MORAIN: Does China offer model for jobs?

September 7, 2010 

Boxer, Fiorina cartoon

(REX BABIN / RBABIN@SACBEE.COM)

In their campaign for the U.S. Senate, Carly Fiorina and Barbara Boxer argue over all the hot-button issues: abortion, gun laws, stem cell research, same-sex marriage.

But perhaps the most relevant issue involves China, and all it is symbolic of — not as a military power, but the economic giant and jobs magnet.

Fiorina has a soft spot for China. When she worked as an executive for Hewlett-Packard and earlier for Lucent Technologies, she opened plants and "right-shored" manufacturing jobs in the People's Republic of China.

"China has done wonderful things to create jobs," Fiorina told reporters after last week's debate at St. Mary's College.

Boxer's view is very different. "I've been there," Boxer said. "You should see the workers, how they live, and the government bureaucrats live high on the hog — a little bit like CEOs."

In their debate, you would have needed your fingers, your toes and maybe those of a friend to tally the number of times Boxer slammed Fiorina for sending "jobs to China," "shipping jobs overseas," "stamping 'Made in China' " on her companies' wares.

At every opportunity, she tells voters that under Fiorina, H-P shed 30,000 jobs. Fiorina says that unlike career politician Boxer, she has had to make the tough choice to cut some jobs to save others.

We won't know until votes are counted whether her time as CEO helps or hurts. But for moneyed interests, her experience is her calling card.

The U.S. Chamber of Commerce is aiming to raise $75 million to take back the House and Senate, and likely will start spending heavily on television ads in the coming days.

"The Fiorina-Boxer campaign is extremely important to the U.S. Chamber of Commerce," said William C. Miller Jr., who oversees the group's political operation. "We can wring our hands about why jobs are leaving, but businesses go where they can compete. What Carly Fiorina talks about is that we need to fight for every job and lift the burdens on American companies."

Fiorina praises China's Special Economic Zones, free-market areas within the communist country where the regime eases taxes and any other laws to spur development.

The most notable is Shenzhen, a fishing village in the 1970s that has been transformed into a metropolis of 8.6 million people and is home to factories owned by multinational firms.

It's hard to imagine a Shenzhen happening in the United States, but Fiorina urged creation of special zones where the government would grant tax breaks and "use the power of the federal government to cut through regulation" to aid businesses that provide jobs.

"China rewards innovation better than we do," Fiorina said.

Innovation is one way to describe it. But UC Berkeley Professor Harley Shaiken, an expert on labor and globalization, notes that manufacturing wages in China are 10 percent or 15 percent of what they are in this country. And Chinese workers lack the basic right to strike.

Certainly, there would be no Silicon Valley without China and other countries where labor is cheap and environmental restrictions are lax, if they exist at all. But special economic zones that work well for China would not translate here, says Professor Tomas Gomez-Arias, director of the Center for the Regional Economy at St. Mary's.

"We are a much freer economy," he notes. "The labor market is much freer in America. As much as we can complain about taxation, we are in a much better situation."

Fiorina's vision for special zones has a familiar ring. California lawmakers have created 42 "enterprise zones," with the goal of spurring job growth in depressed areas.

Businesses locating in the zones get state tax breaks amounting to $500 million a year. But many jobs go to low-wage food service and retail workers. And some zones are in areas that hardly need the help, like San Francisco's bustling South of Market area.

Worse, they don't work. The Legislative Analyst's Office has recommended their abolition "because they are expensive and not strongly effective."

Fiorina's admiration for the ways of China is ironic. She decries regulation and high taxes imposed by Washington, viewing a strong central government here as bad. But she extols China's highly centralized government, which can require aggressive policies to create factories.

Boxer, organized labor's darling and a skeptic on free-trade agreements, offers big promises, too. She says she envisions a return to the day when products have "Made in America" stamped on them. She sees California as the hub of the new green-technology industry.

That's a nice idea. No doubt, California's big thinkers will imagine much of the new clean energy technology.

But in this flat world, once they develop the next new thing, they will in all likelihood send it to China, where it will be pieced together by workers earning 10 percent of their American counterparts, at least those who have jobs.

THE SACRAMENTO BEE

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