Why Capitalism Thrives–and how it self-destructs

Earlier conservative press reports-5

The Week magazine recently reported that large numbers of Chinese millionaires are buying real estate in the U.S., Canada, and other nations with high living standards. At the same time, Chinese workers are working for pitiful wages and terrible working conditions.

A pair of articles from BusinessWeek illustrate what has happened to the U.S. economy. And to think that it happened in just a few years of China’s adoption of capitalism and its American gift of industry.

These articles are from BusinessWeek, December 15, 2011.

Using Propaganda to Stop China’s Strikes

Government and industry search for ways to calm the country’s factory hands

Less than two years after the worker suicides at electronics giant Foxconn and a strike at Honda suppliers in Guangdong province, labor troubles are again roiling China. On Nov. 17 around 7,000 workers at a Taiwanese-owned New Balance supplier in Dongguan protested plans to relocate production to Jiangxi province and cut bonuses. Dozens of workers were injured when police moved in, according to reports and photos posted on the Internet.

Five days later, 1,000 workers halted production to protest overtime rules at a Shenzhen company that, according to its website, supplies Hewlett-Packard. In Shanghai, women workers at Singapore-owned Hi-P International, a supplier for Motorola Mobility and others, struck on Nov. 30 over a planned shift of part of production to Jiangsu province. (Motorola confirms the incident, and says it is not directly involved in working toward a resolution.)

“We are seeing an upsurge in worker activism that exceeds anything since the summer of 2010,” says Geoffrey Crothall, communications director at China Labour Bulletin, an advocacy group in Hong Kong…

Some 180,000 riots, strikes, and protests occurred in 2010, according to Sun Liping, a professor at Beijing’s Tsinghua University. …

On Dec. 1 the government announced the first contraction in manufacturing since 2009. “As the environment goes from bad to worse, a lot of factories want to find a way out,” says Willie Fung, chairman of Hong Kong bra-maker Top Form International. “They want to downsize, shut down, or move somewhere else, and this sparks labor disputes.” A strike at Fung’s Shenzhen factory ended after he agreed to a holiday bonus of $189 each for 500 workers….

The government is expanding the Party-controlled official union—still a largely toothless organization, according to Chang Kai. Wal-Mart, Dell, and Motorola have already let the union in. Policymakers want 80 percent of all companies to have collective bargaining agreements by 2013….

The only sure strategy to stop strikes may be to raise pay. The latest Five-Year Plan aims toincrease the average minimum wage by at least 13 percent a year.Or machines can replace workers. After Hong Kong’s Milo’s Knitwear (International) added new Japanese knitting machines at its Dongguan sweater factory, it reduced line workers from 80 to 6. “All the headaches, the riots—gone,” says Managing Director Willy Lin. “Machines don’t complain about their salaries.”


In China, Culling the Carmaker Herd

The government aims to shut some
manufacturers, but it’s slow going

Almost two decades ago, Western car companies watched uneasily as the Chinese government embarked on a plan to forge a powerful domestic auto industry using technology won through joint ventures with foreigners. Regional governments and companies—a cigarette maker, a liquor distiller, a refrigerator manufacturer—jumped into the market. In one sense, the plan has been a smashing success: China today has more than 70 automakers. But the bottom 55 of those account for just 11 percent of the country’s vehicle sales, according to the China Association of Automobile manufacturers (CAAM). Ten companies haven’t sold a single vehicle this year….

Foreign brands today control 58 percent of the passenger vehicle market, up from 55 percent a year ago. Volkswagen plans to inaugurate a 2 billion yuan ($315 million) plant in 2013 in Xinjiang, the desert region flanking China’s northwest frontier. Japan’s Nissan Motor has a new push to sell cars in inland China. And GM’s November deliveries on the mainland surged 20 percent even as China’s overall car market was nearly flat.

“There will be close-quarter combat between the Chinese and foreign brands,” says Zhu Fushou, president of Dongfeng Motor Group, China’s second-biggest automaker, “as competition gets fiercer and fiercer.”

The first article describes how investors profit mightily, while workers labor with low pay and terrible working conditions, when the national government doesn’t defend interests of workers. The Chinese experience is what has been happening to workers in the U.S. for the past three decades:

• Corporate executives and their investors consider workers as machines and an expense to be minimized. This means that when wages rise in and area, they move somewhere else

• They keep unions out, or, if the pressures for unionism gets too great, they go for a government pseudo-union without teeth.

• They also demand ALL the benefits of technology, robotics and productivity improvements for themselves, and use it everywhere they can to eliminate workers and workers’ share of the success of the corporation.

The second article tells how U.S. and other nations sold out their workers by going to countries like China and literally training them how to do American jobs. Companies like GM, GE, Motorola, etc. didn’t go to China and install old manufacturing units and outdated technologies. They went there with the very latest technology and manufacturing breakthroughs—and taught the Chinese how to use and improve them. Of course, then they told American workers that they needed to compete with Chinese workers making one-tenth as much, and who had more modern equipment.

And it was all to destroy unions and put a lid on rising labor costs—which SHOULD have risen in the U.S. over the years because of higher productivity. But, top corporate executives and their investors wanted it ALL, and didn’t want to share any of it.

Forbes magazine came out with its 2012 investment guide and listed “The 20 new rules of money; how to survive and thrive in 2012.”

The rules included “Ten secrets to staying flush,” which showed readers how they could invest their $1,000,000 into a nice income stream for life. Of course, all their rules began with the simple assumption that you are rich to begin with.

Two articles illustrated some other issues: the phony claim that the federal taxes on the rich are too high, and the conservative love of predatory economics—the kind that benefits the wealthy at the expense of the financially desperate.

From Forbes investment guide for 2012.

Warren Buffett, Meet New York

While Washington debates whether to tax the rich more, some states are doing it.

…Despite all the political hubbub, federal income tax rates for the rich remain at or near historical lows. But in the States, it’s a different-though constantly changing—story. During the recent recession-related state budgets mess, Connecticut, Hawaiim Maryland, New Jersey, New York, North Carolina, Oregon and Washington, D.C. all hit high-income folks with targeted rate hikes, most of them billed as temporary…

The Ultimate Hedge

Here’s how to play a new form of vulture investing through an old business: pawnbrokers.

…Pawnbrokers are seeing waves of homeowners unable to qualify for credit cards, entrepreneurs looking for seed capital and small-business owners struggling to make payroll…
Bring in a television worth $300 and you might get a 30-day loan of $100 at 20% interest per month….

The big profits, of course, come from lending and not from selling TVs or Barcaloungers in pawnshop showrooms. In fact, loan defaults are surprisingly low. The National Pawnbrokers Association says that 80% of all pawn loans are repaid. The gold bull has been good for pawnbrokers.

Two lessons from the above:

First: While representatives of Republicans and conservative Democrats will shout on TV that federal taxes on the wealthy are too high—their most prestigious conservative financial publications occasionally publish the truth. (They have to tell it like it truly is if they are to serve their investors.)

Second: Conservatives always claim that they must make huge amounts of money they invest, because “they are taking risks.” But, as pointed out above, and annual interest rate of 240% covers way too much risk, and simply makes it legal for rich people to take ruthless advantage of poor people.




Forbes magazine is an excellent source of information for America’s wealthiest citizens who want to continue to live like royalty, even in retirement.

Below are five of the ten ways to live a life of luxury by maximizing the gains you realized because of workers’ stagnant or declining wages for the past three decades.

(The other ten ways were more complicated and required much more explanation to get clarity. Those who are actually interested in the investment issues of the article should refer to the original.)

From Forbes magazine, December 5, 2011.

Ten Ways To Get Income In Retirement

…Vanguard’s High-Yield Corporate bond fund pays out 7.3% if you qualify for the lowest-cost shares (minimum investment: $50,000)….

…The Vanguard Long-Term Tax Exempt fund skims off only 0.12% for expenses if you qualify for the cheap shares (minimum investment: $50,000). For any but the very wealthiest investors, a fund makes more sense than individual bonds….

…Annuities come in many varieties, some of them a thicket of complexities and fees. Here we’re looking at a simple and desirable product called the fixed immediate annuity. You put down a lump sum, like $100,000, and get a monthly check, like $615, for life….

…“Covered call” funds write call options against their stock positions, then distribute the option premiums as income to fund investors…. But there is a wrinkle here that allows careful buyers to get a market-beating return. Some closed-end covered-call funds are so out of favor that you can buy them at a discount to net asset value. The Eaton Vance Tax-Managed Global Diversified Equity Income Fund, for example, was recently trading at 85 cents on the dollar. Combine this fund’s 13.3% annual payout with a 15% discount and you have a winning formula. Any dollar you get in your quarterly distribution is a dollar you just bought for 85 cents….

…A master limited partnership like Kinder Morgan Energy Partners or Enterprise Products Partners owns oil and gas pipelines and other energy-handling assets. These shares combine good yields (typically 4% to 6%) with some growth and a nice tax advantage. Distributions are mostly treated as a nontaxable return of capital….

If you just lost your job, or you haven’t been keeping up with inflation lately, you’ll probably not find much help in this article. It’s actually for the Wall Streeters, bankers, investors and money manipulators who caused our economic collapse and who have long since fled the scene with tons of money.

Note that most Americans are not able to use these ways of getting a comfortable retirement. That is, unless you have $50,000 laying around, or lump sums of $100,000, or you’re sophisticated enough to use “covered call” options, or are able to learn where to find nontaxable limited partnerships.



Most people focus on the wrong thing when it comes to the economy. Although the terrible unemployment problem is significant, the decline in overall wages is far more significant.

The fact that only 7% if re-employed workers now have jobs that pay equal or better than their old jobs tells us volumes about the extent to which corporations and their investors have gained total control of the labor market.

Workers have lost all bargaining power, and while incomes of top level corporate executives and investors are skyrocketing, wages are tanking.

From Fortune magazine, December 2, 2011

Three reasons why the job market still stinks

The unemployment rate fell to 8.6% in November, but there’s not much to celebrate.

In November, the unemployment rate fell to 8.6% after hovering at around 9% for most of 2011, the U.S. Labor Department reported. Private employers continued adding jobs at a healthy pace, while the unemployment rate fell to its lowest level since March 2009. Nonfarm payrolls rose by 120,000, with private companies adding 140,000 jobs.

This might sound like good news, given that European officials don’t seem anywhere close to a meaningful remedy for Europe’s debt problems. But, while it might seem like the U.S. (at least for the moment) is shrugging off problems of the euro zone, all is far from well. If you’re reading the government’s report and still aren’t convinced your jobless plight is getting better, here are three possible reasons why:

The jobless have quit their job search.

The unemployment rate doesn’t measure the percentage of the population with a job, it just measures the number of job seekers. As a result, many people who have been unemployed for a while and who have given up looking for work aren’t factored into the rate. Indeed, November’s jobless rate fell partly because more workers got jobs, but it also fell because about 315,000 workers dropped out of the labor force. Even worse, the more than 13 million unemployed have, on average, been jobless for 40.9 weeks – an all-time high.

“It is likely that many long-term unemployed workers are dropping out as their unemployment insurance benefits expire,” according to a report by Moody’s Analytics. “Many of these workers will likely stay out of the job market permanently.”

Those who do find jobs aren’t financially better off.

As New York Times’ Motoko Rich points out, a new Rutgers University study shows that only 7% of those who lost jobs after the financial crisis have returned to or improved upon their previous financial position and lifestyle.

The vast majority in the study’s survey say that have diminished lifestyles, with about 15% saying they have seen drastic reductions in their incomes.

And those with less education saw more job losses during the downturn. Even those who landed a job made significantly less than before the Great Recession.

Government workers are getting the boot.

Employees of local and state governments probably have the least reason to celebrate. Whichever direction the unemployment rate moves seems almost irrelevant for them, as governments grapple to close budget gaps and shed workers. In November, the downward trend continued as the public sector lost 20,000 jobs – 5,000 of which came from the U.S. Post Service.

Not only are workers experiencing “diminished lifestyles, with about 15% saying they have seen drastic reductions in their incomes,” but public service employees are also losing their jobs. When they enter the labor market, they exert further downward pressures on wages.

Unless these trends are reversed, the U.S. is headed for an economic catastrophe.



The following Bloomberg Businessweek article describes why our country is in so much trouble and why the “occupy Wall Streeters” have such a formidable opposition to overcome.

Think of the power and money behind the movement to con Americans into voting against their own best interests.


From Bloomberg Businessweek, December 1, 2011.

Pssst … Wanna Buy a Law?

When a company needs a state bill passed, the
American Legislative Exchange Council can get it done

Paul Weyrich started the council in 1973 with a group of Republican state legislators. Weyrich also founded the Heritage Foundation and coined the phrase “moral majority.” More than 2,000 state lawmakers belong to ALEC; each pays $50 in yearly dues. A look at former members now on the national stage suggests the organization is a farm team for Republicans with ambition.

There are 92 ALEC alumni serving in the U.S. House, 87 of them Republicans. In the Senate, eight Republicans and one Democrat are ALEC alumni, according to information found on ALEC’s website in April that has since been removed.

According to the Center for Media and Democracy, a Madison (Wis.) research group, four sitting governors were members, including John Kasich of Ohio and Scott Walker of Wisconsin. Corporations, think tanks, and trade groups can join ALEC, too. Currently, about 300 are members.

They pay up to $25,000 in yearly dues and can spend more to sponsor the council’s meetings. At ALEC’s 2010 annual meeting in San Diego, three companies—AT&T, pharmaceutical manufacturer Allergan, and cigarette maker Reynolds American —each paid $100,000 to be “president level” sponsors.

Eleven other donors, including Pfizer and the Institute for Legal Reform, the U.S. Chamber of Commerce arm that advocates for jury award limits, wrote checks for $50,000 to become “chairman level” sponsors, according to documents distributed at the meeting that were given to Bloomberg Businessweek….

None of this is illegal. And it’s effective. It allows companies to work directly with legislators from many states, rather than having to lobby in each state individually to get language into a bill. ALEC says its mission is to help state legislators collaborate around the Jeffersonian principles of free markets, limited government, federalism, and individual liberty.

It does this, and something else, too. It offers companies substantial benefits that seem to have little to do with ideology. Corporations drop bills off at one end, and they come out the other, stamped with the imprimatur of a nonprofit, “nonpartisan” group of state legislators. Among other things, ALEC is a bill laundry….

This is but a small fraction of a huge article, but it gives you an inkling of how Republicans, corporations and special interests are gaining control of our nation. Under the guise of “nonpartisan,” they clog national news media with the absurdities of America’s crackpot right-wing.

And note: this didn’t come from Mother Jones of the Progressive Populist. It was a rare, objective news report from Bloomberg Businessweek.


For earlier conservative press reports go to Conservative-press-4.


The biased conservative
financial press

Read what America's five most prestigious financial publications, The Wall Street Journal, Forbes, Fortune, Barron’s and Bloomberg Business Week have been reporting over the years.

If you didn't before, you'll now understand the anti-worker agenda of America's Republicans and conservative Democrats. (more...)

The most Important
Two-Minute Video...

...for election 2020. Voters have been thoroughly conned into believing absurd economic myths. This video was instrumental in convincing even unionized workers into voting for Republicans and against their own best interests.

Republican think tanks are making massive use of this same propaganda technique today: using hafl-truths to tell deliberate lies. (more...)

Republicans and blue dog Democrats have abandoned traditional U.S. values...

...for those of countries like Mexico, China and India. Globalization (unregulated international trade) is a deliberate strategy to give corporations the power to pit nations against each other.

It’s worked beautifully up to now—for investors and corporate executives—but it’s becoming a disaster for everyone else. (more...)