The Union Boss, who Visited Obama Regularly, Speaks

by Robert Wenzel 

In early 2009, then-Service Employees International Union President Andrew Stern visited the White House more often, 22 times, than any other person who had to log in, according to White House.

Stern, who has left the SEIU, is today out with an op-ed in the WSJ dissing free markets and hailing the centrally planned segments of China's economy.

He writes in an article titled, China's Superior Economic Model:

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."...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.

What does Stern want to replace free markets with? Central planning, of course:

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.

This is rich coming from a former union chief, since it is the union demand for higher minimum wage laws that is behind so much unemployment among unskilled youth. Yet, he blames the unemployment on "failing free-market extremism"!

What is this Chinese success that we should study? Stern tells us:

[In China],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.

Does Stern have any clue? China is on the edge of one of the greatest economic collapses in the history of mankind. The 700,000 units of public housing that are being constructed are a fraud. They are mostly of poor quality and vacant. In fact, some reports indicate that there are 60 million vacant apartments in China!! Yes, 60 million!!! Even Vice-President Joe Biden stated the vacancies are in the 30 to 50 million range. Further, there are empty and near empty train stations and airports, of poor quality, throughout the country that serve little purpose than as a propaganda machine for the supposed growth created by the planning authority.

As for the pay increases of 10%, all indications are that price inflation is in the range of 15% plus. Some pay raise.

This is the model that Stern is hailing. It's an absurd model. Think of it as a central planned economy designed by Dali, with small pockets of free market activity.,

Stern has absolutely no clue what the hell is going on in China. Yet, he has no problem hailing China's Dali-style central planning while modifying his mention of the free market with derisive adjectives such as fundamentalist, extremism, empirically failing,unquestioned truism and worship.

Stern's column shows us he is ignorant about basic supply and demand economics. Markets clear. There wouldn't be any unemployment problem in the US if markets were allowed to clear by eliminating minimum wage laws and if we didn't pay people for 99 weeks unemployment "insurance" not to work.

The column also shows that Stern has never grasped what Mises and Hayek taught us, that central planning as an economic system will be a failure because it distorts an economy and has no price signalling mechanism. Thus, the multi-millions of vacant apartments in China should come as no surprise.

Finally, Stern spouts off "facts" about China as though he really understands the country. He should really keep his mouth shut about China until he learns the facts and then if he still wants to be an advocate of China central planning and wants to not be caught denying the collapse that is coming, he should do what Henry Kissinger did to me when I asked him about the prospect of economic decline in China, growl and walk away. He'll make less of a fool of himself than by touting an economy that is to major degree a centrally planned cardboard economy. At least, in the US when we had a Fed manipulated boom, there were actually people living in the houses. China can't even get that right---to the tune of  30 million plus vacant residences.

I shudder to think what Stern and Obama talked about.