Saturday, June 8, 2013

The Chinese Dilemma

When I think of immigration reform in the US today, I think of people migrating here from across our southern border in search of work, usually for low-skilled and low-paying jobs --- such as farm workers, dishwashers or car wash attendants --- jobs which were once known as "jobs that Americans don't want to do").

Or when I think of immigration reform, I might also think of H-1B visas for tech engineers living half way around the world in China.

In many ways I greatly admire these people. I couldn't imagine moving to Mexico to look for a job, let alone immigrating all the way to China (especially back in the 1800's; what a hardship that must have been!)

But hundreds of thousands did, and they still do, and they still will --- despite how perilous their journey might be. Although the US minimum wage is now only $7.25 an hour, for most of these immigrants, it's still far much more than what they'll earn back in their home country.

And their journeys to the US are often times far less deadly than the jobs they might have left behind.

Chinese Immigration to the U.S.

The Naturalization Act of 1790 was our country's first set of laws dealing with citizenship. Applicants had to be "a free white person" of "good moral character." This excluded indentured servants and slaves. Good moral character was substantiated by establishing residence for at least one year in the state from where they were applying.

During the 1800s Chinese immigrants worked as laborers, particularly on the transcontinental railroad, such as the Central Pacific Railroad. They also worked as laborers in the mining industry. While industrial employers were eager to get this new and cheap labor, the "white public" was stirred to anger by the presence of this "yellow peril." Despite the provisions for equal treatment of Chinese immigrants in the 1868 Burlingame Treaty, political and labor organizations rallied against the immigration of what they regarded as a degraded race and "cheap Chinese labor."

The Page Act of 1875 was named after the Republican Representative Horace F. Page. This is the first U.S. federal immigration law to explicitly prohibit the immigration of a particular group, those of Asian descent. Primarily it was meant to limit Chinese immigrant labor and prostitution.

During this time newspapers condemned the policies of employers. So hostile was the opposition that in 1882 the United States Congress eventually passed the Chinese Exclusion Act. It was signed by President Chester A. Arthur and was the first federal immigration law to prohibit immigration on the basis of race.

The immigration bill had barred all Chinese laborers (both skilled and unskilled) from immigrating to the U.S. for ten years. The law was then extended by The Geary Act in 1892 (about the time when the Eastman Kodak Company was first founded --- and when the corporate strategy of "acquisitions and mergers" began to intensify.) By 1924, all Asian immigrants were utterly excluded by law.

Only since the 1940s, when the U.S. and China became temporary allies during World War II, did the situation for Chinese Americans begin to improve. The Magnuson Act in 1943 lifted the ban on all Chinese laborers from immigrating to the U.S. --- and the Immigration and Nationality Act of 1952 (The McCarran-Walter Act) formally ended all Asian exclusion.

After World War II, anti-Asian prejudice in the US finally began to decrease. In the 1950s and 1960s, the rallying cry for corporate industrialists was for "diversification" --- to broaden corporate bases and take advantage of economies of scale.

Large-scale Chinese immigration to the US did not occur until 1965, when the Immigration and Nationality Act of 1965 had also lifted "national origin quotas". This was after the Chinese forced-labor camps had already been in operation since the Korean War.

The Laogai Labor Camps in China

"Laogai" has been used to refer to the use of prison labor and prison farms in the People's Republic of China. It is estimated that over the last fifty years more than 50 million people have been sent to laogai camps.

The existence of an extensive network of forced-labor camps producing consumer goods for export to Europe and the United States was considered "classified" by China. The publication of information about China's prison system by Al Jazeera (English) resulted in its expulsion from China on May 7, 2012.

Critics have long complained that China's prisons produced products for sale in foreign countries, with the profits going to the Chinese government --- including everything from green tea, to industrial engines, to the coal from China's infamous mines, where workers are constantly killed.

In early 2013, Chinese state-run media Xinhua reported that the country plans to "reform" its slave labor camps this year. The conditions at these Chinese labor camps are much more horrendous than the factories of Foxconn.

Outsourcing Jobs to China

The seeds for outsourcing American jobs to China were first planted with Henry Kissinger's secret diplomatic missions to Beijing, where he met with Premier Zhou in 1971; and then later, with Richard Nixon's 1972 visit to the People's Republic of China and the Paris Peace Accords.

This was before Master Sergeant Max Beilke was officially designated as the last American combat soldier to leave Vietnam on March 29, 1973 (He later died on September 11, 2001 while working on veterans' issues at the Pentagon when a hijacked airliner had slammed in to it.)

The Chinese eventually agreed to a peaceful settlement for the normalization of relations regarding Taiwan and enabled the U.S. and China to open trade. The United States continued to maintain official relations with the government of the "Republic of China" in Taiwan until 1979 when the U.S. broke off formal diplomatic relations with Taiwan and established full diplomatic relations with the government China.

Corporations that were attempting to compete globally in the 1970s and 1980s were handicapped by a lack of agility. To increase their flexibility, many large companies developed a new strategy of focusing on their core business, which required identifying critical processes, and then deciding which could be outsourced.

Although Kodak developed the first digital camera in 1975, the product was dropped for fear it would threaten Kodak's photographic film business. As of 1976 Eastman Kodak commanded 90% of film sales and 85% of camera sales in the US.

According to one technical publication, A Brief History of Outsourcing, the current stage in the evolution of outsourcing is in the development of "strategic partnerships", which was first pioneered by Eastman Kodak with their decision to outsource their information technology systems in 1989.

Kodak was quickly followed by dozens of major corporations, whose managers had determined that it was not necessary to own the technology to get access to the information they needed. All throughout the 1990s the off shoring of jobs had escalated --- mostly tech, call service centers and manufacturing --- by companies such as Microsoft, Apple, Hewlett-Packard, IBM and Dell. During the last presidential campaign, Bain Capital was often mentioned.

In 1999 Bill Clinton signed the controversial trade agreement with the People's Republic of China. The trade agreement was the result of more than a decade of negotiations, and lowered many trade barriers between the two countries.

Data shows that since then, when George W. Bush first took office in 2001, there were 398,887 private manufacturing establishments of all sizes in the United States. By the end of 2010 the number of manufacturing firms had declined to 342,647 --- a loss of 56,190 facilities.

And More Outsourcing

Major America corporations have been outsourcing jobs to places such as China, India, Mexico and Taiwan for several decades now --- and then there's also the trade agreement with Columbia, Panama and South Korea. And some companies, such as Nike, already have their shoes manufactured in Vietnam, which is home to ten Nike factories. 75 million pairs of running shoes are made there each year. Chinese workers in Vietnam earn $1.75 a day; while Vietnamese workers earn $l.60 a day.

In a new twist, some individuals have borrowed the idea from corporate America, and have been outsourcing their own jobs to China.

But the Trans-Pacific Partnership (TPP) is poised to become the largest corporate trade agreement in U.S. history. The massive trade and investment pact is currently being negotiated behind-closed-doors between the United States and countries throughout the Pacific Rim — 600 business lobbyists are helping to write the law. TPP countries currently include the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam with Mexico and Canada recently joining. The TPP intended to become the trade law for the world as it includes a “docking agreement” that allows all nations will join over time.

Currently in the US, about 25 million Americans remain unemployed, of which less than half are acknowledged by the government any longer in the Bureau of Labor Statistics' U-3 unemployment rate. And while the BLS reports that the ranks of the long-term unemployed have dwindled by 1 million since last year, economists are uncertain of whether they're finding jobs or just dropping out of the labor force. And it was also recently reported that "the U.S. economy continues to churn out low-paying jobs in the weakest labor-market recovery since World War II."

Meanwhile, US corporations continue to seek out the cheapest labor whenever possible, including the outsourcing from China to even lower wage countries --- everywhere from Guatemala to Java.

The Aftermath

As of the 2010 United States Census, there are now more than 3.3 million Chinese in the United States...and the influx continues. The number of people that have immigrated to the U.S. from China and Taiwan has actually surpassed Hispanic and Latino immigration in the year 2012. Ironically, many of the jobs that they came here to acquire, may have already been off-shored to their own home country.

Since 2003, Eastman Kodak has laid off almost 30,000 employees world-wide, but now Kodak has been in bankruptcy for the past year as its most recognizable businesses have been either transferred or sold.

Part of Eastman Kodak's corporate complex is also up for sale, and is being considered for a downtown campus for the Monroe Community College in Rochester, N.Y. --- and the New York Times reports that when Eastman Kodak finally emerges from bankruptcy later this year, "it will be a shadow of the blue-chip corporate giant it once was."

But other companies, such as the Milwaukee-based Rockwell Automation, are doing very well. Rockwell has 22,000 employees, but 61 percent of them are outside the U.S. --- and in the US, it's becoming the standard for many manufacturing companies to require employees to have college degrees --- and some jobs even require a PhD.

But what most companies won’t say about their employees overseas is, whether or not THEY need college degrees. After all, what type of skills are required to work on an assembly line, repetitiously doing the same thing over and over again? What type of skills are needed to pack a box, drive a fork lift or sweep a factory floor? Speaking of which, factory-floor openings in the US are scarce and they too often require "specific" credentials. (In the old days, they would have offered "on-the-job training).

A company like Rockwell Automation creates wealth and jobs all over the world --- which is great for the world and for Rockwell's shareholders --- but it's not so great for the people of Milwaukee. Between 1961 and 2001, Milwaukee has lost 69 percent of its manufacturing positions.

The Next Emerging Market?

During the 1800's the American Colonization Society began sending black volunteers to the Pepper Coast of Africa (the present republic of Liberia) to establish a colony for freed American blacks. It was supported by prominent American politicians such as Abraham Lincoln, who believed that repatriation was preferable to emancipation of slaves.

The African Growth and Opportunity Act was signed into law by President George W. Bush on May 18, 2000 as part of The Trade and Development Act of 2000. The trade agreement allows businesses in West African countries (such as Liberia) to export to the United States duty and quota free, raising interest from U.S. clothing manufacturers that have seen increases in both cotton prices and the cost of hiring workers in China, where much clothing manufacturing now occurs.


Yesterday, as President Obama had to defend the US government's collection of cyber-data (the Prism surveillance program), he sidestepped questions about Chinese cyber-espionage of US military weapons systems after a meeting with the Chinese President Xi Jinping. And that's odd too, especially since we've also just learned that Chinese hackers had also infiltrated McCain and Obama's campaign networks in 2008.

But US corporations continue to offshore jobs to China, and therein lies the dilemma. How do the politicians and CEOs continue to convince the American people that free trade agreements are a "good thing" for this country... and that it's "ok" to send our jobs to countries that hack our most vital computer systems?

Or will America's emancipated slaves in West Africa eventually become corporate America's new labor force? Will the free people of Liberia once again become slaves for American industrialists?

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