President Trump has been criticised for his brash tweeting styles, and not generally known for his spelling skills nor expertise in foreign diplomacy but the man behind the American throne and the driver of his economic policy is probably a person the average American or U.K. citizen has not heard of before: Professor Peter Navarro.
Professor Peter Navarro teaches economics at University of California, Irvine, and is a Democrat who ran for office in California three times in the 1990s and lost; and has published several books, one of which Death By China, became a documentary movie in a dramatic portrayal of the loss of American factory jobs through fearmongering and prejudice of foreign innovation. It could be easy to see that whilst the public and media at large are focused on the minutiae of President Trump's public persona, that behind the President of the United States (POTUS), Professor Navarro has been strategically devising plans for what could possibly begin a Trade War with China as the new Director of the White House National Trade Council.
I think everyone who grew up during President Bill Clinton's America, remembers that his administration was the primary driver that built closer ties with China, which lead to great economic growth. However, the beginning of the 1990s also marked the end of factory and manufacturing jobs as U.S. corporations shifted their production bases to nations like Mexico, China, Vietnam, South Korea, Thailand, and India. This outsourcing of jobs abroad lead to backlash against foreigners, and "China's taking all our jobs," became a popular finger-pointing motto that became deployed in the media as a red herring to what was really going on: that a new strategy of flatlining corporatism was emerging, and it was that in the bottom line, it was just simply more profitable for U.S. corporations to outsource these factory jobs whilst focusing on IP in what would become the Information Age that would eventually lead to the rise of social networks and companies like Google, Yahoo, Netscape and Facebook.
During the recent World Economic Forum, Jack Ma, chairman and founder of Alibaba, gave some interesting insights about this rather peculiar phenomenon of blaming China for all of America's problems:
Play video here.
Mr. Ma says that beginning 30 years ago, American corporations wanted to leave lower end jobs to others whilst they focused on contributing IP, technology and branding. These kind of lower end, blue collar factory jobs were outsourced to places like Mexico, India and China. As this transpired, U.S. corporations made billions of dollars in globalization. IBM, Cisco, Microsoft made more profit than 4 of the largest banks in China combined and their market cap grew more than 100x in the past 30 years.
But he asks, Where did the money go?
In the past 30 years, Mr. Ma, says, the United States engaged in nearly 30 wars and international conflicts and spent $14.2 trillion. The money that could've been used to help both white collar and blue collar workers was instead spent abroad instead of domestically. He also indirectly adds that there is a discriminatory kind of spending- in which more money is spent on wealthy children, and more funds go to places like Harvard, but his philosophy is that a nation should spend money on those people who aren't good at school, who need help in education, and those people who need to transition from factory jobs to white collar jobs, and this is something the American govt did not do because it was constantly involved in international conflicts.
He further adds that in 2008, and the events leading up to the increasing climate of deregulation of Wall Street, the financial crisis wiped out $19.2 trillion in the United States alone, and destroyed 34 million jobs globally. In conclusion, other countries did not steal jobs from America, the distribution of money was not spent on the American people. He also adds somberly that it is easy to launch a war, but nearly impossible to end it.
One of the growing inner cities and slums of urban America: Detroit, Michigan. In the last 30 years, America has spent $14.2 trillion on wars but not on its infrastructure, its transport links, its roads nor on its own population to help working class people to make a transition to new jobs in the era of A.I. and automation.
Play video here. Despite the glitzy perception of Las Vegas, British artist and performer Sam Smith, shows the decaying urban landscape and architecture of Nevada in his music video, which is symbolic for many states in America that are in growing disrepair.
Homeless people are a common sight in America's tech capital, San Francisco, where many people were pushed out of their homes due to the rising costs of real estate to make way for tech billionaires.
So what would it mean for U.S. corporations if Professor Navarro is able to lead the Trump administration towards a Trade War with China?
Currently, China is partnered with more than 100 nations in trade and although they might initially suffer a slower growth, it is more likely that American corporations will ultimately end up losing in the trade war, as nations will have to risk doing business with China or siding with U.S. politics. If Professor Navarro, under the Trump administration were to impose 45% tariffs on China, one thing China could do is to also impose restrictions on trade and investment in China, to prevent American companies from entering their market. Apple CEO Tim Cook said that in the future, most of its revenue will come from China as many other tech companies. Aside from technology companies being affected by a possible Trade War with China, the film industry will also most likely suffer as well.
One major driver of Hollywood is all the new investment being spent by Chinese investors, as China has become a major market for Hollywood film growth during a time when the film industry was entering a recession and funding for films was being dried up. China's investment in Hollywood films could also cease, and as the chairman of the Wanda Group, Wang Jianlin, said in December of last year, he has invested over $10 billion in the U.S., employing 20,000 people, and that "if something goes wrong, these 20K+ people might be out of jobs."
Another consequence of a Trade War with China is that the GDP of the United States might shrink dramatically, and gains in the stock market might be a long-gone memory of one of the legacies of the Obama administration. The yuan might also replace the U.S. dollar as a reserve currency, furthering the decline of the American economy.
China's relationship with the United States is like that of a rich aunt or uncle, who lends us money when we need it, and gives us funds to do cool things, like build new gadgets and make movies and often bails us out and invests in our late funding stages when our startups have long been overvalued and burning through investments, not churning a profit. However, we have wasted a majority of that money engaging in a power struggle and policing the global neighbourhood with our bullying, warmongering ways instead of creating innovative social programmes that benefit the population. As China is the second largest holder of U.S. debt, an aggressive, isolationist economic policy against China as Professor Navarro under the Trump Administration is proposing might not be the best way to deal with a nation who has often come to our aid.
Despite other criticisms of China, especially their building of artificial islands in the South China Seas, and currency manipulation, we have discovered as the LIBOR scandal revealed in 2012 in an ongoing investigation that China is not the only one manipulating their currency. The global financial institutions at large have been manipulating interest rates for their own gain for decades worth more than $300 trillion.
The new era of enslavement. Factory workers at Foxconn in Southern China. Women work 12 hour days, 7 days a week and make $350/ month.
Child labourers in Bangladesh. They make $10/month, working 10 hour days under hazardous working conditions, making metal components for electronics. Photo by photojournalist G.M.B. Agash.
Garment workers in Cambodia make $0.45/hour or $150/month working 12 hour days.
Car factory workers in Guangdong Province, China. Their pay is $150/month working 12 hour days.
Although globalisation has often been compared to British imperialism at the turn of the century, and a new era of "enslavement" of people through factory work has taken the place of the black slaves that drove colonial America, one thing is very clear: factory and production jobs are not coming back to America nor to England. That is why it is essential that our political leaders create innovative social programmes that help our working class make a transition in the era of A.I. and automation.
Jack Ma asks, "imagine what would happen if the two largest economies went into a trade war? It would be disastrous for both nations."
By Sierra Choi
As the world's leaders are currently meeting in Davos, Switzerland for the annual World Economic Forum to discuss issues and policies in energy, biotech, income equality, responsible leadership and a host of other issues, the rest of us will have the luxury of being able to access online what is going on at this conference in the comfort of own homes and offices, sipping on hot chocolate and mulled wine from our living rooms or lounging next to the swimming pool.
One of the key issues in this year's WEF is the transition to clean energy. It's been increasingly clear that in our current dependence on fossil fuels has had negative impacts on the quality of life and the environment, but exactly how can this concretely translate into real world solutions?
To view video: press here.
The World Economic Forum, 2017 panel on Energy's Clean Transition included the following panelists: Oleg V. Deripaska (President, UC Rusal), Christiana Figueres (former Executive Secretary of the United Nations Climate Change Secretariat), Patrick Pouyanné (Chairman, CEO, Total), Ignacio Sánchez Galán (Chairman, CEO, Iberdrola), Nur Bekri (Minister of the National Energy Administration, China) and moderated by Steve Sedgwick (Anchor, CNBC).
In the panel, Energy's Clean Transition, leaders in the energy sector had some surprising things to say. The solution is not all that difficult or hard to implement at all. What is necessary for corporations to transition to clean energy are dependent on two factors: 1) carbon pricing 2) new developments in technology that will make clean energy cheaper than implementation and usage of fossil fuels.
If we examine the first condition: carbon pricing, what is it?
Carbon pricing is a tax put on corporations that emit carbon dioxide per tonne. This limits the output of certain industries such as coal; for example, the UK implemented a tax in 2013 which was approximately £15/tonne of carbon dioxide. One of the panelists, Patrick Pouyanné, remarked on this extremely effective solution, which became the primary reason why the UK shifted from a coal-dominated energy industry to a natural gas-dominated energy industry in just two years. Obviously natural gas is still part of fossil fuels, but it is considered the lesser of the two evils in comparison to coal with a much less output of carbon dioxide emissions.
The UK implemented a carbon tax on carbon dioxide emissions in 2013 which radically shifted the UK's energy consumption from coal to gas as the dominant energy source in approximately two years.
The reason why coal is the dominant source of energy in many nations, such as China, the panelists agree, is because coal is the cheapest. Nur Bekri, who is the Minister of the National Energy Administration, National Energy Administration in China, said that because China has a population of 1.4 billion people, that they have a necessity to diversify their energy portfolio, and cannot rely on a single source of energy at present. He finds one of the challenges of renewable energy is that it is unstable, the distribution is inefficient and although the technology is accelerating, it not there yet in terms of scale and being able to be produced cheaply.
However, China has recently decided to axe new coal programmes, and defunded about 100+ new coal plants and other projects related to coal. Some people may be aware that China recently commissioned to build the largest waste to energy plant in the world in Shenzhen. For China, the focus is on waste-to-energy, and to make renewables cheaper.
In the United States, although a few states (such as California) have carbon pricing, or taxes on carbon dioxide emissions output by companies, a nationwide federal law does not yet exist or passed in Congress. In the US, coal takes up 33% of the all energy output, as does gas 33% and renewables make up about 20%. Coal was the dominant energy source in the UK until the carbon pricing was implemented in 2013, in which natural gas became the the dominant energy source in a period of 2 years (30% gas, 22% coal in 2015).
According to the panelists, investors in the energy sector tend to be "rational," which appeared to be rather a nice euphemism for overt short-term profit seeking avarice. The heads of companies, although they may like the idea of renewable energy, are bound to their duties to the shareholders of their company, which is to make profit. To be able to successfully appeal to the energy industries to transition into renewables, there is an imminent necessity to simply make fossil fuels expensive for production and consumption by regulation of the industries by putting taxes on carbon dioxide emissions whilst at the same time making renewables cheaper and technologically more efficient for stable output through R&D investment and government subsidies.
In the US however, govt funding into renewables hasn't been all that successful. One lesson we can learn from the Solyndra debacle of 2011 was that the Obama administration had put all their eggs were into one basket, in which Solyndra single-handedly had been given a majority of govt rebates, without diversifying the govt renewable energy sector investments. What happened subsequently was that the solar energy market became inundated by producers in China that output similar silicone solar panels for much cheaper, therefore putting Solyndra under. Another issue was a technological one; in that silicone solar panels were not efficient, and did not output enough energy as their absorption rate of solar energy was quite low. Silicone solar panels was a step in the right direction, but the technology was still rapidly advancing at the time when Solyndra took the majority of govt tax rebates, whilst other solutions were being developed simultaneously, which had a higher efficiency and output, such as cells being developed for artificial photosynthesis. Although much research exists in this area, with many new technologies being developed, it is still not clear which will become the dominant force into the 4th Industrial Revolution.
Artificial photosynthesis: human-made solar leaves output and absorb more solar energy than natural plants, which could be the new way to output energy into homes, bypassing both natural gas and coal in the near future.
However, President Obama recently wrote an article in science magazine in regards to the gains made in renewable energy and the moving trend from major companies, such as Google and Walmart whose operations will be based on 100% renewable energy in the coming years. In addition, President Obama also notes the dramatic decrease in prices of renewable energy in just the last several years: Renewable electricity costs also fell dramatically between 2008 and 2015: the cost of electricity fell 41% for wind, 54% for rooftop solar photovoltaic (PV) installations, and 64% for utility-scale PV . Despite some initial setbacks, it is clear that one of the key achievements of the Obama administration was to plant the seeds for large scale corporations to adapt to renewables, in addition to setting forth conditions that would put renewables into the profitability zone.
One thing is clear however, the energy sector is one that has been long waiting to be disrupted. Today, people use coal simply because it is cheap, and often in many nations, such as the United States, a federal nationwide tax on carbon dioxide emissions, or a nationwide carbon pricing act is still being hotly contested by members of Congress. Implementing a simple solution is a necessary step to take for nations to move away from a dependence on coal, which might ironically also be beneficial for another fossil fuel, such as natural gas. It's not a perfect solution, but one that could move corporations in the right direction in terms of regulation and less carbon dioxide emissions.
In China, it is a normal sight to see people wearing masks, to avoid breathing in fumes from fossil fuels, such as coal, which releases carbon dioxide emissions and other toxins into the air. Currently, China is making an active transition from coal-dominated energy sources to waste-to-energy and renewable energy.
Christiana Figueres, the former Executive Secretary of the United Nations Climate Change secretariat thinks that carbon pricing is something that is not possible in the state of New York, for example, but I ask, Why not? In the initial stages, it is apparent that many companies will oppose a nationwide carbon pricing, but once implemented, it could make America great again, a nation that is looking to its future and investing in emerging technologies instead of being dependent on the past, fossil fuels such as coal that threaten our quality of life and the air we breathe.
By Sierra Choi
It seems clear that Americans have increasingly lost faith in voting structures, as the United States is still employing old voting machines from more than 15 years ago in many states, especially in the battleground states without any paper trail which are vulnerable to manipulation. The recount further revealed the dire state of Michigan's lack of credibility in ascertaining plausible results that will give confidence to the American people that their vote matters.
2016 was a year in which many Americans lost faith in the very fabric that holds together a representative democracy and which many Britons became fractured through the impending dissolution of their collective role in the European Union.
Instead of my usual step-by-step analysis of the domino effect on the global economy and the world at large, I decided to create a visual diary of events using news footage and soundbites which took me a few days to edit. This is a rough compilation of the footage, audio and images I gathered together over the winter break.
click to play video here: The Winter of Our Discontent
Notes: The music is from an Austin, Texas-based group called Balmorhea, in a song aptly called "The Winter" from the album, The Rivers Arms.
By Sierra Choi