In the US, when I mention that I was going to China, I was liable to hear a flood of complaints. China manipulates its currency to make its goods artificially cheap. Americans are being forced to compete with cheap Chinese labor who live on practically nothing. There are no labor and environmental standards.
That last isn't quite true, but it's certainly different from the United States, and it's hard to argue with the former two arguments: China does manipulate its exchange rate to subsidize exports to the US; and its labor is very cheap.
Both of those factors, however, are changing. The endless acquisition of US currency is unsustainable. The sterilization transactions required to keep their foreign exchange operations from turning into inflation have left the banking system positively gorged with low-interest government bonds; and now that the sterilization has eased, the inflation is showing up anyway. The current official figures are 4.25%, and a bank economist we spoke to yesterday expects something over 5% in the near future.
The wages, too, are starting to rise. Anecdotally, we're hearing reports of labor costs jumping 15-30% in major urban areas like Beijing and Shanghai. Importing low-wage workers from distant farms and using the labor cost advantage to dramatically undercut competitors is a strategy that has limits. To see why, look at the map I posted the other day when I wrote about high speed rail:
China's cities cluster very tightly around good coastal ports, and the Yangtze (that horizontal line in the middle). I'd argue Shanghai and Beijing are near, as the traffic is close to Manhattan levels; if you can't move people or goods, you can't grow much bigger. As those other major cities start hitting the limits to their growth, the cost of living will rise sharply in these cities, and even unskilled labor willing to work for poverty wages will cost enough to make large classes of goods, like textiles, mostly unprofitable.
There's a lot of talk about moving further west, where there is untapped land and cities can essentially be built in the middle of nowhere to house new people and industries. Massive freight rail and port upgrades are underway that will supposedly allow goods to be moved from new growth areas in the hinterlands.
But one person we talked to yesterday, who specializes in helping American companies break into China, said simply, "If you're in an export industry, you want to be next to the port." Water is the cheapest way to transport goods, and switching between transport modes always adds costs and delays. If you can just put something on a boat and keep it there, this will always be preferable to driving it to the railhead, loading it into the container, and then reloading that container onto a ship.
Moreover, there is, as someone else told us, "considerable unrest" in the west. Companies do not like to locate where local riots might disrupt their supply chain.
That means that for China to remain competitive, it is going to have to move rapidly up the value chain. I'm pretty sure they can and will do this, which means that competition from China will remain. But it won't be the same kind of competition. It will be less about low price, and more about value added. For many American companies, this may be even harder to face. But for American (and Chinese) consumers, it will ultimately be a huge boon.
“Here is what I would like for you to know: In America, it is traditional to destroy the black body—it is heritage.”
Last Sunday the host of a popular news show asked me what it meant to lose my body. The host was broadcasting from Washington, D.C., and I was seated in a remote studio on the far west side of Manhattan. A satellite closed the miles between us, but no machinery could close the gap between her world and the world for which I had been summoned to speak. When the host asked me about my body, her face faded from the screen, and was replaced by a scroll of words, written by me earlier that week.
The host read these words for the audience, and when she finished she turned to the subject of my body, although she did not mention it specifically. But by now I am accustomed to intelligent people asking about the condition of my body without realizing the nature of their request. Specifically, the host wished to know why I felt that white America’s progress, or rather the progress of those Americans who believe that they are white, was built on looting and violence. Hearing this, I felt an old and indistinct sadness well up in me. The answer to this question is the record of the believers themselves. The answer is American history.
In 1992, the neuroscientist Richard Davidson got a challenge from the Dalai Lama. By that point, he’d spent his career asking why people respond to, in his words, “life’s slings and arrows” in different ways. Why are some people more resilient than others in the face of tragedy? And is resilience something you can gain through practice?
The Dalai Lama had a different question for Davidson when he visited the Tibetan Buddhist spiritual leader at his residence in Dharamsala, India. “He said: ‘You’ve been using the tools of modern neuroscience to study depression, and anxiety, and fear. Why can’t you use those same tools to study kindness and compassion?’ … I did not have a very good answer. I said it was hard.”
In Sunday’s referendum, voters firmly rejected Europe’s plan to bail out the country’s economy. What’s next?
Updated on July 5, 2015 4:57 pm
On Sunday, Greek citizens took to the polls in a controversial referendum asking them whether they support a plan calling for continued economic austerity in exchange for debt relief. Their answer—with more than 70 percent of the votes counted—was a resounding “no.”The outcome means that next steps for the nation, which has fallen into arrears with the IMF and imposed capital controls to prevent a run on the banks, is largely uncertain. According to reports from Reuters, the country may next attempt to secure financing by asking for more emergency funding from the European Central Bank.
The referendum—which had asked Greeks to vote “yes” or “no” on a proposal from Eurogroup leaders to extend financing to the deeply indebted country— was called for by Greek Prime Minister Alexis Tsipras amid meetings of Eurozone leaders trying to come up with a deal to allow the country to avoid default. The call for the referendum effectively ended those discussions.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
A new book by the evolutionary biologist Jerry Coyne tackles arguments that the two institutions are compatible.
In May 1988, a 13-year-old girl named Ashley King was admitted to Phoenix Children’s Hospital by court order. She had a tumor on her leg—an osteogenic sarcoma—that, writes Jerry Coyne in his book Faith Versus Fact, was “larger than a basketball,” and was causing her leg to decay while her body started to shut down. Ashley’s Christian Scientist parents, however, refused to allow doctors permission to amputate, and instead moved their daughter to a Christian Science sanatorium, where, in accordance with the tenets of their faith, “there was no medical care, not even pain medication.” Ashley’s mother and father arranged a collective pray-in to help her recover—to no avail. Three weeks later, she died.
Female athletes have historically received very little attention from activists and advocates for gender equality. Why?
When I told my friends and family I’d be going to Brazil for the World Cup last year, they looked at me like I’d just won the lottery. In a sense, I had; I’d entered a lottery just to be able to purchase tickets. In Recife, I attended games at a brand-new stadium with a bright-green grass pitch, along with 40,000 other soccer fans from around the world. For months leading up to the event I saw news coverage on TV, in newspapers, and in magazines hyping Team USA, even though they had a virtually nonexistent chance of victory. By the time I left for Brazil, friends who I never knew to be soccer fans were telling me who their favorite players were, jealous that I would see “our boys” play against the tournament favorites, Germany.
For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?
1. Youngstown, U.S.A.
The end of work is still just a futuristic concept for most of the United States, but it is something like a moment in history for Youngstown, Ohio, one its residents can cite with precision: September 19, 1977.
For much of the 20th century, Youngstown’s steel mills delivered such great prosperity that the city was a model of the American dream, boasting a median income and a homeownership rate that were among the nation’s highest. But as manufacturing shifted abroad after World War II, Youngstown steel suffered, and on that gray September afternoon in 1977, Youngstown Sheet and Tube announced the shuttering of its Campbell Works mill. Within five years, the city lost 50,000 jobs and $1.3 billion in manufacturing wages. The effect was so severe that a term was coined to describe the fallout: regional depression.
Defining common cultural literacy for an increasingly diverse nation.
Is the culture war over?
That seems an absurd question. This is an age when Confederate monuments still stand; when white-privilege denialism is surging on social media; when legislators and educators in Arizona and Texas propose banning ethnic studies in public schools and assign textbooks euphemizing the slave trade; when fear of Hispanic and Asian immigrants remains strong enough to prevent immigration reform in Congress; when the simple assertion that #BlackLivesMatter cannot be accepted by all but is instead contested petulantly by many non-blacks as divisive, even discriminatory.
And that’s looking only at race. Add gender, guns, gays, and God to the mix and the culture war seems to be raging along quite nicely.
As the world frets over Greece, a separate crisis looms in China.
This summer has not been calm for the global economy. In Europe, a Greek referendum this Sunday may determine whether the country will remain in the eurozone. In North America, meanwhile, the governor of Puerto Rico claimed last week that the island would be unable to pay off its debts, raising unsettling questions about the health of American municipal bonds.
But the season’s biggest economic crisis may be occurring in Asia, where shares in China’s two major stock exchanges have nosedived in the past three weeks. Since June 12, the Shanghai stock exchange has lost 24 percent of its value, while the damage in the southern city of Shenzhen has been even greater at 30 percent. The tumble has already wiped out more than $2.4 trillion in wealth—a figure roughly 10 times the size of Greece’s economy.
People labeled “smart” at a young age don’t deal well with being wrong. Life grows stagnant.
At whatever agesmart people develop the idea that they are smart, they also tend to develop vulnerability around relinquishing that label. So the difference between telling a kid “You did a great job” and “You are smart” isn’t subtle. That is, at least, according to one growing movement in education and parenting that advocates for retirement of “the S word.”
The idea is that when we praise kids for being smart, those kids think: Oh good, I'm smart. And then later, when those kids mess up, which they will, they think: Oh no, I'm not smart after all. People will think I’m not smart after all. And that’s the worst. That’s a risk to avoid, they learn.“Smart” kids stand to become especially averse to making mistakes, which are critical to learning and succeeding.