Ru Zi Ke Jiao

Having invested 6+ years of my life trying to build bridges between China and America, it’s more than a little distressing to hear prominent members from both countries talking of war, even if it is ‘just’ a trade war.

If you’re interested in the latest salvos, you can start here. Or just use your favorite search engine and type in America China War.

It doesn’t have to be this way. But unless OUR future leaders – and by this, I mean YOU! – stand up now, it’s probably going to be an ugly epoch.

Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!

BusinessWeek has an eye-opening article on how America’s best business school graduates are, upon graduation, fleeing America and rushing towards Asia.

Here are the two money quotes:

“I can’t get out of my head that two-thirds of Silicon Valley companies were started by non-U.S. citizens,” says Manpower CEO Joerres. What if, after Stanford University, Google co-founder Sergey Brin had returned to his birth country of Russia? What if James Tsai is about to do the Next Big Thing — but in his dad’s old country in Beijing?”

“The best and the brightest are leaving,” says the Rotman School’s Florida. “As a country, the U.S. has never confronted this before.”

NASH: I’ve written many times before about the secret to America’s success. It is a formula that any nation can copy. The richness that diversity brings simply can’t be replicated without that diversity.

One more thing, you’ll notice the caption under the Statue of Liberty. Well, that’s the verse that is inscribed in her base. Often times the “poor, tired and wretched masses” have more to offer than we realize.

From the N.Y. Post’s article China’s Debt Bomb:

“Last March, the Pentagon held its first-ever economic-warfare war game, with China as the putative opponent and with economists and bankers (including from UBS) helping out.”

“Details of what unfolded are still classified. However, sources told Fox Business News that the scenario played out as planned. That was the good news.”

“The bad news is that China won.”

NASH: The world has entered another MAD (as in Mutually Assured Destruction) period. America is addicted to “easy” credit and China is addicted to “easy” exports. Were China to simply lose it’s entire dollar portfolio – some 2 trillion dollars – that wouldn’t be the worst of it. The worst would be the millions of poorly educated Chinese who would be locked out of their factories – losing their homes (dormitories) – as well as their income. The same results occur if China stops buying American debt.

In one sense, America has already lost, and the article talks about that, referring to Sun Tzu’s dictum about wars being won or lost before they’re actually fought. And I believe that’s right. America has already danced the dance and now must pay the piper.

China can (and eventually will) turn their factory workers productivity inward to build a more civil society. (Imagine a China with 100 Shenzhens!) Chinese will continue to live in a country with an increasing standard of living. But America is going to have to get used to the opposite, a lower standard of living, indeed a lower quality of life.

Go ahead and read the entire article. You need to know your adversary. (I wish that the Chinese/American relationship wasn’t defined thusly – I worked to prevent just that – but too few were interested in joining this cause. Sometimes it’s easier to be enemies than it is to be friends.) What a pity!

Fareed Zakaria is one of my favorite authors. Last summer, Newsweek magazine published his article – The Capitalist Manifesto: Greed Is Good - from which the follow good news comes – and caution – comes. If understanding Capitalism is important to you – and yes, it IS important to you – then you should take the time to read the entire article.

“Over the past quarter century, the global economy has doubled every 10 years, going from $31 trillion in 1999 to $62 trillion in 2008. Recessions have become tamer than ever before, averaging eight months rather than two years. More than 400 million people across Asia have been lifted out of poverty. Between 2003 and 2007, average income worldwide grew at a faster rate (3.1 percent) than in any previous period in recorded human history. In 2006 and 2007—the peak years of the boom—124 countries around the world grew at 4 percent a year or more, about four times as many as 25 years earlier.”

“Most of what happened over the past decade across the world was legal. Bankers did what they were allowed to do under the law. Politicians did what they thought the system asked of them. Bureaucrats were not exchanging cash for favors. But very few people acted responsibly, honorably or nobly (the very word sounds odd today). This might sound like a small point, but it is not. No system—capitalism, socialism, whatever—can work without a sense of ethics and values at its core. No matter what reforms we put in place, without common sense, judgment and an ethical standard, they will prove inadequate. We will never know where the next bubble will form, what the next innovations will look like and where excesses will build up. But we can ask that people steer themselves and their institutions with a greater reliance on a moral compass.”

I’m talking about the world’s campaign to “Make Poverty History“. Here’s more proof that a picture is worth a thousand words:

“Between 1970 and 2006, the global poverty rate fell nearly 75 percent. During this period, the percentage of the world’s population living on less than a dollar a day fell from 26.8 to 5.4 percent. The world’s population grew 80 percent during the same period, which makes the poverty reduction all the more astounding. The global Gini coefficient, a standard measure of inequality, fell from 67.6 to 61.2 percent, indicating a drop in inequality as well as poverty. The same trend is found in other measures of inequality besides Gini.” You can read Ryan Streeter’s entire blog post here.

NASH: But as with every important thing you’ll ever try and achieve, the last mile is the hardest. Your generation has to finish the job. Don’t blow it.

If you’re interested in finance, economics or straightforward business, you need to understand credit ratings. The New York Times offers definitions here.

When you follow that link, you’ll see that America has the highest rating (AAA) – of course! Why “of course”? Simply, the rating is based on a country’s ability to repay its debt. America can easily repay ALL of her debt because the debt is in US dollars. And when push comes to shove, America can simply print more.

If you’re interested in business, politics, investing etc…then you need to learn about credit ratings.

[This post - and e-book - is for EVERYONE.]

For nearly all of us, this will be useful knowledge, so I’ve embedded this e-book, Fixed to Flexible. You don’t have to read it at one sitting, and you can always download it yourself (from here) and read it when you’re offline. However you choose to absorb it, just make sure that you do.

And yes, much of the book focuses on economics. Now, if you’re not the least bit interested in money, then you are dismissed from needing to read this book. But for the rest of us, understanding the principles here is vital to our futures.

I hope you’re paying attention to just how fast the world is changing. This book is FREE. What that means is this: going forward, a great majority of the world’s authors are going to have to make their living through other means. That is, publishing a book (or singing a song, or teaching a lesson or even flying an airplane) simply isn’t going to generate a livable income all by itself.
Fixed to Flexible – The Ebook