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Does Mercantilism Still Exist in China and the USA Today?

Updated on July 10, 2013

The Evil of State Sponsored Mercantilism. Watch Out Middle Class! You Are Being Robbed!

I wrote this in reply to an article critical of Chinese mercantilism:

"What makes you all think that a change would help the US consumer? My assumption is the US consumer is the only serious consumer in the world. Therefore, my view is that it is sour grapes to complain about the Chinese currency.

If the Yuan appreciates, it will be more expensive for American consumers who are laboring under a massively high cost of living still, with gasoline and other commodities and products artificially high.

If my assumption is correct, that the only consumer who matters is the US consumer, then it is necessary for the US to allow the dollar to rise. Interest rates must go up and the dollar must strengthen. We need to have less debt if we are going to be Japan.

The author talks about Chinese mercantilism. But who is more of a mercantilist than Wall Street, Goldman Sachs, JPM, etc. They think the US can bail herself out with exports to China. I doubt it. The Chinese save massively and over 1/2 of GDP is saved.

Cavuto and Schumer want one thing, for the Chinese to be up to their eyeballs in credit debt just like us! At least Chinese mercantilism produces things!"

My point is that the administration truly believes that China's consumer is the hope of the US recovery and that our export of credit debt to China will become the way Wall Street makes money like the go go days.

I don't believe it. So I think that a lot of this talk about the US consumer and recovery is not the key issue anyway. The key issue is that Wall Street has a lot of hot money that flowed into China recently, hoping for big bucks quickly. This didn't pan out as Obama didn't help ole Cavuto and Schumer's Wall Street pals out much as the Chinese didn't budge regarding their currency peg to the dollar.

While Wall Street politicians like Schumer and Wall Street commentators, like Cavuto claim a populist position versus the Chinese, it is all a diversion, in my opinion. They are likely just mad that the hot money will up and leave China with Wall Street investors disappointed like it left in early 2009!

My point in this article is a big shame on you to these guys like Schumer who don't care about US consumers, Chinese consumers, or anybody but their Wall Street buddies. We would be better off as a nation if we just burned the hot money, stopped the casino on Wall Street, and tried to rebalance the cost of living so that main street has a chance.

Main street is not happy with Wall Street, and only corrupt people would attempt to divert this anger to China. If the Chinese had real white hot consumers like the US did, then perhaps this anti Chinese Neo Mercantilism would be a legitimate argument by Cavuto and Schumer, to blame China for our woes. But since I don't believe that they have a consumer driven society at all (with consumption merely 30 percent of GDP), I think this argument against the Chinese is just a bunch of propaganda. What are the Chinese supposed to do if their consumers don't spend? They rely on exporting and I don't believe it is a neo mercantilism because the Chinese buy our treasury debt. They have an interest in the US surviving and buying their stuff!

Certainly the American government cannot be accused of classic mercantilism, ie. the shunning of imports as a government only seeks exports. However, the US government is engaged in a new form of export, credit debt. American banks would love to offer credit cards to the Chinese. The US is now desperate to bail herself out of the economic jam of the ponzi housing meltdown by exports. As I have said above, this is driven by the desire to weaken the dollar and impoverish mainstreet. The middle class will be sacrificed in this desire to forget the US consumer and focus on the exports and the world consumer. This effort on the part of the US is detrimental to the middle class.The US government has bank favorites. That is a form of mercantilism to not allow corporations to fail but rather put it on the taxpayer. The is a Neo Mercantilism.

The solution: Pay Americans more with less going to corporate profits and CEO salaries, and help them get their balance sheets in order. Companies are flush with cash. They need to pay workers more! The US needs a jubilee or some sort of forgiveness of debt, or we will suffer a weaker dollar. You can count on it! Yes, forgiveness of debt would hurt in the short run, but then the US consumer could come back and buy the excess of world goods. I am not advocating a return to unbridled credit consumption, but a real improvement in stagnant wages that would bring a consumer driven economy back.

Great Teaching About Mercantilism

Web of Debt



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    • bgamall profile imageAUTHOR

      Gary Anderson 

      10 years ago from Las Vegas, Nevada

      If everything is a certain price why did Henry Ford pay such good wages to the assembly workers for his cars? I have already said elsewhere that all markets are manipulated. Therefore, all markets are gouging the average guy, including the employment market. It is all about leverage. The corporations have the leverage. If there is a glut of oil, just refine less. If there is a glut of real estate, just pull the foreclosed homes off the market. If there is a glut of stocks just churn them in trades, driving them up on low volume.

      The consumer of the US is hurting and will take the world with him. Either fix him or the world will be in depression.

      Pay him more. If the corporations, who are flush with cash and not giving you any money anyway because shareholders have no rights, don't want to pay people more then force them to, if they have over a certain amount of employees.

      Otherwise, we are going to be in this recession when your grandchildren grow up. I guarantee it.

    • eovery profile image


      10 years ago from MIddle of the Boondocks of Iowa

      bgamail. How do you pay Americans more and less to CEO's and share holders. Everything is worth a certain price, anything done to try to artificially change this screws up everything, and nothing works. Americans are the richest they have ever been, and they want more.

      I rely as much on my investments as I do my work. I work to make a living, but I invest so I can retire. I need corporate profits to guarantee that I have a job. I also need corporate profits to earn money on the money I do have.

      A lot of corporations ROI are under 10% and and many or less than 5%. They can shutdown the corporation and invest their money's in other places and make more money. I am sure you know more about this than I do, but it seems you may be over looking the basics. Get back to basics. Corporation need employees. Employees need job. If the employee do not like the wage the corporation pays, he/she needs to improve him/herself to make him/herself more valuable to that company, or find another job which pays more. Get to the basics. We relying too much on unions and the government and are not doing it ourselves, any more.

      People drop out of school and do not go to college, well they may not make as much money as one who betters him/herself. Everyone has the opportunity to better one's self and make a better wage. It is not government or anyone else's responsibility to see that that person makes more money. It is his/her own responsibility.

      Keep on hubbing!

    • bgamall profile imageAUTHOR

      Gary Anderson 

      10 years ago from Las Vegas, Nevada

      Thanks. It is interesting that countries always seek a mercantile solution to their economic problems. That could end up biting China as exports to the US falter, and it could bite the US, as Chinese don't spend a lot of their income as consumers.

    • Hello, hello, profile image

      Hello, hello, 

      10 years ago from London, UK

      Thank you for your great hub and you have an interesting point there.


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