A Bloodless Ascention

A little over a week ago, China was able to capture 15% of the world's internet traffic and route it through their domestic server. They maintained this for about 18 minutes.  During that time, they had access to everything from email addresses to encrypted military documents.

Make no mistake about it - China has made their entrance.

There are those that may think, "I'm not worried, out military is way stronger and decades more advanced."  While this is true, I would caution that this is only a passing situation.  And even if it weren't, even if we always maintained the world's largest military, that does not mean our position as The World's Superpower, is not in danger.

Those that know, know that economics determines who makes the rules.  I don't care how many guns you have.  If there are no jobs and you owe money to everyone, then you are in big trouble.

China grew its economy by using our system of free trade. The only problem is, they cheated.  They don't let the market determine the flow of money and goods.  The government subsidizes industries they want to grow.  They get the money for this by keeping about 1 billion people working for poverty level wages.

Now, this is not about, Don't buy Made In China because of the poor workers.  If the workers their don't like the way they are treated, let them rise up and take care of business.

No, this is about free trade not working because China is cheating. Here is an example;  In Eastern Europe, China is starting to take over all of the infrastructure for the telecommunication industry.  Local companies are losing bids to Chinese companies because the Chinese bids are so low.  For a European company to win a bid, they have to propose a price that is far less then their break even point.  The Chinese don't care if they lose money on the deal.  After all, they have plenty of slave labor that produce profits in other sectors.

So, China takes over Europe's telecommunications industry and they can take over the internet at will.

The real threat to us, is not the Chinese, however.  In India, they have this thing called a Manufacturing Policy.  It's a plan to grow and manage their country's manufacturing base. One of its key points is to foster education and innovation.  This is a real threat to our economy.  They actually plan on learning to do things better.  The Chinese don't care about better.  They are happy to copy your technology and sell it back to you at half price.  I consider that marginally sustainable.  However, there are now nearly a billion Indians that plan on "doing it better".  This is our specialty and they want in on it.

You may be wondering what our Manufacturing Policy is here in the United States.  We have none.  We talk a lot about rebuilding our manufacturing base when in reality, we've forgotten how to do things.  We've forgotten how to innovate.  Our parents built up some economic momentum and our children are riding the wave.

We are doomed if this is our plan for the future.

The solution and the biggest roadblock resides in Washington.  Politicians more interested in winning elections than in doing what is best for the country are our worst enemy and our only hope.

Then of course, there is me.  I'd pitch in but there is a world to save.

Up, up and away...

Jim