Monthly Archives: April 2009

Examples of Capitalist exploitation in Romania…

As we have talked about in class many times before, capitalists in a capitalist country try their hardest to squeeze what they can out of their workers as they are the ones who turn supplies into goods.Their exploitation is one of the single worst aspects of capitalism and in Romania some foreign workers finally took a stand. In the Phillipines, 95 textile workers had a contractual agreement to “a basic wage of 400 US Dollars, 100 percent bonus for over-time and free accommodation and food” to work in Romania. Because of this agreement, these same workers took out loans back in Manila to pay for the travel fees and the agency who found them the job in the amount of 2500 USD. Once they arrived in Romania however, Mondostar, the company that had hired them forced the workers to “sign a second contract…to undermine the previous contractual agreement, to squeeze out a maximum labour performance and to lower their own expenses”. The new agreement called for a 60 hour work week paying 235 US dollars a month, and 165 of which would be deducted for food and accommodation. This is the absurdity of capitalist principles, as making a profit and cutting expenditures was far more important for Mondostar than keeping their business integrity and ethics. However, the workers plight was not over as they could only stay in Romania if they kept their job at Mondostar, and now they had incurred massive debts back home in the Phillipines because they had taken out the loans. Their complaints at the Phillipine embassy caused Mondostar to not be able to hire any more foreign workers and 78 of the workers eventually quit 5 months after their hiring. It’s crazy to think about capitalism screwing so many people, but it does on a day-to-day basis. I think maybe with correct legislation and workers rights, capitalism would still tend to do the same because the overall goal is to maximize profit at any cost. But in Romania? A third world country can never have that type of protection for their workers, and that is why capitalism hurts so many people. When you lessen trade barriers and open up economies and make everything a competition, ethics and integrity are thrown out the window.

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“The Commodification of Wisdom”

This is an academic article i read while doing research for my paper, which deals with the commodification of education, and how education today has been increasingly standardized similar to other commodities in economic markets. Author Mary Kupiec Cayton, shows how education has essentially entered the global market and has been standardized to a point where it is given a value measurable by how this “good” is produced, and sold.

“Today services, too, can be commodities, and whatever else education may be, in economic terms it is a service. Standardization has come later to higher education than to other commodities markets, but it has arrived. As with other commodities, unit cost matters, as do how “goods” are produced, measured, and sold”.

While education has in previous generations has never been thought of or viewed as a major commodity  especially in economic terms, it has slowly entered this competitive global market where it is given market value. Because of this, the value of education isnt just valued by the degree itself that is attained, but also by the the ways in which that degree was attained, how it was offered, and where.

“Regulation of goods and services comes both from free trade and from government intervention, and in higher education these days, we are seeing both. For example, many for-profit universities are driving down the cost of instruction by outsourcing it to part-time workers, often with lesser qualifications than those of faculty members at more traditional four-year degree-granting institutions. In so doing, those universities are forcing a reconsideration everywhere of how to cut labor costs in order to compete. At the level of government intervention, my own state, Ohio, has developed an articulation-and-transfer policy for postsecondary institutions that guarantees the ability of credits for certain courses — for instance, U. S. history surveys — to transfer between institutions and apply directly to the major at any public postsecondary institution in the state”.

A major issue is raised here and that is the ways in which Universities have begun to financialize the ways in which they operate. Many colleges are seeking to improve profits and their “bottom line” by outsourcing teaching to other less qualified individuals. This is just one of the many profit seeking practices put into place by these institutions in order to “compete” with one another as in any competitive global market. You even have local and state government (gov’t intervention) that play a pivotal role in the ways in which colleges operate by helping establish policies that affect the ways in which credits are transffered and so on. This regulatory practice is greatly affecting the functionality of education and in effect jeopardizing the level of education available.

“The history of consumerism and commodities further suggests that as a mass market develops for certain goods and services, a luxury market often develops alongside it. The well-to-do seek out and consume scarce goods and services with which status becomes associated, and as those goods enter the mass market, the elite move on to identify new status-oriented consumables. For example, in Europe, for much of the 17th century, when coffee became popular as an exotic beverage, it was the drink of the rich. After a time, what once was a luxury became a staple of the masses”.

 “Have we arrived at a point in higher education where we will see increasing divergence between degrees meant for the masses and those for the elites? How will a Wal-Mart-type degree (“Always low prices”) differ from high-end products with status value à la Lord & Taylor (“The Signature of American Style”) and those targeted, Macy’s-like, to folks in the middle (“Way to Shop!”)?”

And this is one of the major problems that is beginning to take affect. There has slowly begun to take place a division of higher education among the public and private institutions, where the quality of educaton isnt necessarily the same and neither is that degree that you would eventually attain.  This “luxury” market developing among the private institutions is a perfect example of the elitism that is shaping education in this day and age. Individuals attaining degrees from such universities will unjustifiably in my opinion, be viewed in a much higher regard not just in society, but more importantly in the competitive job markets. They will be put “ahead of the line” when applying to jobs and drastically affect the value of education from public institutions.

Will this trend ever end? I personally dont think so. I think this is just the beginning especially with increasing tuitions. College is becoming less affordable, so more and more individuals will turn to these public and community colleges that offer “education for the masses”. The only individuals that would benefit from this are the upper class and elitist who can afford to attend top private institutions and continue to have a leg up on everyone else.

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Profesional Athletes Cheating the Game They Love

I just read the article Risk, Reward, Steroids Inside a Tempting World of Easy Steroids by Michael S. Schmidt on it explained that over the past decade the use of performance enhancing drugs has become known to the public.  This illegal practice has been going on inside major league baseball for longer than any fan or writer can speculate.  Steroids had been banned since 1991 but there was nothing the league could do to enforce these rules until 2003.  Even after punishments had been set and implemented on some, players like all-star third baseman Troy Glaus and pitcher Scott Schoeneweis still proceeded to inject the banned substances

“Even after Major League Baseball and its players union bowed to pressure and started a testing program in 2003, the All-Star third baseman — Troy Glaus of the Anaheim Angels — and the worn-down pitcher — his teammate Scott Schoeneweis — said they continued using steroids…Glaus said he was “willing to take the risk” because he needed to play, according to a report written by the federal agent who interviewed him.”

These players began taking steroids not to become the best player to ever play the game but, instead to heal quicker to make a living for their families.  Major league baseball has been a complete victim of financialization, with these new billion dollar stadiums that have advertisements in every corner of the stadium.  Players started taking steroids because many players numbers were being inflated by players who were using steroids.  Therefore to keep up, many more began to follow so they could produce numbers which in actuality turned into a big contract.

The scariest part of this whole entire ordeal is that most of these cheaters were not to sure what they were actually putting into their bodies

“Frustrated with his rehabilitation, Glaus contacted Scruggs, whose only request was for a blood sample to see whether Glaus’s testosterone levels were low enough to warrant a prescription for steroids. Medical files seized from Scruggs’s office show the steroids were sent before Scruggs reviewed Glaus’s blood test.

Asked by the investigators whether he was concerned that Scruggs did not ask to see him, Glaus was quoted in the report as saying: “I just wanted to get better, it didn’t alarm me. I just wanted to get better and play.”

To play at the level that he needed to Glaus risked everything but all Glaus cared about was getting better to play the game he loved.  This should never be the case for America’s past time, these are men who love the game cheating and tainting the game that so many other’s truly love.  From my perspective I don’t ever seeing Major League baseball ever becoming definancialized.  There is way to much money to be made in the industry.  I do see the use of illegally band substances being used at a much lower rate in the upcoming decade from its predecessor.

The URL is

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Jobs and health care

I read the radical perspectives article called ” When a Job Dissapears, so does the Health care”. It gave an overview of the unfortunate unemployment situation in the U.S and the jobless numbers ever increasing.  The main point of the article was that not only are people losing jobs but they’re losing their health benefits as well. I find this very disheartening and scary as well because I am under my moms health insurance but when I am no longer a student I won’t be. So if I don’t have a job i’ll have no health benefits. People are really going to desperate measures to get the care that should be a right to every citizen.  One example in the article was a woman who induced her labor because she needed her medical coverage to cover the delivery.

“The crisis is on display here. Starla D. Darling, 27, was pregnant when she learned that her insurance coverage was about to end. She rushed to the hospital, took a medication to induce labor and then had an emergency Caesarean section, in the hope that her Blue Cross and Blue Shield plan would pay for the delivery.”

To me that is a shame. It is a human right to be able to have your baby delivered in a safe and healthy environment.  Also the article talked about other people working at a cookie factory that abruptly lost their jobs and coverage with only three days notice. People were not even able to take the medications they needed anymore. They also had to put off medical procedures. 

The amount of people that are jobless have reached record highs. According to the article:

“About 10.3 million Americans were unemployed in November, according to the Bureau of Labor Statistics. The number of unemployed has increased by 2.8 million, or 36 percent, since January of this year, and by 4.3 million, or 71 percent, since January 2001.”

This is a very alarming statistic and people are suffering with illnesses.  I think that there are more problems that can arise if something isn’t done and the government doesn’t start paying for peoples healthcare.  Epidemics can start and people might start spreading diseases without any medicine or treatments. I thought that America was a place that could afford to give the citizens what they need but apparently the government is failing at that task.

The article also mentions what President Obama had plans to do about this.  When the article was written he was the president elect.  It says:

“Expanding access to health insurance, with federal subsidies, was a priority for President-elect Barack Obama and the new Democratic Congress. The increase in the ranks of the uninsured, including middle-class families with strong ties to the work force, adds urgency to their efforts.”

I haven’t seen any major improvements on health care since Obama has been in office but I think this has to be put at the top of his list of things to do. Or else it could have great consequences on the U.S as a whole.

Here is a link to Obama-Bidens plan for health care if anyone was interested. I wonder how much better the plan will make things for the average family.

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Pharma Corruption

I have just read, Dean Baker: How to End Corruption in the Drug Industry by an article from Naked Capitalism.  The article raises many of the big issues within the Pharma market, particularly within research.  It then suggest some solutions that arguably can fix this corruption.  Overall, the problems it sites are rather obvious issues within the industry that would make any reader a little hesitant before trusting their doctors prescription.  On the other hand, I personally do not see the solution to be as clear cut as she implies.

The main issue brought up with Pharma’s research methods is that

“most of their so-called research is on ‘new drug applications.'”

Basically most of the research done nowadays is not to discover new drugs that are needed to cure illnesses; rather they Pharmas spend the majority of their research budget on finding other uses for thier drugs so that they can be marketed for these new uses, essentially attempting to gain an edge of the generics when the patents run out.  Clearly this is a problem.  The research branch of a pharma company like Pfizer should not be used as an extension of marketing.   Medical research is meant to be for finding cures for increasingly more prominent and more dangerous diseases, or at least that was my understanding.  It is not meant to create new “talking points” for industry salesmen.  This point, I believe, shows the transformation of what was once productive labor, the advent of new drugs that have the promise of alleviating symptons or  possibly curing an ailment, into unproductive labor, the creation of new marketablity.

Another problem within Pharma research is that the testing done on a specific drug is done by the company itself, “who has a direct material stake in their outcome.”  This is indubitably a conflict of interest.  Some of the negative effects of this are

“concealing test results that show drugs to be harmful or ineffective, payoffs to researchers for publishing favorable articles in professional journals, bribing doctors to prescribe certain drugs.”

A way that she suggests these problems can be eliminated is by having exclusively government funded research.  By moving the sponsorship into the public sphere, first and foremost, it can be insured that there will be no alternative motives for a drug to enter into the market.  The government would pay for the research by

“appropriating a sum of money approximately equal to what the industry now spends on clinical trials (around $20bn a year). It can then arrange long-term contracts (10-12 years) with independent testing firms, who would then decide which drugs to test. Renewal and expansion of the contracts would depend on the effectiveness of the contractor in finding and testing new drugs and preventing unsafe drugs from coming to market.”

There would also be full disclosure of the research, publishing everything online, accessible to all. This would in theory work the same way the press should, giving independant researches the ability to check the government’s work and therefore making the government research accountable to the public.  With methods like this and strict regulations, the belief is that prices will be forced to become lower, making persciption drugs more affordable and more widely accessible as well as more acurately match their cost of production.

Personally one of the biggest flaws in this theory is that too much power is awarded to the government.  This I believe is seen through the example of George Bush and stem cell research.  The Government already sponsers some medical research, but only the type of research it believes is proper and ethical.  Because of this America is now 8 years behind the world in stem cell research because President Bush decided that it was not moral to conduct such studies.  By giving the government complete power in deciding what should be researched and how much money to alot to a given product, it is possible that there will be less corruption in the development and marketing of a certain drug but is also possible that the country will only be ingaging in selective research and cut itself off from crucial medical advances.

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Consumers are thinking twice about using their credit cards

This article is from and it is about American Express credit card.

American Express (AXP) reported 1st quarter earnings after the close Thursday and from the behavior of the stock, you’d think it suggested a major turnaround and economic recovery.

The stock was up 20% on very strong volume. The stock is now up 150% from it’s March 9th low – from $10 to $25.

If our country is suffering from a financial crisis, and most banks are closing down and losing customers, then how comes American Express company is actually making money? Well, in my opinion, I think the company report their first quater income because they wanted to show people that our economy is bouncing back and banks are doing good financially.

But in fact the report clearly shows continuing economic deterioration. Even though earnings beat analyst estimates, the quality of earnings is very low.

Most importantly, the credit card portfolio continues to show massive credit quality deterioration. The charge off rate on the $56.5 billion US Card portfolio leaped to 8.5% and the press release says AXP expects a 200 to 250 basis point increase in the 2nd quarter!

Consumers do not spend as much as before and they now only buy things that are necessary. Many credit card’s interest rates are continually going up and it seems that it will stay that way for awhile.

Further, spending by card members is dropping precipitously. US Card billed business dropped 15% from $114.6 billion to $97.4 billion. Average basic US cardmember spending dropped 15.8% from $2,838 to $2,391 for the quarter. This suggests worldwide consumer spending is in freefall.

Since the usage of credit cards are dropping, credit card companies are desperately approving credit to just about anyone who wants it. For example my 17 years old cousin, currently in high school and jobless, got approved recently for a VISA card limited to $500 access. Credit card companies are doing everything and anything just to bring in customers, they send emails to sign up for cards and keep sending mails to your house for approval. If you keep deleting the emails and ignoring the letters, they just keep on coming, until you join.

Financial crisis not only affect banks, credit card companies, businesses, Wallstreet, etc. but it also affect people’s spending. Consumers are not as big spenders like before. We tend to consume less and learn to adjust to our new spending habits.

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Musings on Structural Challenges to the Financial System

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I read my article from Naked Capitalism entitled “Musings on Structural Challenges to the Financial System” posted by Yves Smith. This article blames securitization as the main reason why the banks of today are such in a mess. The author starts off with how the current system of the banks is bothering him and how it reminds him of the Great Depression. According to Smith finance was different if you go back to 1980. In his opinion outside of New York City and MBA programs no one knew what an investment banker was. Banks were affected by being disintermediated which is when funds from banks are withdrawn and invested in other things that will yield a higher return. Smith says the following “Much of sound banking credit processes has been replaced by sophistry” this is show there was shady practices by these financial institutions.

One line that sums up the whole article is the following:” And securitization was and remains the epicenter of the crisis”.

From what I understand the author uses the factor of investment banks and regular banks to prove a point. The fact that he mentions banks was different as to going back to 1980. Then there is shift. What I’m wondering is if the rise of investment banks caused the trouble throughout the article its mention overtly and also in a subtle. At the end of the article refers to the Great Depression and says “And I worry that like the Depression , we will have to see it break down completely before we can start to rework it ins significant ways” The author seems to think with securitization and negligence he feels the financial system break down will take time to rework.

Dhanha Bien-Aime

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Crisis in China

“Crisis in China” by John Clegg, discusses the past crisis, present crisis and the possible future crisis of China. Over the past 20 years, China has been significantly industrializing. China was the “go to” spot for many capitalists looking to increase their profits. And because of that, it brought millions of migrant workers from the countryside into the cities where they would find work in factories. Many of the workers even saw themselves staying in the cities for the rest of their lives and therefore, they sold parts of the farm land.

Although China has been industrializing for the past 20+ years, many workers have complained about the conditions and wages of working in factories. This was the crisis for the past 20 years. Many workers weren’t satisfied and had enough of the harsh treatment. This forced many to strike and create movements to better the conditions of the factory life. Clegg states,

after the beginning of the industrialization thrust, the number of struggles of migrant workers increased steadily, struggles against the horrendous working conditions, for improvements and higher wages, for their share of the fruits of the boom.”

While laborers were struggling, capitalists were making huge profits. And surprisingly, the Chinese government didn’t really care either because they were prospering too. Allowing external capitalists to run factories with cheap labor costs attracted even more capitalists to do the same. China was practically a market for capitalists to increase their profits. In addition, it was becoming one of the biggest exporters in the world.

A labor activist said that the government wants factories to survive and stay, and that is why they ignore the problems at the workplaces.”

If the Chinese government begins to enforce the labor laws, many factories will have to be closed down. Besides the poor laborers, China saw this time of industrialization as a time of growth. That’s why they didn’t really bother with workers’ concerns.

Anyhow, the labor conditions and struggles was the crisis for the past 20 years. Now the crisis is something else and some are afraid that it might be even worse. In the fall of 2008, China believed that the recession wouldn’t hit them because they were such a big market for production. Unfortunately it hit China hard. Now they’re even in bigger crisis.

In mid-January 2009 the Ministry of Labor announced that 10 million migrant workers had lost their jobs, in early February the number was raised to 20 million.”

Before, the working class was complaining about the conditions of working. Now, they don’t even have anything to complain about, except for the fact that they have no job. Soon or later, the workers are going to realize that the industrial boom is over and they will realize that their lives will change dramatically. Clegg believes there will be 2 scenarios:

a) The second generation of migrant workers does not want to live in the countryside anymore, or at least does not see its future there. So they could stay in the cities and, if unemployed, would have to search for alternatives for getting an income, accommodation and food, and possibly fight for and appropriate it. In many big cities they account for 30 to 80 percent of the population. Is there a chance for them to join forces with millions of urban poor who survive on petty trade and petty jobs?

b) The migrant workers could migrate back to their families in the villages where they still have the right to farm a piece of land. Maybe they will manage to get by with the money they saved, but without an urban wage the families will sooner or later run into financial problems. There are no jobs, no perspective, poverty and boredom.29 In the past few years the countryside has seen many revolts against corrupt cadres, land dispossessions and environmental contamination. Even now in many regions the small plots are not big enough to feed a whole family, and there is still a rural labor surplus. The planned state subsidies for education, school fees and the setting up of businesses will not change much. If the migrant workers return to the countryside in masses – a temporary reversal of 30 years of urbanization – that would create an explosive mix.

In addition, some are even afraid of a bigger crisis. China is well known for social problems between the working class and the wealthy class. China has a history of working class citizens and peasants who try to revolt to overthrow the government. This is what Clegg and many analysts are really afraid of if the working class of China does not find any employment.

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On Good and Bad Financial Innovation

 People tend to generally assume that the word innovation always carries a positive connotation. While for the most part they may be right, this isn’t always the case. Innovation has the ability to fuel prosperity, but unfortunately it sometimes comes at the expense of the common man. The concept follows that of the distribution of wealth; where one man is rich only because another is poor. I recently came across a blog post by Yves Smith on titled “On Good and Bad Financial Innovation”, in which Smith explores the world of devious financial innovation. Although the entire post reads like a satire on capitalism and its inabilities to efficiently function unregulated on a mass scale.  


In the midst of this global recession it only seems appropriate to question the gurus that landed us into this mess. It has become abundantly clear that change must come in order to prevent this continuous rise and fall cycle that the economy has played post WWII. The real problem is and will always be that Capitalism is comfortable with being in the realm of morally gray. Yves says,  


Given the propensity of financial firms to take advantage of widows and orphans, a caveat emptor posture and investment in attaining a higher level of expertise seems prudent.”

Yves starts the topic by dissecting the perspectives of Ben Bernanke and Ryan Avent on the topic of financial innovation. Ryan Avent pointed out that in a recent speech Ben Bernanke had a tough time coming up with examples of good financial innovation that related to the current crisis. Bernanke took the generic route by citing credit cards and securitization. However what we generally have in mind these days are the complex financial derivatives that are the helm of the banking crisis.

 The major problem that Yves identifies is the extension of access to credit. He quotes Kwak,

The other kind of financial innovation has to do with extending access to credit. Here I think it’s less clear that innovation is unequivocally good. It is certainly possible for a society to be below the optimal level of access to credit. Consider the idyllic banking paradise that gets mentioned a lot these days, in which people deposited their savings with local banks which, in turn, lent money out to trustworthy local home buyers and held onto those mortgages to maturity. The good thing about this model is it encouraged responsible underwriting. The bad thing is that it isn’t very good at moving capital (money) from one part of the country to the other…. In short, financial innovations whose sole function is to increase access to credit do not in and of themselves make the world a better place.

It is now a known fact that the spark of this crisis was the subprime mortgage crisis which eventually set off a domino effect. So what happened to the good old days when banks lent money to those with both merit and collateral substantial enough to repay that subsequent loan? Well the answer to that question lies with the negligent business models taken on by our “too big too fail” banks. It starts with the insane leverage these institutions began to carry after the barrier between commercial and investment banking was broken. This conflict of interest incentivized banks way to much for raising capital. First they’d give out a loan with disregard to a possible default scenario, swallow the transaction fee, and since some of the banks were leveraged as high as 30:1; they’d turn around and allocate those funds into even riskier investments. And thats where the enormous role of hedging comes into play.

Now sure hedging has its benefits, and is an essential tool that allows risk sharing or risk transfer. It is by far the root that is at the bottom of all these complex products. So even though hedging is a great tool, excess use of it can create probleme. First people who actually understand and make use of these credit default swaps should be using them. Take for example a recent case study done by the Motley Fool. When you purchase a corprate bond it has a certain risk attached to it, so it seems like a smart move to have Goldman Sachs insure your risky bond incase of a default. By purchasing this insurance policy you have basically transferred risk for an insurance premium. You have made a solid investment move for which you can now pat yourself on the back for. However you are not my concern, my concern is the man who is being sold a credit default swap but has no idea what he just bought. He purchased it because he believes that the guy selling it to him is smarter than he is, overlooking the fact that he is also the man inheriting the commission. This man has just bought from Goldman Sachs an insurance policy on his U.S. Treasury bond. That is by far the dumbest investment I have ever heard of. So the logic is that there could exist some catastrophic event that would have within it the power to wipe out the entire American Government, but would leave Goldman Sachs left standing to pay you your insurance money.

 The first is that these new products were sufficiently complex and opaque that risks were too often dumped on the hapless who didn’t know what they were buying. We’ve seen everything from German Landesbanken, Norwegian villages, Australian pension funds, Jefferson County and a host of other municipalities buying products or entering into swaps they didn’t understand.

Needless to say Yves points out something that has scared us for a very long time. It metaphorically questions the fate of Capitalism and its ability to sustain itself. Today we are combatting our problems through disguised socialism, so the question comes to mind. What’s next for a country that has set economical, political, and social precedents that most of the world has followed? To even attempt to make such an impossible inference would mean that i was suddenly overcome with the illusion of grandeur. However I will say this much, since we have officially started our path through a lightless tunnel, it will be rather interesting to see what comes out the other end. 

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How China Deals with Crisis

Since U.S has accepted the new president, the nation have had hope that he would be the one who brings this financial crisis to the end, however, issues that this world faces is more complicated than ever. The International Labour Organization (ILO), stated that twenty million more people will be out of employment by the end of 2009 than 2007.

In this article, Mrtine Bulard talks about realities of U.S. dollars and how powerful China is today’s world economy. It became obvious that China is one of most powerful country today, however, it used to be just like other countries. How come China became so powerful, how much influence they have, and is there any way that U.S. will get back to the most powerful position like where they used to be at?

One of the reasons why the U.S. now has to care so much about what China argues is because China is the second major purchaser of U.S. Treasury securities debts. China vindicated that the most serious issue the U.S. faces is a huge diversity of rich and poor people. The U.S. used be the richest country all over the world. A biggest secret of what made it possible for U.S. to become the richest country is that rich people refused to pay proper wages to their employees. Rich people got richer, poor people never be able to save money. In this country, a company hires many illegal workers, because of their few job opportunities; they have only little right to say about their harsh job conditions. Because the U.S. faces such a difficult economic crisis, Chinese prime minister stated “And particularly at such difficult times, China reached out to the US. And we believe such a helping hand will help stabilize the entire global economy and finance and prevent major chaos from occurring. I believe now that cooperation is everything.” The cooperation of those two countries seems to be an alliance of capitalists. This statement makes clear that the U.S. now can not do anything without China’s help, however, China needs less help from U.S. than it used to be.

Chinese economic growth made by producing more stuff with less cost than any other country and export products all over the world. However, compare to international markets, China has developed internal markets only a little bit. That is why, only cities have developed and county sides left aside. Riches got richer, poor got poorer. Even though, China has the highest saving rate in the world, internal market does not develop that much. One of the reasons why people save money rather than purchasing products made in China is because of their low income. Chinese government put so many priorities on an economic growth; social security and health care system were left behind. People have to save their money for their retirement, and sickness.

Even though China took the first place of world’s economy, people in China got few benefits by that. It always does not make sense that employees who actually work hard to producing stuff gets less benefits than the government. The alliance of two capitalists that have the most economic power all over the world leads other countries to move on to capitalism.



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