America the Beautiful

The Chinese name for the U.S. is mei guo. It means beautiful country. This means Americans are mei guo ren, beautiful people. The Chinese language is written as ideograms, or pictures from thoughts, so it has no capital letters, no verb tenses. It didn’t even have punctuation until recent times.

Ren means people, which is why although the currency of the Middle Kingdom is known as the Yuan, the banknotes say Renminbi. The People’s Currency. The whole financial system in China is pretty amazing. When I first went in 1998, I remember security at the airport of the northern city of Qingdao being mystified with some coins I had in my pocket – at that time coins were rarely seen in China. After all, this is the country that invented paper money, imposed on the people by the brutal Mongolian emperors. Marco Polo, who pops up occasionally in The India Road, reports on the wondrous idea of accepting a valueless commodity as valuable, guaranteed by the iron fist of Kublai Khan.

Chinese paper money from 1960.

My experience with banks in zhonguo is that the bureaucracy is of legendary proportions. Once I had to fill out a form in western alphabet. The clerk deemed it illegible, and my Chinese friend, whose western script is somewhat laborious, had to fill out a new one in English which the lady behind the counter was able to read perfectly. For the common ren China is very much a  cash economy. The highest denomination that circulates is the hundred yuan bill, about fifteen bucks. Last time I went to China it was only ten bucks or so. That means Chinese exports are now less competitive, but that’s in good measure because of the fall in the greenback.

So it’s not unusual to see people maneuvering large packets of hundred yuan notes, although like everywhere else credit cards are more and more prevalent. If we didn’t have paper money, and its modern day equivalent, plastic money, life would be much more laborious but we wouldn’t be wallowing in a total financial mess. You can’t print gold when you run out. That’s what makes a commodity valuable: scarcity.

America is trying to spend its way out of trouble, Europe is trying to save its way out of trouble. In Europe, the UK has scrapped its last aircraft carrier and intends to reduce the public sector by half a million people. Spain, Portugal, Ireland, and others are going through the mill. Economics is anything but an exact science, and has a very limited ability to forecast. Part of the problem, as George Soros wrote, is that the lab rats change the experiment. In a medical experiment you can test combinations of drugs, placebos, etc and look for statistically significant changes. Of course statistics don’t prove anything, contrary to what is normally heard from politicians and football pundits, but they indicate a trend.

In economics and in social sciences, given we are the lab rats, everyone decides to behave irrationally and go out and buy all the sugar in the stores, because others decided it was best to stock up on sugar. The crowds outside banks demanding to get their (paper) cash is another good example. Or in an extreme, Germans wandering round with wheelbarrows full of marks during the Weimar Republic. The Reichsbank in 1923 issued a one hundred trillion mark banknote. Less than one hundred years ago. How feeble our memories are, and in such contrast to our arrogance.

Busier than a one-armed paperhanger: the German Reichsmark, an attractive wallpaper design. I have retained the original picture name from Wikipedia. My German language skills are poor, but I believe it means: up shit creek without a paddle.

The US economy is recovering in segments, but not resolving the big issue of unemployment. It doesn’t surprise me at all. A couple of days ago we saw the best numbers ever from Apple Computer Inc. If we want to buy IPads, IPhones, and soon IBrains at the present prices, they can’t be made in the States, which has a per capita GDP of over 45,000 dollars per year. China’s is expected to reach 5000 dollars by 2015. Roughly ten percent, in five years time!

Sustainable employment will return to western countries when we are prepared to pay costs that sustain our own population, rather than that of another country. Of course there is a balance in this, but it’s pretty obvious that giving us what we can’t afford because it’s made cheap elsewhere is going to increase our material happiness, our foreign debt, and our unemployment. Not necessarily in that order.


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