Hydro-Power, Manufacturing & Political Will: Can the American Rust-Belt Learn from China?

New Eastern Outlook
by Caleb Maupin


43223123123These mighty men labored by day and by night

Matching their strength ‘gainst the river’s wild flight

Through rapids and falls, they won the hard fight

So roll on, Columbia, roll on

–           “Roll On, Columbia”, Woody Guthrie

With an executive order, Roosevelt hired millions of Americans who had been laid off in the economic crisis of the 1930s. Their task was start building. One of the projects involved building the Grand Coulee Dam, a vast hydro-electrical facility on the Columbia River. The above lyrics were composed in celebration of the vast construction project.

With taxpayer funded paychecks, the millions of unemployed workers built not only the Grand Coulee Dam, but also New York City’s LaGuardia Airport, the Overseas Highway that connects Key West to Florida’s mainland, and the Lincoln Tunnel from New Jersey to Midtown Manhattan. Hundreds of courthouses, schools, post offices, and public buildings were also constructed.

After the Second World War, with a huge apparatus of schools, hospitals, highways, and airports, the private sector industries were set to go, and America began supplying cars, steel, aluminum, and other products to a world that needed to be rebuilt. It was during the post-war boom of the 1950s that the US working class had arguably the highest standard of living in the world.

It is widely recognized that the infrastructure of the United States is in a far different situation today than it was in 1945. Water isn’t being properly purified. Bridges are not secure, and roads are crumbling. Though Donald Trump won the recent Presidential election on a platform of “bringing back the jobs” with tariffs and penalties for corporations that manufacturer overseas, many economists are a bit skeptical about his ability to make it happen.

An article by Adam Minter for Bloomberg News points out that the choice of corporations to manufacture in China, rather than the USA, is not only about cheap labor. While examining Apple’s choice to manufacture iPhones and laptops in China, Minter pointed out that the United States in 2016 is simply not the ideal place for industrial production.

He explains: “Last summer, Apple contractors reportedly hired 100,000 workers to ramp up production of the iPhone 6s in advance of its fall release. Nothing comparable could ever happen in the U.S., no matter what the president wants. A mass mobilization on that scale, and at that speed, likely hasn’t been attempted since World War II. And there’s little reason to think it would be successful or desirable today, even if Apple was willing to try.”

One of the reasons Apple is able to do business in China is because the needed workforce on the mainland can be mobilized very quickly. In the USA, assembling tens of thousands of people to work in a production facility would take quite a long time. In China, the population is almost instantly available, and the assembly lines can get rolling almost immediately.

Furthermore, Minter went on to point out: “Apple’s executives estimate that they’d need 8,700 industrial engineers to oversee 200,000 assembly line workers, yet only 7,000 students completed university-level industrial-engineering programs in the U.S. in 2014. Shenzhen, by contrast, is home to 240,000 Foxconn employees — and millions of additional engineers and laborers.”

According to Minter, it’s not just tens of thousands of readily available assembly line workers that make China attractive, but also its many highly skilled technicians. The education system of the United States, while leaving millions of students drowning in debt, does not turn out the necessary number of qualified individuals. To produce iPhones in the USA, Apple would need to scour the globe to find the properly educated engineers and technicians, and then import them to the country, at great expense. However, China’s universities and government funded research projects are bursting with individuals ready to take on such tasks.

Crisis of Neoliberalism

Until the 1970s, among even the most market-oriented economists, it was almost universally recognized that in addition to privately owned factories, stores, and banks, capitalism requires a state sector. For example, the US Constitution mandates that the Federal Government operate the Postal Service.

Contrary to popular misconception, the post offices, the fire departments, the police, the public schools, and the Department of Agriculture are not examples of “socialism.” Rather, they are part of a state apparatus that serves the overall needs of capital. While the state-owned post office and the paved streets of the cities do not turn a profit for any individual capitalist, profits cannot be made without roads to drive on and mail being delivered. The market depends on “the commons.”

Take law enforcement as an example. The police, the courts, and the criminal justice system, though they are not profit-oriented market tools, are deemed to be necessary in order to defend capitalist property and allow the market to function.

It is only with the rise of neoliberalism and its Chicago and Austrian schools, that these concepts have been eroded. What seemed like common sense to even the most right-wing and market- oriented thinkers of previous epochs is now up for debate. Among the circles of power, there is a feeling that society would be better off if the post office were replaced by corporations like FedEx and UPS. Those who study Ayn Rand’s novels rather than the work of respected academic economists often speculate that perhaps roads and highways would be better if they were owned by private companies. Even the prison and criminal justice system has been largely privatized. A large amount of the Pentagon’s activities are now conducted by private military contractors.

In endless examples, the result of neoliberal thinking has been catastrophic. In the recent school years, millions of American children have been left without schools to attend, because the private corporations that run their “Charter Schools” have either shut down mid semester, or in some cases, swindled the public and run off with the money.

Neighborhoods throughout the Midwestern United States are dotted with empty foreclosed homes, following the massive deregulation of mortgage lending.

African-Americans are in a state of revolt against police brutality, in the context of private prisons, whose profits depend on mass incarceration. Even beyond the African-American community, there is a widespread feeling that civil liberties are vanishing. Meanwhile, the country is witnessing the growth of a surveillance state apparatus, largely handled by private security firms and military contractors.

The lack of industrial jobs isn’t simply about cheap foreign labor or “overpaid workers” in “greedy unions.” The basic ability of the United States to function as a healthy society is now being impeded by the scramble for profits. In the absence of well-paying industrial jobs, the country’s heartland is now home to low wages, along with rising rates of heroin addiction and suicide among a younger generation of increasingly cynical Americans. The unfolding domestic crisis makes the USA far less than ideal for manufacturers to set up shop.

What is China’s Secret?

So why is it that China, a historically impoverished country, is so attractive to corporations like Apple? Unlike many governments in the undeveloped world, the People’s Republic is anything but an obedient client state, bowing before the feet of western capitalists. Apple has furiously clashed with the Chinese government over issues such as copyright infringement. OSI, an Illinois- based meat supplier that works with McDonald’s and Yum brands has been harshly penalized by the Chinese state for serving rotten meat. Executives were even dragged out of their offices in handcuffs.

Corporations that do business on the Chinese mainland are not given a free hand. Rather, they are tightly monitored, regulated, and taxed, with Communist Party members assigned to watch their every move. Yet, American and European companies continue to operate in what politicians would probably describe as a “less than business friendly” environment.

Why? While the foreign investors are closely regulated and monitored by the Chinese state, they are also accommodated. If Apple needs to assemble 100,000 new employees, the Communist Party has the ability to make it happen, and fast. The deeply ideological organization founded in 1921 with roughly 30 people now has 90 million members. Every block and neighborhood is monitored by this strict, democratic centralist machine that knows how to get things done. Chinese society is highly efficient, and as high speed trains are built and government funded research makes more discoveries, it is each day becoming more accessible and productive.

Though it sounds absurd on the surface, the reason that China is such a great place for foreign capitalists is because of the country’s socialist economic foundations. China is so great for capitalism, because of Communism.

China cannot really be called a “capitalist country.” Many of the country’s major industries are State Owned Enterprises, or SOEs. Furthermore, most of the largest private corporations don’t function like capitalist institutions. The huge Chinese multinationals like Huwai or Dalian Wanda may be nominally private, but their CEOs and directors are all Communist Party members, and their primary business activities are done in full coordination with the government and the military. While those who invest in them certainly see returns, these corporations, sometimes legally designated as “collectives” do not make their decisions by following the logic of the market.

The Communist Party establishes “Five Year Plans” for advancing the standard of living and the gross domestic product. Instead of simply doing whatever is profitable, or what individuals determine to be in their “rational self-interest,” the entire country, from low- wage agriculture workers to top CEOs and stockholders, marches behind the party’s leadership. In China, it is the decisions of the party bureaucracy, not the chaotic drive for profits, that is in command.

The party’s goal of building a “moderately prosperous society” by 2020 is resulting in solid, concrete changes in people’s lives. In the remote Tibet Autonomous Region, the standard of living is now rapidly rising. In the past five years, transportation construction in Tibet has increased by 33%, as the Chinese government has invested roughly $2.5 billion in over 1,216 development programs. The “Sky Road” Qinghai-Tibet Railway, connecting the remote and mountainous region to more prosperous parts of the country is being completed. Tourists are flooding in.

While Tibetan separatists and fanatical Buddhists may scorn the Chinese Communist Party, it is because of the Communist-directed efforts to build up this impoverished region that tens of thousands of Chinese people have now become fascinated by ancient Tibetan religion and philosophy, and are traveling there to learn more about it. The Chinese government now has special programs dedicated to preserving traditional Tibetan culture and history.

As part of the plan for the lifting up the region, the Chinese government has created the Tibet Poverty Alleviation Office. Having collected the personal details and information of 590,000 impoverished people, the Poverty Alleviation Office is rapidly working to upgrade millions of impoverished Tibetans to a more modern lifestyle. Dashon, a 52-year-old resident described how for her entire life, every time it rained, she and her family had to leave the small hut they were living in. She was quoted in China Daily as saying “our house could have collapsed at any minute.”

But now Dashon, and 172 other families, are living in two-story modern homes with electricity and running water. Currently there are 236,000 Tibetan families in the process of being relocated to modern housing units. They will become the latest of the over hundreds of millions of people the Chinese Communist Party has raised from poverty in the last several decades alone.

China’s efforts to alleviate poverty do not stop at its borders. The standard of living in Latin America has vastly increased in the past two decades, primarily due to China investing over $500 billion in the region. Between 2000 and 2014, Chinese trade in Latin America has multiplied 22 times. Cooperation between the Marxist led-Sandinista government in Nicaragua and China, its primary trading partner, has reduced poverty by 30% between 2006 and 2014. Nicaragua’s Gross domestic product has risen by 36% in the process.

One the staples of Chinese investment is infrastructure development. In Ecuador, the Coca-Codo Sinclair Hydro-Electrical facility is under construction in a joint venture between Chinese corporations and the government led by the Bolivarian socialist Raphael Correa. Once the huge facility is completed, the flow of electricity in this impoverished nation will increase by a whopping 30%. Hydro-electrical power plants have also been erected in the impoverished regions of Brazil, Bolivia, and Argentina.

Thinking Beyond Capitalism?

When explaining capitalism in the 1930s, the widely respected economic John Maynard Keynes said: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” After being President of the United States for a few years, Roosevelt realized that free market policies of letting capitalists enrich themselves, while society lay in ruin all around them, were not going to fix the country. The times were desperate, and it was necessary to look elsewhere for inspiration.

It is widely recognized that Roosevelt and his advisors were inspired to launch the Works Progress Administration by the unprecedented successes of the Soviet Union’s Five Year Plans. Beginning in 1928, the Soviet government mobilized the population to industrialize the country. The result was transforming a previously agrarian country into a world industrial powerhouse.  The Soviet Union soon had a booming steel industry, out-producing every other country on the planet. The USSR also set world records in the production of tractors and the extraction of coal. In Ukraine, the centrally planned economy of the Soviet Union built what was then the world’s largest hydro-electrical power plant, the Dnieper Dam.

Interviewed about her work on the Dneiper Dam, Tatiana Federova told PBS “Even now, I think it’s like something out of a fairy tale. How was it possible, in one of the most difficult times, to raise these great construction sites? It was only possible through the unity of the people, and the love of the people for their idol, and for us, Stalin was an idol.”

The idiotic notion that free markets and deregulation are required for prosperity had been solidly refuted by events that took place in the USSR between 1928-1936. The idea that centrally planned economies “never produce anything” and “just don’t work” was proven to be absolutely false. Today, China’s heavily state- controlled economy is yet another testament to complete the falsehood of statements about how “socialism always fails.”

Today, the world’s largest hydro-electrical power plant is the Three Gorges Dam on Chinese Yangtze River. China is also leading the world in the development of new forms of energy, which could end the dependence on non-renewable resources and push the human race toward a new era of technological advancement.

One of Donald Trump’s promises during his Presidential campaign was that he would rebuild the infrastructure of the United States. However, as he appoints people to his upcoming cabinet, the cast of characters involves many former Wall Street bankers, figures from the Republican Party establishment, and adherents to neoliberal, free market ideology. Another four years of providing “tax incentives” to “job creators” is only going to make conditions worse for The Rust Belt.

It was Roosevelt’s willingness to study Soviet economic achievements, along with his alliance with organized labor, unemployment councils, and left-wing mass movements, that enabled him to build such a strong infrastructure, defeat the attempted “business plot” coup d’état against him, and eventually help defeat the Nazis.

If Trump genuinely wants to rescue the United States from its continual decay, perhaps rather than starting a trade war with China, he should look into the secrets behind their unprecedented successes. The greed of capitalists cannot be trusted to save the rustbelt. Rescuing the American heartland will require something that the Chinese people clearly have, and Trump has often invoked: “Political Will.”

New Eastern Outlook