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by ANDY STERN: Obama’s other Buddy

China’s Superior Economic Model

The free-market fundamentalist economic model is being thrown onto the trash heap of history.

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By ANDY STERN

Andy Grove, the founder and chairman of Intel, provocatively wrote in Businessweek last year that, “Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best of all economic systems—the freer the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.”

The past few weeks have proven Mr. Grove’s point, as our relations with China, and that country’s impact on America’s future, came to the forefront of American politics. Our inert Senate, while preparing for the super committee to fail, crossed the normally insurmountable political divide to pass legislation to address China’s currency manipulation. Secretary of State Hillary Clinton, former Gov. Mitt Romney and President Barack Obama all weighed in with their views—ranging from warnings that China must “end unfair discrimination” (Mrs. Clinton) to complaints that the U.S. has “been played like a fiddle” (Mr. Romney) and that China needs to stop “gaming” the international system (Mr. Obama).

As this was happening, I was part of a U.S.-China dialogue—a trip organized by the China-United States Exchange Foundation and the Center for American Progress—with high-ranking Chinese government officials, both past and present. For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China’s 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development.

Some Americans are drawing lessons from this. Last month, the China Daily quoted Orville Schell, who directs the Center on U.S.-China Relations at the Asia Society, as saying: “I think we have come to realize the ability to plan is exactly what is missing in America.” The article also noted that Robert Engle, who won a Nobel Prize in 2003 for economics, has said that while China is making five-year plans for the next generation, Americans are planning only for the next election.

The world has been made “flat” by the technological miracles of Andy Grove, Steve Jobs and Bill Gates. This has forced all institutions to confront what is clearly the third economic revolution in world history. The Agricultural Revolution was a roughly 3,000-year transition, the Industrial Revolution lasted 300 years, and this technology-led Global Revolution will take only 30-odd years. No single generation has witnessed so much change in a single lifetime.

The current debates about China’s currency, the trade imbalance, our debt and China’s excessive use of pirated American intellectual property are evidence that the Global Revolution—coupled with Deng Xiaoping’s government-led, growth-oriented reforms—has created the planet’s second-largest economy. It’s on a clear trajectory to knock America off its perch by 2025.

As Andy Grove so presciently articulated in the July 1, 2010, issue of Businessweek, the economies of China, Singapore, Germany, Brazil and India have demonstrated “that a plan for job creation must be the number-one objective of state economic policy; and that the government must play a strategic role in setting the priorities and arraying the forces of organization necessary to achieve this goal.”

The conservative-preferred, free-market fundamentalist, shareholder-only model—so successful in the 20th century—is being thrown onto the trash heap of history in the 21st century. In an era when countries need to become economic teams, Team USA’s results—a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top 1%—are pathetic.

This should motivate leaders to rethink, rather than double down on an empirically failing free-market extremism. As painful and humbling as it may be, America needs to do what a once-dominant business or sports team would do when the tide turns: study the ingredients of its competitors’ success.

While we debate, Team China rolls on. Our delegation witnessed China’s people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader—Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily—including, our delegation was told, 700,000 units of public housing annually.

Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

For those of us who love this country and believe America has every asset it needs to remain the No. 1 economic engine of the world, it is troubling that we have no plan—and substitute a demonization of government and worship of the free market at a historical moment that requires a rethinking of both those beliefs.

America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history. Our great country, which sparked and wants to lead this global revolution, needs a forward looking, long-term economic plan.

The imperative for change is simple. As Andy Grove pointed out: “If we want to remain a leading economy, we change on our own, or change will continue to be forced upon us.”

Mr. Stern was president of the Service Employees International Union (SEIU) and is now a senior fellow at Columbia University’s Richman Center.

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“Occupy Wall Street” to Push for Global Tax

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by Cliff Kincaid

Jumping on the anti-Wall Street media bandwagon, Josh Boak of Politico says Democratic Rep. Peter DeFazio’s measure to tax Wall Street has “newfound momentum.” The Soros-funded Think Progress blog quickly jumped on the report, saying the plan is being seriously considered on the Hill. There is only one problem: DeFazio hasn’t introduced any such bill in the current Congress.

Despite the hype from Politico, the issue is a real one. And the threat is not only a “Wall Street financial transactions tax” that could affect ordinary investors but a global tax to finance various international agencies and causes.

It’s just a “tiny tax,” say proponents, that has the support of billionaire Bill Gates and can generate $100 billion a year. A global tax on financial transactions could generate at least $700 billion a year from the U.S. and other “rich” countries.

One of the groups pushing the tax is National Nurses United, whose Massachusetts affiliate is already putting its political muscle behind radical Massachusetts Democratic Senate candidate Elizabeth Warren. Her speech to the Massachusetts Nurses Association convention was given in front of posters saying, “RNs say Heal America. Tax Wall Street.”

Warren just made big news by raising more money than some presidential candidates did in the last quarter.

Taking Obama’s class warfare rhetoric to a new level, Warren recently said, “There is nobody in this country who got rich on his own. Nobody! You built a factory out there? Good for you! But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You, uh, were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did.”

At this point, the Capitol Hill “Tax Wall Street” measure has yet to be introduced. Backers are apparently waiting for the “Occupy Wall Street” protests to build, with further help from the media.

“The Oregon Democrat has teamed up with Sen. Tom Harkin (D-IA) to introduce the measure—a sequel to their 2009 bill—before the November G-20 meeting in Cannes, France,” says Boak.

Boak says the DeFazio-Harkin proposal “fizzled two years ago” in the last Congress. The term “fizzled” is an understatement. The House version, H.R. 4191, only had 25 co-sponsors. The DeFazio bill was referred to the Committee on Ways and Means, the Committees on Rules, and the Budget Committee. But no action was taken on it.

Harkin’s Senate version, S. 2927, fared even worse. He had only three co-sponsors: Sherrod Brown (D-OH), Bernard Sanders (I-VT), and Sheldon Whitehouse (D-RI). It was referred to the Committee on Finance, which took no action.

A photo caption for the Politico story refers to Harkin being a sponsor of the bill which “probably” will be offered before the G-20 meeting in November.

So a bill that already had “momentum” may or not be introduced soon. What is going on here?

The Boak story has all the earmarks of a plant by the Institute for Policy Studies (IPS), a Marxist group pushing the tax. IPS held a seminar on the topic at the recent Take Back the American Dream conference in Washington, D.C. It was announced there that a nurses union would be staging a “D.C. action” on November 3 during the G-20 summit being held in France.

Indeed, this is the next phase of “Occupy Wall Street”—a carefully orchestrated attempt to make it seem like people all around the world are clamoring for a tax on Wall Street. Here, National Nurses United (NNU) is leading the charge and will hold its “major action” in front of the U.S. Treasury Department in Washington, D.C. on November 3.

The nurses will wear their nurses’ garb and hold signs proclaiming, “Heal America. Tax Wall Street.” NNU has created a “Protest in the USA” website to help organize the demonstrations.

The “momentum” for the not-yet-introduced proposal is the result of a far-left network that wants to use the current “Occupy Wall Street” protests to push and pass the tax, which could go global.

The effort cannot be dismissed. On the international level, a group called “Make Finance Work for the People and the Planet” boasts 1,000 signatures of economists on a petition for the “Robin Hood tax.”

The IPS released a report last year promoting the tax, noting how it could help pay for U.S. “global commitments around poverty, health and climate.” The report states, “If the U.S. is going to fulfill its commitments to the world’s poorest, it needs to contribute an additional $80 billion in revenues per year.”

Internationally, the campaign is being organized by Public Services International (PSI), with affiliates in Europe, Latin America, Asia, Africa and Arab countries.

U.S. affiliates of PSI, in addition to National Nurses United, are the American Federation of Government Employees, American Federation of State, County, and Municipal Employees (AFSCME), American Federation of Teachers, International Brotherhood of Teamsters, Service Employees International Union (SEIU), United Electrical, Radio and Machine Workers of America (UE), and the Utility Workers Union of America (UWUA).

A “global day of action” for the tax was already held on June 22 but received little attention here. Sympathetic media coverage of the “Occupy Wall Street” protests is sure to generate significant press attention for the November 3 protests.

The media are determined to create a “progressive” version of the Tea Party, even if the bill to tax Wall Street hasn’t been introduced yet. The actual introduction of the measure will be big news on the evening news programs.

After this is accomplished, critics of the “Occupy Wall Street” movement will no longer be able to say that the protesters have no concrete demands. Obama, at the G-20 event, will undoubtedly then “consider” the proposal, even perhaps say some more kind words about the protesters.

We saw this before. In my December 14, 2009, column, “The Secret Plan to Pass a Global Tax,” I noted that there was a push for the DeFazio-Harkin plan at that time.

The difference now is that the “Occupy Wall Street” protesters, assisted by Van Jones, Soros-funded progressives and labor unions, are mounting a major effort to get the measure passed and they have the support of the major media.

Even if they lose the battle in Congress, Obama will have revitalized his base.

Original Article

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