While Donald Trump continues to repeat his line about his “good friend” Chinese President Xi Jinping “screwing” America on trade, the reality is that China’s success is not the root cause of the failure of certain western economies to keep up with innovation, win-win employment models, education and long term planning. The cartoonish attitude of “they took our jobs” simply is not true when it comes to China. Here are the real root causes of unemployment and stagnation in the west.
1. Lack of investment in the industrial sector
Just as industrial finished products are constantly evolving, so too are the production techniques involved in creating them. This is true both in terms of what the consumer does not see (efficient, safe and fast production techniques) and what the customer does see (reliable products, products whose quality increases over time while the price remains largely the same when adjusted for inflation, visible innovation). To accomplish this, one must constantly re-invest in the industrial sector even when current production techniques and business models are still successful and profitable. If one waits for a production technique to fail, become outdated or a product to become obsolete before re-investing, one will see that other countries who do re-invest will be well ahead.
It seems that the US has a chronic distaste for re-investment in the private industrial sector. This is true in terms of both offering tax incentives for businesses to re-invest in their own companies and it is even more true in terms of the government injecting cash into companies in order to encourage and accelerate innovation.
Ironically, the one sector in the US where the re-investment model is put to work on a regular basis and where government and private sector actively cooperate in order to improve products and production techniques is the defence industry. In this sense, the US doesn’t even need to look abroad for lessons in what to do to reform its civilian industrial infrastructure and business model. All the US needs to do is adapt the techniques that have been so successful in its defence industry and put them to use in the civilian industrial sector. It is frequently stated that the US can hardly compete with China when it comes to the production of most civilian goods, but the US can and does compete with China in terms of military hardware. The answer lies in the different US approach to military and civilian goods. If the US did with General Motors and the electronics industry what it does with Boeing, Lockheed and Raytheon, the US and China would be on-par when it comes to industrial production.
2. Confrontational trade union/labour union model
The role of trade and labour unions in US and European industry was once highly important and highly effective as it helped to end practices of extreme exploitation of workers by their masters. In recent decades however, the confrontational model between unions, management and in some cases between unions and non-unionised workers has become a sizeable burden on industrial development. Here, arguably Europe’s most successful economy, Germany can be seen as an example of where union leaders sit beside management in the boardroom and where both sides have their own large vested interests in seeing that companies function both efficiently in terms of production and fairly in terms of workers’ pay and rights.
By contrast, in the US, UK and France, the confrontational model has made unions a burden on industry. In such models, unions are constantly holding back progress and often create nothing more than prolonged strikes or extortionate union dues required by workers whose jobs are getting less and less safe in spite of unionisation. The hostile atmosphere of union vs. management, union vs. non-unionised worker and management vs. workforce must end if the west has any hope in reviving its failed model.
3. No sustainable preparation for robotics and artificial intelligence
As robotics and artificial intelligence (AI) become ever more prevalent in industrial manufacturing, fewer jobs for humans will be required. China’s market socialist model is fully equipped not only to manage this but to actually take advantage of this on a win-win basis. As part of Xi Jinping’s push towards transforming China from a production super-economy to an innovation and tech driven super-economy, the Chinese workforce is going through a quiet transformation wherein high skilled workers are being encouraged to express their creativity in terms of engaging in more entrepreneurial endeavours, while low skilled workers are being re-trained at no cost to themselves to enter the world of technology as opposed to the production line.
In the market socialist model, the profits of industry are not given an easy route out of the country (as they are in most western economies), but instead the capital generated in industry whether by the human hand or by robotics and AI is re-invested in the domestic economy in areas including technological research and development, improved production techniques, national infrastructure, green energy (where China is now a global pioneer), and social programmes ranging from rural poverty relief to education, health, culture and sport.
By contrast, in the western model, those whose jobs are replaced by robots are left with virtually nothing. The profits generated by AI in countries like the US can be easily off-shored in foreign banks or hedge funds rather than be re-invested into the national economy and into people as they should be.
The AI revolution is doing two things simultaneously. First of all it is bringing to the fore the most negative aspects of extreme capitalism where if people are replaced by machines they are left jobless and without prospects, thus creating a generation facing long term unemployment or employment in incredibly low paying and humiliating jobs.
By contrast, AI and robotics are able to mediate the most extreme accesses of socialism by literally putting machines to work for the benefit of society. The market socialist model of China has grasped this advantage. Thus, in a market socialist society, AI can be a worker’s best friend as the profits generated from machines can elevate the position of the low-skilled worker within society. In a system such as the current one in the US and most of EU, AI will devastate working class individuals.
AI has changed the implications of both market socialism and capitalism, it is time therefore for many in the US and EU to re-examine their relationship with and prejudices about both systems as previously understood.
Western education systems have become more and more insufficient over the last decades of the 20th century and into the 21st. Far from just failing to make children literate and numerate, vocation based education has disappeared in much of the US and western Europe. Schools are not babysitters nor do they exist to indoctrinate children with poisonous ideologies. Schools exist to give children and young adults real skills that will equip them to contribute to society and themselves once they become independent adults.
If education in the west isn’t reformed soon, not only will westerners by unemployable even in their own nations, but they simply will not be able to compete with the adults who grow from students in north east Asia’s globally superior education system.
5. Work ethic
Many stereotypes exist for a reason. They are generally exaggerations based on an initially true premise. In the case of China, it is undoubtedly true that Chinese people work harder than Americans or European. So long as Americans and Europeans see work as a form of suffering that just needs to be gotten through before going to the ball game, the bar, the television screen or the internet, the western workforce will always lag behind not only China but other Asian countries including Japan and potentially both Korean states where doing one’s job well is as much a matter of pride as anything else in one’s existence.
American celebrities like Oprah Winfrey have for decades talked about the need for people to feel pride. It was Americans that coined terms like black pride, gay pride, Irish-American pride, Italian-American pride, etc. What about developing a culture of pride in one’s work? If Americans can go out of their way to emphasise pride in all other personal and social characteristics, surely there is room for pride in hard work.
All of the aforementioned problems in the west were things that would have been inevitable stretching back to the middle and late 20th century even if China never rose to the superpower status that it currently has. The problems highlighted all have their origins internally and no foreign power whether China, Korea, Japan or anyone else can be blamed for the fact that they pursued economic, industrial, employment, educational and social models that have resulted in more material success than the ageing models in North America and much of Europe.
The next time a politician or celebrity tries to scapegoat China for the west’s own inability to come to terms with its internal decline, instead of listening to such regressive rhetoric, tell them to look in the mirror and begin to work at problem solving close to home.