The End of the World

[This is a post from the business blog. My feedback from friends so far; they say I write like a stoned teenager. I absolutely deny being stoned when I wrote this though[

Over time, I have learned to channel my frequently occuring negative emotions from my “issues” into areas that can give me strength in my professional and personal life. But, I’m still a fairly unstable person. I have a big ego and I have big mood swings. Also, I can be extremely insecure and I am constantly worried that something bad is going to happen to my children.

Although I have “issues”, I feel that I should never take “medicine” for my problems, in part because doing so would reinforce the concept that I am a pre-programed biological robot living in a highly mechanical universe. Some of my friends say “of course you are a robot! We all are! Your often depressed because you don’t want to face reality, but you can still see what’s in front of you!”. Anyway, I prefer to have the illusion that I have free will, and hence, control over my destiny.

Wow. Enough mushy stuff about emotions. What does this have to do with China business anyway? Not much. Well, if the world ends, it ends for me in China too. I feel it would be best for me to see clearly how the world will end, and then see, within that overall disaster, where can I take control over my destiny.

The world will end in the following ways:

• Global warming is going to mess-up our world, and China is going to excellerate this
• We are all on the verge of the Trade War to End all Trade Wars.
• The drive to ever increasing efficiency is going to make human’s irrelevant.
• My existence in China (based on my ability to work and provide services as an expatriate) is threatened by the above.

OK. First of all is Global Warming. Because of the increasing demands of Chinese consumers, Greenhouse gases created in China (and…uh…everywhere else) will doom all chances of stopping global warming. Funny thing is, the more hot it gets, the more people will use air-conditioners (I know I am!) and so the more CO2 created. Because we humans are basically very stupid beings, and the inherent problem of the commons / “prisoner’s dilemma” nature of Global Warming, there is no chance of our governments cooperating to stop the disaster. At worst, the permafrost in the artic circle will melt, causing an exponential increase in CO2. The increased heat will cause the tropics to heat up, but at a certain point it won’t be able to heat up, so Ocean currents will stop, and then wind will stop, and then bad Oxygen eating microbes proliferate, and then we are all screwed. Geoengineering may be able to save us, but in the meantime, I am considering taking control of my destiny by buying land in cool Canada.

So, I have to overcome my character defects to make enough money to buy land in Canada. Not the most difficult of challenges really. However, I make my money by helping companies in China. That seems to be becoming more difficult.

As the GM of GE Jeffry Immelt said, “They won’t let us win!”. More on this here, and here. My favorite quote: “[China] is increasingly putting pressure on developing nations with large natural resources. Resource-rich nations don’t want to be ‘colonized’ by China”. Hmm. But said developing nations are OK about being colonized by the West? My goodness. Mr. Immelt is a schmuck. Of course, this has re-ignited that China-closed-to-Western business theme which I talked about before.

I tend to dismiss this “China closed for business theme. And so does my fellow alumni and “China business blogger” Rich Brubacker, at All Roads Lead to China. Rich points out these stories are often “emotionally charged”, and nowadays are backed by “data” which is really meant to show a particular biased view for political purposes, but only represents a small part of “reality on the ground”. His article really breaks down the main trends, which include: maturing, more competitive China market; effects of the economic downturn; and greed. But the point which really struck me was, “The anecdotes are driving the story.” In other words, the sky is falling for a few companies and industries, and they purposefully trying to make it seem that the sky is falling down on everyone.

I feel better to hear that the sky is not falling down on everyone. Except…maybe it really is. If we back up to the 30,000ft view of the world, we see Global Warming. We also see what may be the end of Capitalism as we know it. Robert Reich wrote (and here linking to Salon article because his blog seems to be blocked) in “The Vanishing American Consumer and the Coming Trade War”:

President Obama has vowed to double U.S. exports within the next five years. That’s because exports are critical for rebooting the American economy. …
….It’s not just that one out of four Americans is unemployed or underemployed (working part-time, overqualified, or at a lower wage than before). More significantly, the Great Recession burst the housing bubble that had let American consumers turn their homes into ATMs. Now the cash machines are closed.

So the administration figures foreign consumers will have to fill the gap.

Problem is, most other economies also relied on American consumers. Remember the trade gap? Americans used to be the world’s biggest and most reliable customers – sucking in high-tech gadgets assembled in China, car parts from Japan, shirts and shoes from Southeast Asia, and precision instruments from Germany….

…As of now China and India are still relying on net exports to fuel their growth. Even if you think their middle classes will eventually become so big and rich they can buy everything these nations will be able to produce, that doesn’t mean they’ll also buy what the rest of the world produces….Meanwhile, the productive capacities of China and India will continue to grow: More workers, more factories, more high-tech equipment, more offices. The buying power of their middle classes will have to expand rapidly just to catch up with what these nations will be able to produce.
…
When the world’s productive capacities exceed the buying power of the world’s consumers, every government wants to increase exports and discourage imports. That spells trade war.

Great. Trade war. My plan to escape Global Warming by moving to Canada is getting more difficult. It gets worse. Thanks to John Stranderfer at the Huffington Post, in his post “Where the Jobs Went“, he put the issue of the trade war into a higher perspective:

Those jobs [which US economy lost ]are no longer needed as almost every sector of our economy has figured out how to provide more and more products while relying on less and less people. Not only do we have the ability to make many times more of everything than we can possibly buy, but each item has more features and costs less than the previous year.

This trend is being amplified by newer companies like Amazon and NetFlix that are able to generate the same amount of revenue as Barnes & Noble and Blockbuster while only requiring a fraction of the number of employees.

These are structural changes that government programs cannot reverse. No amount of tax credits, investment incentives, or retraining programs is going allow companies to be able to remain competitive while employing the same number of people they did in the past. For better or worse, the world has changed and the traditional link has been broken between economic growth and employment growth.

The above reminded me of the Kurt Vonnegut book “Player Piano“[1. “Player Piaono”, Kurt Vonnegut, 1952 ISBN-13: 978-0385333788]. In his book, the upper classes of society manages the robots, while the obsolete lower classes lives off welfare. That is until Skynet takes over (which is not in the book, but one can extrapolate).

Basically, Capitalism is coming to the point where its going to start eating itself. At least, as far as the United States is concerned. There is too much production capacity. People are becoming less relevant an input into the production capacity. And producing will generate waste, hastening Global Warming.

On the plus side, I will look at the glass as, maybe not half full, but nonetheless has some drops of water in it. While China scrambles to find export markets for its over-capacity, and Westerners scramble to find more efficiency in their China operations, there will be plenty of opportunities for me. Maybe. I also feel I’m not too old to go and learn robotics.

So, to end this post I will quote lyrics: “Its the end of the world as we know it…and I feel fine”