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Friday, January 14, 2011

Glenn Beck Program, January 14, 2011

The theme for today is China.

The genesis for the program today was two things…
  1. Toy – Glenn held up a small animal-like toy. 
    1. He got this when he took his son to Burger King. 
    2. It is a Zhu Zhu (Sp?) pet. 
    3. Not only was it manufactured in China, it is a part of China’s culture, not ours. 
    4. Not only are we getting “stuff” from China, we are now starting to see part of their culture show up in ours. 
    5. This is something that historically we were used to doing to the rest of the world, e.g., Coca Cola, Mc Donald’s, Starbucks, etc.
  2. A headline in a newspaper “China Holds Line, Won’t Commit to Strategic Talks with the U.S.”

Other headlines during the last few weeks…
  • China Passes U.S. as World’s Top Car Market. 
    • To Glenn, this means that China gets it’s choice of the cars and we get second choice.
  • Germany No Longer World’s Largest Exporter…China is
  • Education Survey:  China Scores Top Marks; U.S., France Lag.
  • U.S. Teams Lag as China Scores on International Tests
  • China Leads Asia-wide Acceleration in Manufacturing
  • Oil Prices Rise as U.S. Supply Declines
  • China Overtakes U.S. as Biggest Entergy Consumer
  • China is Pushing Up Cost of Gas Production in U.S.
    • Previously, we got the oil that was easiest to refine because we were the largest buyer.  Now, China is and we are getting lesser quality crude, which is more expensive to refine, pushing up our gas prices.
  • 2.4 Million U.S. Jobs Lost to China
  • Shanghais Now World’s Busiest Container Port
  • China Now Has World’s Fastest Supercomputer
  • China Military Making Quick Advances
  • China Has a New Steal Fighter Waiting in the Wings
  • U.S. Sounds Alarm at China’s Military Buildup
  • Chinese Mothers are Superior

Empires over history came and went. 

China is expected to pass the U.S. economy in 9 years.

5 Factors of Economic Growth
  1. Entrepreneurship
  2. Innovation
  3. Capital
  4. Labor
  5. Technology and Raw Materials

China has been buying minerals and oil all over the world.  China’s leader has been to the U.S. twice in the last two years.  He has been to Africa 4 – 6 times in the last six months.

Glenn discussed how China and the U.S. compare on the above 5 economic growth factors.  Of them, the U.S. leads only in Entrepreneurship and Innovation – barely.  One study he saw reported that the ability of U.S. kids to think “out of the box” is in decline.

Today in the U.S., many government policies are restricting Entrepreneurship and Innovation.  It’s been said that Bill Gates could not start Microsoft today given current governmental restrictions.

He held up 2 books
  1. 1421 – The Year China Discovered America
  2. 1424 – The Year a Chinese Fleet Sailed to Italy and Ignited the Renaissance.

The Chinese have always felt that America was a blip that will be corrected over time.

China is soon to become a superpower.

Glenn spoke to a billionaire who met with the Chinese.  Their message to him was that we were screwed, but stated it more politely.  They told him that the one area that we were superior was in the ability to think outside of the box.

  • Jim Rogers – A global investor and self made millionaire.
    • Author of “A Bull in China: Investing Profitably in the World's Greatest Market
    • His best advice to Americans is to have your children and grandchildren to learn Mandarin.
    • He moved his family to Asia so they would understand the culture.
    • Started Quantum Fund with George Soros 41 years ago.
  • David Bruckner – Professor at Columbia
    • Goes to China 4 – 5 times per year.

Jim – Two things make up an economy – labor and money.
  • He claims money is leaving America for China and Asia.
  • He spends most of his time helping American companies get set up in China, teaching the Chinese how we run our companies.

David – What we inspired here over the last 100 years is now being internalized in China.

Jim – America is the largest consumer in the world.  China is the largest creditor in the world.
  • America has been spending on consumption.  China has been saving and investing for the future.
  • Japan and Germany both have higher labor costs than in the U.S. and they can still compete.  However, there are other factors that increase costs in America, e.g., health care, litigation costs, American children do poorly on international tests, etc.

Glenn compared the U.S. decline with the decline of the British Empire at the turn of the 20th Century.  He asks his guests “If you don’t want to repeat history, what do we have to do?”  What does the average American do?

Jim – It has to start with education for their children and grandchildren.
  • He has a daughter in second grade and they push the kids. 
  • She has more homework that he got in any grade here in the U.S.
  • The Singapore school system is very vigorous and very demanding.
  • These kids are working their heads off.
  • China produces 20 or 30 times as many engineers as we do every year.
  • In America, we don’t teach math and science.
  • We teach self-esteem.
  • In Singapore where he lives, you have to earn your self-esteem.

David – The average individual has to inspire innovation.  Make sure government policies allow for entrepreneurship.

Glenn – If Americans were told the truth and left to solve their own problems and the government reduced the spending dramatically and the bureaucracy and the cost of getting stuff done, would that make a difference.

Jim – Of course. 
  • We have to stop spending all this money and running up all this debt.
  • You have to change the tax code to encourage savings and investment, instead of huge consumption
  • No one got rich by spending.  You get rich by saving and investing.

David – He has confidence in two things: hunger and knowledge.
  • If people knew spending without innovating and growing is debt – worse if it someone else’s money.
  • With hunger comes innovation.
  • If something is in decline, people will become hungry and this will drive innovation.
  • Historically, after each of our recessions has come a great boom.

Glenn – Is “State Capitalism”, the system China now uses, is that the right way to go?

Jim – No.  Massachusetts is more communist than is China today.
  • What will work is innovation and capitalism.
  • They are moving away from socialism.

David – Culturally, the Chinese start with the “Greater Good” and work down to the individual.  In America, we start with the individual and work up to the “Greater Good”.

Glenn – China has it’s own problems as well.  They are sitting on a powder keg.

Jim – America is sitting on a powder keg.

Glenn – The only way forward for America is entrepreneurship.

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