thread fail to acknowledge in their nationalistic anti-American zeal. The Chinese paradox is this: its strength lies in manufacturing, a strength which will inevitably weaken as the Chinese government is forced to loosen up the tightly held reins of social and political control or face internal problems it cannot control or afford. The transition from manufacturer to brand owner takes years upon years and is bitterly fought. Americans are ingenious, creative, smart, and have a knack for what the global consumer wants. We create global brands all the time and reap the profits. The Maytag Man's sale notwithstanding, the transition to brand owner will not be easy nor will it be uncontested. The Chinese won't use their reserves as weapons because it is suicidal. They will use them internally, to fund the things which a first class nation needs. China is in the classic capital accumulation stage but it cannot let the reserves simply sit in the bank. Attacking the US economically will never happen.

To: KyrosL who wrote (20579)	7/29/2007 11:48:42 AM
From: carranza2	Read Replies (1) \| Respond to of 220194

I forgot to make another point as I was discussing the Chinese Paradox. Creativity, which leads directly to brand dominance, creative designs, etc., and therefore to the upper Smiley reaches, does not flourish in repressive societies. No brands and no globally dominant designs [AK 47 excepted, but that says a lot, too] have arisen out of the Soviets, the Chinese, the Cubans, Eastern Europe before we won the Cold War, NKorea, the Arabs and Persians, or any number of other societies where social and political control is prevalent. No country has come even close to equalling the unrestrained and amazing creativity of Silicon Valley, a place which has reaped the Smiley profits in an enormous way. The most creative thing I've seen come out of China was Tianmen Square and the little guy who singlehandedly stopped the tank. Since then, not much. Creativity is disruptive. The Chinese troglodytes who control politics are afraid of it b/c it challenges their control. The only system which allows creative disruption and indeed welcomes it is advanced Western democracy. I believe advanced Western democracy and unrestrained freedom has lead directly to the US dominating Smiley. Until the Chinese allow it, they will be stifled.