As consumers in the West, we love China. We are not so fond of India, since we seldom see “Made in India” stickers on the goods we buy. But “Made in China” stickers are everywhere.

Wal-Mart in 1998 posted banners saying the company bought American. Apparently, someone in management thought shoppers cared. They didn’t. Wal-Mart took down those banners years ago. Nobody protested. The parking lots did not empty. Companies in China began stocking the shelves at Wal-Mart, K-Mart, and Target.

Call it the Bob Barker phenomenon. The price is right. Bob has retired, but the show goes on. So does its message.

So, if we buy “Made in China” items, we don’t hate China.

As customers, we love China.

But if a person is employed in manufacturing, he fears China. If he has just been laid off, he may hate China. If the plant where he worked is closed for good, he blames China.

We all wear two hats: a consumer’s hat and a producer’s hat. As consumers, we want producers to compete. As producers, we want protection from unfair competition. What is unfair competition? Successful competition.

People vote with their money as consumers. They often vote in a polling booth as producers. As consumers, they want liberty. As voters, they want controls, or more to the point, control. Control over them. You know. Competitors.

Spending is about liberation from controls on us. Voting is about the imposition of controls by us.

We are schizophrenic. It shows.

LIBERATION FROM TRADE UNIONS

When I was in my teens, I was interested in national politics. I no longer am. I used to think we could make things better through national politics. I no longer do. St. Paul commented on this change of mind.

When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things (1 Corinthians 13:11).

Back in the 1950’s, there was a political movement called the right-to-work movement. “The right to work” meant the right to work without joining a union. It was a great slogan, although it was bad economics and worse jurisprudence. There is no right to work. There ought to be a right to make an offer to work. There is no right to a job. There should be a right to bid on a job. But “the right to work” was a great political slogan. When explained, it made an important point: trade unions were limiting the right for an employer to accept bids from people who wanted to work at wages lower than what trade union members wanted to match.

Trade unionism in America in 1955 was limited to about 25% of the work force, but the manufacturing sector was heavily unionized, especially in the industrial North. If you did not belong to a union, you had to seek employment elsewhere. It was illegal for unionized businesses to hire you as an independent.

As government-protected producers, union members could demand and receive above-market wages. They could not legally be fired if they went on strike. People who crossed a picket line were taunted. They were called scabs.

There are still scabs today. They are called Asians. There are over three billion of them. They don’t cross picket lines. There are no picket lines in Asia. There are few unions. Asian workers produce goods, which are offered for sale to Westerners. There is no phrase more beloved by American consumers than “Let’s make a deal.” If American manufacturers cannot beat Asian prices, they go out of business. Result: no more picket lines. No more jobs.

Union members should have seen this coming. The process began in the 1950’s. But “Asia” back then was located south of the Mason-Dixon line.

In the South in the 1950’s, right-to-work bills became laws. Employment steadily moved south, reversing half a century of emigration out of the South. The South benefited from two things: right-to-work laws and air-conditioning. The North could not compete, and still can’t.

Right-to-work laws were passed in the deep Midwest. From Texas to North Dakota, and from Texas to Virginia, the country is liberated from unions. Twenty-two states have passed these laws.

The liberated states are in turquoise.

If states in the North abolished state income taxes, and if the Federal government revoked all “labor legislation” — laws forcing businesses to bargain with unions that get a 51% vote of employees, just once — the North would rise again. The North’s economy would start booming, the way that South Dakota — no state income tax — is booming. But this is unlikely to take place. The North’s economy is bloated with bureaucracy, hostile to economic liberty, and aging fast. When you think “North,” think “Senator Kennedy.”

Trade unions fought back in the 1950’s. They could not keep businesses from building plants in the South, where wages were lower, regulation was weaker, and politicians could be bribed cheaper. So, they got Congress to pass a series of minimum wage laws. The first result of these laws was to keep black teenage males unemployed, thereby reducing competition in the labor markets. The other result was to keep Southern workers from being able to bid their labor below the minimum wage. This made it less profitable to build plants in the South.

But then price inflation under Johnson, Nixon, Ford, and especially Carter forced down real wages. The dollar bought less. The legal minimum wage did not keep pace with price inflation. The Federal Reserve System did the bidding of four Presidents — debauched the dollar — and that gutted the minimum wage law.

At the same time, Japan started exporting low-cost, high-value products. Americans started buying them. The 1970’s was the decade of the Japanese invasion. The 1980’s solidified the market share of products manufactured by Japan, Hong Kong, and South Korea.

Then, in 1978, Deng Xiao Ping liberated China’s agricultural sector. Output soared within a year. This made more food available in cities. More rural Chinese could then move to cities. The joint phenomenon of agricultural revolution and urbanization, which had begun in the West in the sixteenth century and has kept accelerating, had at last reached China. Agricultural output always increases under liberty. Efficient farmers out-compete inefficient farmers, who then move to cities or into local trades.

Today, China must build the equivalent of Houston every month to accommodate the flood of immigrants from the farms.

Initially, Japanese goods undermined American manufacturers. Here was the basic strategy: price competition (1950’s), product improvement (1960’s), marketing (1970’s), credit (1980’s). Then Chinese manufacturers got the liberty they needed to compete, when the Communist Party freed up the economy. China began where all newcomers must begin: price competition. It caught up with Japan in less than two decades. Capital flowed in. Technology was either stolen or purchased. Output soared.

Wal-Mart took down its “We buy American” banners. That visibly marked the end of American labor union movement. It exists mainly in the auto industry, which is approaching bankruptcy, and government, which is also approaching bankruptcy.

In 1958, I dreamed of the end of the labor union movement. Because of the Federal Reserve and Asian manufacturing, my dream has pretty much come true.

EUROPE FALLS BEHIND

The trade union movement in Europe is still strong. China is now undermining Europe’s unions. They are still politically powerful, but consumers like good deals, and China offers good deals. The French socialists failed to win last month. China is in the World Trade Organization. The internationalists’ goal has always been to cut trade barriers and extend bureaucratic control over the international economy. But the plan has backfired. The Chinese, with India close behind, have used the WTO’s managed trade system to breach the Great Wall of Europe — trade unionism — without surrendering an inch on the question of adopting European rules regarding pollution, wage negotiating, and safety.

The internationalists worked for almost a century to get their system accepted in North America and Western Europe. Their dream has almost come true. But they didn’t foresee what Asians would do to their plans. Always, Asia had been looked at as a market for European and American goods. Asian farmers would export food to us. We would sell them manufactured goods.

America now sells its farm products to China — our only big export success in China — while “Made in China” stickers are everywhere.

In short, Keynesian economic planners in the West, who adopted a post-World War II strategy of imposing government controls on Japan to prepare the West’s economies for a grand invasion of Asia, knocked down the Asian drawbridges that had kept out Western goods for centuries. As soon as the drawbridges were down — in Japan, South Korea, Hong Kong, and Singapore — the flood of goods started flowing: from East to West. The planners’ grand plan completely backfired. Ludwig von Mises was correct when he argued that the results of government economic planning will always be the opposite of the official policy of the planners.

The United States succumbed first. We were Japan’s primary export market. Then, nation by nation, Japan’s exporters established a foothold. Western consumers started buying. The other Asian tigers followed Japan’s lead.

It is now Europe’s turn. Bureaucracy is vastly more entrenched in Europe. The welfare State is more extensive. Taxes are higher. Mobility is less. Europe is sclerotic economically and biologically. It is aging rapidly.

The European internationalists have centralized power through the European Union. They are about to do an end run around voters, who have rejected the 300-page constitution. The deal will be sealed through treaty, with no opportunity for voters to register a veto.

The Eurocrats think they can gain control over the economy by means of faceless bureaucrats who answer neither to politicians nor businessmen. But they have no power at all over Asia. They are committed to low tariffs and managed trade. But the Eurocrats will not terrify China’s politicians. China’s politicians will smile, bow politely, and do nothing.

China’s politicians have a unique way of dealing with China’s bureaucrats, as Zheng Xuaoyu was reminded this week. He ran China’s equivalent of the Food and Drug Administration. He was executed for taking bribes from companies that then released drugs that killed ten people.

In 1968, George Wallace’s third-party presidential campaign had a slogan: “Send them a message!” They take message-sending seriously in China.

Message to the WTO: “China will not comply.”

China, India, and the rest of Asia will take advantage of the European Union’s low tariffs and reduced import quotas. Europe’s main import quotas are on agricultural imports. Asia imports food, so those restrictions will have no effect on Asia. As for the WTO’s guidelines on labor relations and safety conditions, who will enforce them on 200 million Chinese workers, just off the farm, who earn about $350 a month for a 12×7 work week?

Heads, Asia wins; tails, Eurocrats lose.

Europe is going to find that its government-protected industries suffer a fate similar to Mr. Zheng’s. It’s just a matter of time.

Europe’s century-old tradition of social democracy — Marxism without bloody revolution — will not survive another 25 years. It’s as sclerotic as the rest of Europe is. If the Eurocrats don’t allow the European economy the freedom that China now enjoys, European manufacturing is doomed. Labor unions control manufacturing and government. All over the West, China’s free market economy is bankrupting both.

THE GREAT REVERSAL

The West after World War I began imitating ancient China. Not since the days of Egypt’s pharaohs has there been a bureaucracy to rival China’s, which lasted for a thousand years. Entry was based on mastery of Chinese poetry. Even military officials had to pass this exam. It was rigorous. Smart people with a gift for poetry passed. This eliminated nepotism. Sons could not follow their fathers unless they could pass the exam.

By 1900, the failure of the old system was visible even to the rulers. The West had sent theologically liberal socialist missionaries to China in the 1890’s. The result was revolution: first organized by Sun Yat-sen in 1913, then under Mao in 1949. China’s leaders had been trained by liberals in missionary schools and denominational colleges in China. Mao speeded up the process of social revolution by destroying old families and old wealth.

India experienced a similar system of secular evangelism. Its best and brightest were sent to study at Oxford and Cambridge in 1900. They came back confirmed Fabians. They became bureaucrats.

Japan had become Western in 1868, by top-down decree. It went militaristic. It also went bureaucratic.

All roads were heading West in 1900: to Marxism, Fabianism, or militarism, but surely to bureaucracy.

Then came Japan’s defeat in World War II. The old guard lost face. Industrialists invited W. Edwards Deming to teach them about quality control in manufacturing. They were under the impression that Deming was influential in Western manufacturing circles. He wasn’t.

There was also Hong Kong’s experiment in liberty after 1945. Deng saw what happened there. Then he came to power. He imitated Hong Kong.

Next, India began to follow China’s lead after 1995.

The East has generally abandoned Western economic theories of protection of labor unions. It has adopted wage competition and labor mobility. It passes the savings along to its trade partners.

Under pressure from Asian imports, the United States has been forced to abandon the New Deal in the field of labor relations. Now it is Europe’s turn.

The tide has turned. Asian politicians have loosened government control over their economies. The result is enormous productivity. Anyone in the West who gets in the way of this avalanche of production will be crushed. Consumers will be crushed with bargains. Producers will be crushed with competition based on four major factors: unprecedented price competition, an unprecedented savings rate, an unprecedented work ethic, and unprecedented labor mobility.

Asia learned well: first from left-wing teachers, then from Henry Ford.

THE COST OF LIBERATION

At the beginning of any revolution, leaders call their followers to a life of self-sacrifice. For the sake of the revolution, men must sacrifice their lives, purses, and sacred honor.

That call to sacrifice doesn’t sell well these days. What sells well is a call to go to the mall.

If today’s revolutionary youth leader were as symbol-oriented as yesterday’s, he would have a large photo on his wall of Sam Walton. Beneath the photo would be these words: Sam lives!

The West today is facing a different kind of political revolution: an imported revolution. It was one exported by the West after World War II: free trade. Now it is being sent back, embodied in low-price, high-quality goods.

Those of us who grew up fighting the Fabians, who were dominant in American academia after World War II, are at long last seeing the bastions of Fabian-Keynesian power being bankrupted. The labor unions are the symbol of this process. They are dying.

They will die soon enough in Western Europe.

Businesses that relied on government protection, such as tariffs and import quotas, are also dying.

Even the public schools are in trouble. Home school curriculum materials, which cost a fortune to design and print in 1980, can be bought for $200, once per family. The program’s CD-ROM’s are run on a $500 Chinese-made computer.

There will be more pain for people who were trained to work in government-protected industries. There will be less pain for consumers.

There will be great sacrifices made by retirees who trusted their labor unions’ leaders when the leaders negotiated fat pension promises from companies that can renege simply by declaring bankruptcy. There will be fewer sacrifices for people who spotted the scam and stayed in the labor force.

There will be great pain for taxpayers who have trusted similar promises about government pensions, Medicare, and drug payment subsidies. There will be less pain for those who spotted the scam and stayed in the labor force.

Every revolution has winners and losers. The winners will be entrepreneurs and consumers. The losers will be politicians and their victims, who believed political promises of protection.

Government today is a gigantic protection racket. Now the “family” is under assault by products bearing these stickers: “Made in China.”

The revolution is being made in China. It is not Mao’s revolution. It is Deng’s.

CONCLUSION

My children will live to see the destruction of the cartel-creating, tax-extracting, bureaucracy-expanding, sclerotic Fabian Establishment that has had its way in the West since about 1933. As surely as its evil twin, Marxism, went the way of all flesh by 1991, so will Fabianism perish.

The cutting edge of the revolution is a sticker: “Made in China.”

In my mind is a life-sized photo of David Rockefeller. (If I were a European, it would be Jean Monnet.) Every time I buy something made in Asia, I mentally stick a pin into the photo.

So, buy something made in Asia. Support the revolution.

July16, 2007

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 19-volume series, An Economic Commentary on the Bible.

Copyright © 2007 LewRockwell.com