Who is Getting Shanghaied in Trade?

11/15/23 • 10 min

Trade with China makes Americans richer, but China is likely using the profits from their exports to build a military that the US will fight someday. In the 19th century, if a sailor got too drunk in a port city, he might wake up the next day on a ship steaming toward Shanghai. The noun became a verb, and he had been “Shanghaied,” but in the current US-China trade relationship, who is getting Shanghaied? Trade with China makes us richer, but they might be using those profits to build a military that we will fight someday. I’ve often said, you won’t find a one-armed economist because we will always say, “On the other hand.” Trade with China reflects this conflict. Trade makes us richer, but it also makes China richer. What do we do? I think it would be difficult to find a scripture that encouraged market discrimination against a people group, just because they are from another country. That’s where Christianity and Economics support each other. They BOTH call for open markets and trade, among all people groups and all countries. Trade is Good Of course, trade is good. The entire Adam Smith economic legacy might be neatly tied up in a two-step process: First, increase production via specialization, then trade your surplus. Trade is Good is one of the Ten Commandments of Economics that I found with my co-author Sergiy Saydometov, when we wrote the book titled Biblical Economic Policy. If we didn’t trade, we would be very poor. I’m pretty good at giving economics lectures and writing, I’m an average farmer, a lousy tailor, and even a worse auto mechanic. I couldn’t make a car if my life depended on it. Instead, I specialize in writing and speaking, and I trade for food, clothes, and cars. That little economic system works at the national level too. This is still Adam Smith territory: he noticed that the French were better at making wine, but the Scots were better at making Whiskey. That’s why some wines, like Champagne and Bordeaux, are named for the region where they are made. I’ll presume you know why they call it “Scotch Whiskey.” In the first nine months of this year, China exported to us $210 billion more in goods than we exported to them. That’s the FRONT part of the equation that they explain to you on CNN and Fox News. The back part of the equation is a little more complex, so you only find that in the Wall Street Journal and The Economist. That’s where you find this Chinese businessman holding a million US dollars and trying to exchange it for something. He ends up buying a shopping mall in Cincinnati, or a wheat farm in Kansas because that’s where the US dollar is honored. That back side of the equation is where you hear people complain “The Chinese will own the US someday.” That’s chicken little economics. I heard the same thing about the Japanese in the 1990’s. If the Chinese buy $210 billion worth of real estate in the US every year, there really is not even an ESTIMATE of how long it would take them to own a meaningful percentage of US assets. Recently, there have been reports that they are buying land near military installations. That’s concerning. Trading Avoids War There’s something called the Golden Arches theory of Conflict Prevention that goes something like this “No two countries that both have a McDonald's have ever fought a war against each other.” It was first proposed by Thomas Friedman in a New York Times column, then became part of his book titled The Lexus and the Olive Tree, which I read years ago. Maybe it was disproven by the UK’s struggle with Argentina over the Falklands, and the current Russian war on Ukraine, but the concept is still valid. Trading avoids war. Part of the reason that Imperial Japan attacked the US was because the US stopped trading oil and steel with them. OK, the US had good reason. They were responding to Japan’s atrocious treatment of the Chinese, just across the Japanese border. That’s interesting to think about: My podcast today,

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#192 School Choice

School Choice: The rich already have the choice to send their children to any school they want. The poor should have the same choice. The rich should have a choice that the poor do not have. Really?! Think about it: The rich already HAVE school choice; they can send their kids to any expensive school they choose, but poor kids don’t have that choice. Shouldn’t we give them that choice? We live in Texas, where our legislature is trying to decide what to do about school vouchers. To a Christian Economist, this is pretty simple. As an economist, I think people should have the freedom to send their children to a school of their choice. As a Christian, it certainly seems like a person should be free to choose Christian education over secular education. So who disagrees with that? People who want power. They want power, not only over your decision but over the dollars you pay in taxes. First, they forcefully extract tax dollars from you, then when you want to direct the use of those dollars, they want to spend them on two monopoly providers. More on that in a minute. The Poor Will Always Be With You Jesus said that, because He knew we would not be able to keep the Biblical commandments to run a Biblical Economy. The school voucher issue is simply another example of it. People should be as free as possible to choose religious education over secular education. If people were better educated, production would increase, and our country would be richer. The productivity equation, after all, is what determines a country’s wealth. “Know the truth, and the truth shall make you free.” That’s from John 8:32, and it follows after a pretty interesting scripture as well. The preceding verse reads, “If you hold to my teaching, you are really my disciples.” Oh, so teaching is pretty important to Jesus. So it’s through LEARNING that we find the truth. I don’t have the time today to deal with the philosophy of one truth or multiple truths, but don’t miss the point: The scripture clearly says THE truth shall make you free, the not truths, plural. In podcast #163 Who Owns Education?), I quoted Oprah Winfrey saying, “Education is the key to unlocking the world, a passport to freedom.” Okay, so we’ve determined that people should have the freedom about how to unlock this key to freedom. I’ve often said, the intersection of Christianity and Economics is freedom. I guess that’s poignantly true in this podcast. Monopolies There are two monopolies at work here: The first one is quite obvious. Public schools don’t like to compete with private schools. They’re happiest when they have a monopoly on education in your town. I’m an academic, and one of the basic ideas is that no one knows it all. That’s why most academics study at various universities and then join the faculty at another university where they didn’t study. I’ve attended ten universities. But why? Why didn’t I get all my education at the same place? Because, no one and nothing, not even a University, has all the answers. You have to study broadly to gain different views of the world. When I started teaching Economics, I would teach Macro one semester, then Micro the next. My friend and co-author Sergiy Saydometov did the same thing. But that meant they either had two classes with me and none with Sergiy, or the opposite. But then, I camped on Macro, and he camped on Micro, specifically so that our students at Dallas Baptist University were forced to hear economic views from two different angles. That’s how you build a market for information. In contrast to the previously cited market where the intellectual capital of various people is poured in, the fallen nature always wants to reduce that market to a monopoly, and that’s what we have in lots of public education today. The school superintendent who complains about resources being moved from their monopoly to a competitive environment is wearing shoes that were bought in a competitive environment...

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#194 Thankful for Private Property

The Pilgrims tried socialism and it failed. Then private property led to so much prosperity that they hosted the first Thanksgiving. If you have enough to eat this Thanksgiving, you should be thankful for the private property system that produced the food. We live in the most prosperous, fruitful time in human history. Let’s take a brief look at how we got here. In October of 1621, Plymouth Colony governor William Bradford called a three-day festival, inviting the ninety Indians to join the 50 Pilgrims. This feast, which included times of thanks to God as well as athletic competitions and food and fellowship, is commonly celebrated as the first Thanksgiving festival in America. So, if you celebrate it with football games and food with your neighbors, you are re-enacting this cherished Christian tradition, but who were these Pilgrims, and how did they get here? Fight or Flight That’s the basic idea from psychology that our minds are built to either change ideas we disagree with, or run from them. It’s a pretty big discussion among Christians in the United States today. Or, at least, it SHOULD be. I delve into the question in podcast #72 titled Two Worlds. Being in the world, but not of the world is becoming more difficult in post modernity. The Pilgrims response was flight, as explained by David Barton at WallBuilders: The Pilgrims are well known today for their association with the first Thanksgiving festival. The Pilgrims were Separatists — a set of Protestants who felt that they would be unable to reform the Church of England and therefore they chose “flight” over “fight.” They went to Holland and then eventually to America. But the other group who came later, were Puritans. They were “fighters” who believed they could reform the Church of England. It turned out that they were wrong, and following severe persecution, some 20,000 followed the Pilgrims to America. The Pilgrims had obtained a land grant for Virginia and set sail in the Mayflower on September 6, 1620. But after a rough ocean crossing, they landed 200 miles north of Virginia in what became known as Massachusetts. On November 11, 1620, they finally dropped anchor and came ashore. Grateful or Entitled Of the hundreds of books and articles I’ve read and the hundreds of speeches I’ve heard, the one that makes the most impact on today’s subject is a little five-minute video by Dennis Prager, titled The Key to Unhappiness. He says there are two groups of people: Those who are grateful and those who are entitled. The grateful will always be happy, the entitled will never be happy. And here’s the strange part: Dennis is a Jew, who does not believe Jesus died for him. Think about it: A Jew is telling a Christian that HE should be grateful. Kinda backward, isn’t it? I’m the one who should be telling HIM to be grateful. Jesus had to die for your sins because there’s no such thing as a free lunch. Somebody had to pay. And it wasn’t you. That’s why Christians are grateful, and why we celebrate Thanksgiving. We have a lot to be grateful for. You’re welcome to feel sorry for atheists during this season. They have no one to be grateful TO. I don’t know how you can be grateful FOR, without being grateful TO. Oh, then the non-believer has to suffer through Christmas, and not celebrate the birth of Christ. You know, for all we complain about the difficulty of being a Christian, this time of year, it’s quite a blessing. Our grandkids sometimes tell each other, “You get what you get, and you don’t throw a fit.” Actually, that’s a pretty good Christian economic philosophy. Be happy for what you have. After all, being happy is not having what you want, it’s wanting what you have. In our book Biblical Economic Policy, Sergiy Saydometov and I mention this concept as one of the Ten Commandments of Economics, which we borrowed from the list by Moses. It’s #4 for us, and it’s called “Don’t Covet.” If you Don’t Work