Olympic lament

The biggest loser in Beijing? American workers.

Illustration By robert armstrong

I really am starting to miss the Cold War. Back when the Berlin Wall was standing, you knew what was what. Communists vs. capitalists, both sides armed to the teeth with thermonuclear weapons. Duck and cover, boys and girls. Thus through the doctrine of mutually assured destruction, peace was attained. Détente, they called it.

In the early 1970s, this clash of the titans played out on the world stage every four years, at the Olympics. You knew what was what there, too. The Soviets would field a strong, state-subsidized team comprised of the whitest dudes on the planet. The unibrowed East Germans served as a test bed for exotic, dangerous performance-enhancing drugs. Tiny Cuba kicked ass in boxing. No one sweated the backward Chinese. The United States, the last bastion of freedom and democracy, fielded a racially diverse team of amateur athletes, who kicked ass most of the time.

At least, that was the narrative presented to us back in the days when the late Jim McKay anchored Olympic television broadcasts for ABC. The thrill of victory. The agony of defeat. Us vs. them. Keep it simple, stupid. It worked, because the competition was good, and both the Americans and the Soviets understood they were locked in a bitter ideological struggle.

What a difference three decades makes. From the extravagant beginning of open ceremonies in Beijing three weeks ago to the explosive grand finale last Sunday evening, this round of the Olympics was about one thing: China’s arrival on the world stage, and America’s pending exit.

And to think we did it to ourselves. But like Yang Peiyi, the sweet-singing 7-year-old who was replaced with a lip-syncher in the opening ceremonies because Chinese officials deemed she wasn’t attractive enough, the complicity of global financiers and the U.S. government in our economic destruction remains hidden from the public.

Author Pat Choate goes to great lengths to lift this veil in his latest book, Dangerous Business: The Risks of Globalization for America. Choate was Ross Perot’s vice-presidential running mate in 1996 and is deeply familiar with “the giant sucking sound” of jobs flowing to Mexico that the diminutive Texan correctly predicted would occur if Congress approved the North American Free Trade Agreement. As it turns out, the trade policies the United States has agreed to as a member of the World Trade Organization have had a far more devastating effect.

Choate argues that China’s melding of capitalism and communism is nothing more than a return to the days of mercantilism, the dominant economic theory in the West from 1600 to 1800. In that system, countries artificially kept the price of their exports low and used tariffs to price imports higher than comparable goods available domestically. Thus a country could hold an “absolute advantage” in trade, to the exclusion of all other countries.

In the late 19th century, Adam Smith—the classical economist most often cited by today’s rabid “free traders”—and later David Ricardo, developed the theory of comparative advantage, in which one country could trade goods with another country for the mutual benefit of both countries. At its theoretic optimum, any given country in this scheme would maintain an equal balance of trade, because total exports would equal total imports.

Every U.S. president since Ronald Reagan has hammered on the free-trade anvil, culminating during the administrations of George H.W. Bush and Bill Clinton with the formation of the World Trade Organization. But someone forgot to clue in the American public on at least one key fact: Free trade only works if the other countries play by the rules, and China is most decidedly not playing by the rules. Never has.

Choate maintains that China holds an absolute advantage in the one area that matters most: price. Chinese workers on average make 18 percent of what U.S. workers earn, and there are virtually no health and safety regulations. China ignores intellectual-property rights and is the world leader in piracy and counterfeiting. Pollution controls are nonexistent. And to top it off, the Communist Chinese government heavily subsidizes key industries such as high technology, offering sweetheart deals to American companies such as Intel that choose to relocate their operations in China.

As demonstrated by our own staggering trade deficit with China—$256 billion in 2007—there is simply no way for American workers to compete in the current scheme. Not that it matters to global corporations with no national allegiances, or their well-placed enablers in both the Republican and Democratic parties.

Unfortunately, Choate doesn’t see an easy way out of this. China isn’t the only country not playing by the rules. Most of the Asian Tigers—Taiwan, South Korea, Hong Kong and Singapore—enjoy similar trade advantages, as do members of the European Union. American politicians pay lip service to enforcing the WTO regulations, even as their corporate cronies exploit the total lack of enforcement.

It all made for some mighty fine opening and closing ceremonies at the recently concluded Olympics, where Chinese and U.S. athletes both took home their share of the gold. Typically absent from the podium was the American worker, who once again got the shaft.