California Rail Project A Way Out Of Beggar-Thy-Neighbor?
April 20, 2010 - 3:53pm ET
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From a New York Times report on ongoing talks between the State of California, General Electric and various parties in China on a contract to develop a high-speed rail line from San Francisco to Los Angeles, possible extending to Anaheim and San Diego in the future:
... The railways ministry has concluded a framework agreement to license its technology to G.E., which is a world leader in diesel locomotives but has little experience with the electric locomotives needed for high speeds.
According to G.E., the agreement calls for at least 80 percent of the components of any locomotives and system control gear to come from American suppliers, and labor-intensive final assembly would be done in the United States for the American market. China would license its technology and supply engineers as well as up to 20 percent of the components.
State-owned Chinese equipment manufacturers initially licensed many of their designs over the last decade from Japan, Germany and France. ...
The Chines government banks are interested in investing some of their considerable spare cash in infrastructure projects like this, and Chinese companies seem willing to do as they were done by, helping US workers and companies develop the job skills and institutional expertise to pull off a large, high-speed rail project. Add in the health and economic benefits of cutting freeway congestion, oil consumption and the need for in-state air travel, and this has win-win-win written all over it.
So whether this particular deal goes through or not, it's a good model for cooperation. Neither country's economy can well survive a crash of the other's economy. We're going to have to learn to play well with each other at some point.
As to how badly things can go when countries don't cooperate, when one country simply destroys the industries of another because they can, because there are no repercussions, we only need to look as far as Haiti. Former President Bill Clinton said the following about US agricultural policy towards Haiti:
Since 1981, the United States has followed a policy, until the last year or so when we started rethinking it, that we rich countries that produce a lot of food should sell it to poor countries and relieve them of the burden of producing their own food, so, thank goodness, they can leap directly into the industrial era. It has not worked. It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake. It was a mistake that I was a party to. I am not pointing the finger at anybody. I did that. I have to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people, because of what I did. Nobody else.
It doesn't really matter if we're talking rice, tires or trains. When countries put each other's workers deliberately out of their livelihoods, they often can't afford to buy even the cheap imports they couldn't compete with anymore. It's not a help.
Which is why the terms of this rail deal, so far, sound so very good. It seems to be the opposite of the beggar-thy-neighbor mercantilism that the US (mostly, but not in agriculture,) abandoned during the Great Depression, and which China will hopefully abandon in coming years.
Our choice is between cooperation and the promise of a good future, or continuing to fight over which dwindling resources the victorious country can pointlessly squander fastest. You'd think the choice would be obvious, but apparently, it isn't.
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