As we have been suggesting for a while now, the biggest and most damaging impact from China has not been the poisoned dog food or the counterfeit toothpaste, nor is it even the lead in children’s toys or the SARS epidemic which originated in China and almost shut down parts of Canada. Serious and unsettling as these have been, they pale in comparison to China’s apparent power to induce North American consumers to fall into a state of obliviousness and sleep walk into disaster in their pursuit of cheap products.
It seems many have forgotten that they are really dealing with and enriching a regime that is fundamentally corrupt, as any dictatorship which lacks principles of transparency and accountability fundamentally is. The West was too quick to grant China most favored nation status some years ago. It did so without thinking about the consequences —about the lost jobs at home, the appalling working and sanitary conditions in China or about making a communist totalitarian system one of the major creditors of the United States. We are beginning to see some of those consequences, just as we are the spectacle of what some companies will do in placing profits ahead of prudence.
As we have remarked before, the real concern is that this is just the tip of the iceberg and that a number of other shocks lie ahead —not just involving product safety but other ways in which the China contagion of corruption and deceit, along with its mounting wealth, has afflicted our society, our economy and our institutions.
It has long been said that there is no free lunch. If that is the case, perhaps we have all paid a much higher price than anticipated for the products we thought China was producing at bargain basement prices. What we observed a few months ago seems particularly fitting at this time of summer holidays and daily horrors in the marketplace.
None of us can afford to take a vacation from the stakeholder responsibilities we all have as citizens, consumers and investors, and when we do, the results can be chilling.