JOBS: The Key to Capitalism’s Success

by John Brian Shannon

As we all know, several political/economic models are in use in the early 21st century. A little refresher for you first, if your high-school political science classes didn’t especially thrill you.

The capitalist system employed by the Western nations and some other nations, is often referred to as the Free Enterprise system, the Free Market system, Wealth Accumulation, Capital Accumulation or the Open Economic model – depending on the context of a conversation. Politics can vary within capitalist systems – which are often a variant of democracy (civil rights enshrined in a constitution, the right to vote, rights to property and person and freedom of expression) form part of this model. Socialist parties represent the “left wing” and conservative “right-wing” parties are represented along with independent candidates as elected by the registered voters.

In the capitalist system, greed is the primary agent of economic change. If you want to eat, you work for money to buy your food. If you would rather drive to work than walk, you work for money to buy a car and insurance. An individual “works” to earn “profit” to purchase goods or services. The underlying premise being, that if an individual has a decent education and works “smart” and “hard” you will accumulate wealth over time. Western corporations and governments operate in a similar fashion.

So, why isn’t it working?

“It IS working!” wealthy Western individuals emphatically state.

“It IS working!” Western corporations emphatically state.

“It IS working!” Western governments emphatically state.

And in those cases, it most emphatically IS working!

But the rest of us are not. Working, that is. You know… jobs, working, making a living, paying the bills, making the rent… and all the rest of it.

You will recall my words from a previous paragraph; “An individual “works” to earn “profit” to purchase goods or services. The underlying premise being, that if an individual has a decent education and works “smart” and “hard” you will accumulate wealth over time.”

All good there. Except what happens in the capitalist system when there aren’t enough jobs?

The short answer is; A failed economic system. Ever more wealth becomes concentrated in a ever smaller percentage of the general population. You guessed it — 1% of the Western population will always agree that the Open Economic system works well for them.

For Western nations it is death by a thousand cuts and only in the interests of economic survival will our present system evolve into something very unlike the present model and it may take as long as 50 years to do so.

Let me back up a bit.

I promised you a political science refresher and here is the other half of it. The Communist system, sometimes called the Statist model, the Centralized Economic model, or the Closed Economic model, does not employ greed as the primary driver of human activity. Profit, either at the individual or corporate level is unknown and all economic activity is considered the property of the state. The only things that really matter to a communist is the national GDP and the sovereignty of the country. Of course, civil rights and personal freedoms are enshrined in the constitutions of communist countries – although at the end of the day personal rights can be and often are subjugated in the best interests of the state.

For one example of this, in the former USSR alcoholism rates were astonishingly high. But this was never reported in the Soviet media as it was thought that publicizing this knowledge would emotionally depress workers across the nation – and thereby suppress economic output. Therefore and officially, in the former USSR there was no alcoholism – and hence, the government-owned hospitals failed to devise a treatment for a disease which only occurred in the decadent West! If a citizen of the former USSR arrived at a hospital or doctor’s office for treatment of his alcoholism, he was told that he suffered from “an imaginary disease” and was counseled to stop “trying to get attention” by emulating Western behaviors. And no doubt put on some sort of watch list for good measure.

Eventually the former USSR collapsed mainly due to internal forces. However, some communist nations remain and are thriving. China has surpassed India, France, the UK, Germany, Japan and every other country except for the United States in GDP and accumulated wealth – and has done so by employing the statist economic model. According to most economics Professors, China will surpass the United States GDP by 2040. That’s 28 years from now in case you are a Chinese economist counting the days.

The main reason for the dramatic growth-driven economic performance in China is that many Western corporations have chosen to do business in China rather than the West – due to lower land and construction costs, lower labour rates, the lower costs associated with a relaxed or non-existent regulatory environment (depending on the industry and region of the country) and other cost-lowering factors associated with operating a business in China.

Beginning about 1999, U.S. corporations especially, have embraced the opportunity to lower their costs by closing their North American factories and building brand-new factories in China – sometimes with significant communist Chinese government assistance! Other western corporations too, have been closing our factories by the thousands in America and Europe and relocating their manufacturing operations to China – and on account of this economic activity, the Western economies combined are at present, 150 million jobs short of full employment. This trend of creating jobs in communist China whilst simultaneously creating higher unemployment in the Western democracies will continue as long as Western voters don’t complain too much.

By 2030, the Western democracies will be much-weakened in comparison to a still-booming China and the other Asian nations. At that time, Asia will be supplying almost all the manufactured goods for the Western economies which will by then, have lost 300 million jobs to Asia.

Also by 2030, perhaps as many as 700 million Westerners will be retired persons receiving some form of Social Security – while millions of younger people won’t be old enough to join the workforce. It will be a time when less than half of the West’s population will be employed and able to support the Western economies. From the Western point of view, this trend gets worse until 2060 when economic performance is expected to plateau in Asia.

A paradigm-shift has been taking place right under our Western noses for three decades now and we have just now begun to notice. China will soon be the dominant world power – and we handed it to them in exchange for higher profits for Western corporations.

It’s said; “He who has the gold makes the rules” – and it is shaping up to be a very different world indeed.

Follow John Brian Shannon on Twitter: https://twitter.com/#!/JBSCanada

Harper Should Lobby for Free Trade with China | MY COMMENT

Harper Should Lobby for Free Trade with China — The Huffington Post – Canada
by Yuen Pau Woo, President and CEO, Asia Pacific Foundation of Canada   January 13, 2012

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MY COMMENT — Free Trade agreements are becoming more common world-wide­. It is up to the countries involved to set their own particular free trade agreement rules and conditions­. Every bi-lateral agreement is different.

But it is a trade matter — it is not a venue to browbeat the other country over their human-righ­ts situation etc. it is simple matter of you sell us X and we will pay Y, on as many products or services as both sides decide to include in the accord.

One thing that we like about this scenario is that by engaging in trade with Western nations developing nations learn our ways. This helps them to progress in real time in all matters, including among other things, best practices for the business community, human rights, environmen­tal legislatio­n and the reasons for those standards.

Where there is better communicat­ion — better relationsh­ips result.

A FTA with China, Japan, India and other countries will facilitate better relationsh­ips with those countries AND improve Canada’s economy.

Will an FTA solve every problem? No, obviously not. There will never be one big agreement that will address every identified negative policy or procedure in a developing country. An FTA will however, play an integral part of that process going forward.

Terry Glavin: Canada sells the oilsands to China. Then complains about foreign interference! | MY COMMENT

Canada sells the oilsands to China. Then complains about foreign interference! — National Post
By:Terry Glavin  January 13, 2012

MY COMMENT — Must it always be about extreme positions? Why must it be only about eco-terrorists or big business? Can’t Canada, one of the most developed countries on Earth, extract this resource AND do it in the least harmful way to the environment? Of course we can!

We have world-class technology available now to reduce the impact on the environment, we have a majority government with the necessary expertise to enact legislation to promote more sustainable development and we have ever more billions of dollars being invested by the world’s most powerful countries.

It’s so simple. The government calls a meeting of all stakeholders, who decide upon the “best practices” available, enact legislation with teeth to that effect and invite anyone who doesn’t want to follow that legislation to leave Canada.

Transporting crude oil by pipeline and supertanker is the absolute worst-case scenario. There will be a spill on Canada’s pristine coastline and eventually in BC’s scenic interior.

A better plan from an environmental viewpoint, is to merely ship the raw tar sands product, in the same way that coal has been transported to Asia from BC and Alberta, for decades, with no problems.

Another way that will give Western Canada the opportunity for value-added product (more jobs) is to highly-refine the crude oil into a very clean, fully refined, low-toxicity product and ship it from near Vancouver — a much safer waterway than Kitimat.

In addition to this, tar sands can be highly-refined into ethane gas and sent to Kitimat by a clean gas pipeline and picked up by LNG tanker. LNG tankers are truly innocuous, compared to crude oil tankers. In case of leak, practically zero deaths of ocean life and little, if any destroyed land environment as would be the case with a crude oil spill, LNG merely evaporates into the air, unless ignited — so keep the gas pipeline 5 km back from any populated areas or highway/railway.

See, it’s simple. We merely need a better plan – than the one presently under consideration!

A highly significant visit | MY COMMENT

A highly significant visit — Arab News
January 14, 2012

MY COMMENT — There is no doubt at all that the new China is a powerful balancing force for this world in this 21st century. Under the leadership of President Hu Jintao and Prime Minister Wen Jiaboa China has grown exponentially and not just in the economic sphere.

Holding the Olympics in China, the establishment and enhancement of bi-lateral ties with many nations and the financing and partnership in mega-projects by China, such as the LHPP in Lesotho, would have been unthinkable prior to year 2000.

China has recognized the need to convert it’s electricity grid to renewable energy as this becomes more economically feasible. With over 1.35 billion citizens, many living in close proximity to industry, clean air is at a premium. I wish China’s leaders well and hope their affinity for clean electricity continues and that with lower renewable energy costs now apparent, more of that capacity will be built.

China may have more to gain from this than any other country – and that’s even before factoring in millions or even billions of yuan of value-added green energy products that China can export to other nations. It would rank as yet another transformation China the country, could add to it’s international CV.

I predict, especially as time progresses, that those nations, corporations and individuals which treat China with respect will fare very well, as China has just begun it’s growth to full potential.

David Suzuki: Screw the Environment! The Pipeline Will Hurt Our Economy | MY COMMENT

David Suzuki: Screw the Environment! The Pipeline Will Hurt Our Economy — The Huffington Post – Canada
By: Dr. David Suzuki  January 12, 2012

MY COMMENT — Dr. Suzuki easily destroys the house of cards arguments put up by some people and corporatio­ns supporting both the Enbridge Northern Gateway pipeline and the Keystone XL pipeline.

There are so many billions of dollars invested in the tar sands now and much of it has been invested by China, the U.S. and others, that there is no going back now. The tar-sands will be extracted every day for decades, unless the price of oil drops below the tar-sands extraction price.

My concern is a spill over pristine land or sea. For that reason, an oil pipeline with supertanke­rs is out of the question. If tar sands product is going to be exported to China (it will be, trust me on this) an oil pipeline and supertanke­rs are the absolute worst way to go. What makes way more sense is to highly upgrade the tar sand material to highly-ref­ined ethane and send it to Kitimat by high-press­ure gas pipeline. LNG tankers are innocuous compared to crude oil tankers! In case of accident, ethane evaporates (unless ignited) into the air instead of destroying thousands of miles of coastline and countless sea-life.

Even exporting the raw tar-sand itself — delivered by rail to the port and carried inside bulk carrier ships (the same way as coal is exported every day in BC) is light-year­s better than shipping crude oil!!

Exporting crude to China from Kitimat, really is the worst option of all the available choices.

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My second comment on this same article by Dr. Suzuki:

OPEC could care less about Canada’s tar sands oil, or any other oil, anywhere. Regular readers of Middle Eastern newspapers and Middle East oil industry periodical­s know that all the oil OPEC produces every day is already pre-sold — and a year-long waiting list is in place for any extra oil that may become available due to delivery cancellati­on or additions to supply from bulk oil stockpiles there.

Note­: Not all OPEC countries are based in the Middle East, but Saudi Arabia produces about half of OPEC’s total.

Middle Eastern oil costs less, requires much less refining and is of higher quality than any oil in the world — except West Texas sweet crude which is the creme-de-la-creme of petroleum. Saudi oil is rated at about the same ‘sweetness­’ as (North Sea) Brent intermedia­te crude oil which is tied with Saudi oil for 2nd place.

China buys 50% of all Saudi oil extracted and they would buy all of it — and a lot more if they could.

There is no competitio­n between Canada and Saudi or other OPEC countries. If a glut suddenly appears due to market conditions­, buyers always line up to purchase the ‘good’ crude as it is often cheaper especially when you factor in refining cost. ‘Sour’ crude sits until the market picks up again.

Here is a huge dump of informatio­n on the Saudi petrochemi­cal industry for you in PDF form;
http://www­.sabic.com­/corporate­/en/binari­es/SABICCo­rporateBro­chure_E_tc­m4-1610.pd­f