T
The fiscal slide in North America began when unions be-
came so powerful they literally started feeding upon their
own.
Today, one thing is becoming clear to anyone with a fin-
ger on the pulse of North America’s economy. It is that
a shift has taken place across the world’s financial land-
scape. Gone are the days of investors playing by the rules
set down in the early ’70s. These principles that allowed
North America to prosper for decades have seen its grad-
ual decline during the last economic downturn.
China, however, seems to have not only taken the lead; it
has rewritten the rules to suit its newfound prosperity. In
its slow but deliberate climb up the ladder to becoming a
new world superpower, it has taken no prisoners.
If we look at commerce from a historical perspective, the
U.S first became a superpower towards the end of World
War II. Its brilliant strategy was enacting a bill passed by
Congress called the Lend Lease Act. This arrangement
supplied the allies with munitions, air, sea and land ve-
hicles as well as raw materials needed to engage the en-
emy. In simpler terms; Lend Lease essentially indebted
England and many allied countries for decades.
When the smoke cleared, Britain was up to its eyes in
debt while the North American economy flourished
throughout most of the 1950s. Canada certainly benefit-
ed as well, through its resources being sold to manufac-
turers feeding the war machine.
When the 1970’s emerged, there began a very grad-
ual change; one that’s effects are still felt in the pres-
ent.
China plays by its own set of rules. It essentially un-
dercuts western industry through lower prices, as well as
higher efficiency.
RUS S I AN
BRI D E S®
The result was a massive restructuring, funded by federal
bailouts. GM shed its manufacturing model at the cost of
three brands. Factories were either revamped or closed,
with thousands of workers thrust into the unemployment
lines.
Within all this monetary chaos, GM found its salvation
by relocating. The main benefactors were South Ameri-
ca and Mexico. This move took advantage of a workforce
that was not only less expensive, there were no unions.
This saved GM while enabling their factories to work em-
ployees much harder.
In contrast, China already ran their operations this way
So while America struggled to keep up, China simply
opened up its markets to expansion; assigning its great-
est resource, the workforce, to ramp up world exports.
China also has a very important resource; rare earth
minerals. China has 97% of the world’s supply. What this
...WHILE AMERICA STRUGGLED
TO KEEP UP, CHINA SIMPLY
OPENED UP ITS MARKETS TO
EXPANSION; ASSIGNING ITS
GREATEST RESOURCE, THE
WORKFORCE, TO RAMP UP
WORLD EXPORTS
It was in that decade that President Nixon intro-
duced the Economic Stabilization Act. His intent was
to boost employment while ensuring America was
economically attractive. This one piece of legislation
yielded a platform that resulted in a slow spiral into
the turbulent financial environment that exists to-
day.
H O T
Take GM. It had, through union agreements with its work-
ers, an obligation to continue paying for a workforce sect
where jobs no longer existed. Operations became so
costly that keeping financially solvent became a game of
Peter robbing Paul.
-
means is that China can set the price; as well as deny
supply. Without this commodity, most of the electronics
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