Buffett Orders Chinese

Stocks are diving today because GM is going to declare bankruptcy. But I think they should be diving for another reason. A Drudge-linked article just exposed the tip of the iceberg that will probably sink America’s auto industry. Warren Buffett just bought 10% (as much as he was allowed) of Chinese automaker BYD.

I have been harping on this for quite some time. Liberals are worried that union workers in the US might be reduced to a mere 200% or so of the daily wage they’re actually worth, as a result of our domestic woes. That’s silly. Our real problem is the huge, highly motivated, highly capable Asian labor market, which is going to make cushy American union jobs a fond memory. If Obama were competent, and if our Congress were not dominated by effete liberal kooks, we might have some chance of fixing our internal problems. But how are we supposed to stop the Chinese and the Indians? We can’t. They’re smart, they work harder than us, they work cheaper than us, and there are over two billion of them. And protectionism, our only remaining weapon against them, has proven ineffective and destructive.

Take a look at this quotation about BYD’s founder, largest stockholder, and CEO:

Wang entered the automobile business in 2003 by buying a Chinese state-owned car company that was all but defunct. He knew very little about making cars but proved to be a quick study. In October a BYD sedan called the F3 became the bestselling sedan in China, topping well-known brands like the Volkswagen Jetta and Toyota (TM) Corolla.

Not exciting? Look again. He didn’t beat the incompetents at the Big Three. He beat TOYOTA, and our homegrown companies are to Toyota as Chuck Wepner was to Muhammad Ali. And he did it in half a decade. He also stomped Sony and Sanyo; he produces batteries cheaper than they can. Not cheaper than they do. Cheaper than they can. And the secret is cheap Chinese labor. China is the Wal-Mart of human beings. The supply is high, and the cost is low.

BYD has an electric car. Here, let me save myself the effort of paraphrasing:

BYD has also begun selling a plug-in electric car with a backup gasoline engine, a move putting it ahead of GM, Nissan, and Toyota. BYD’s plug-in, called the F3DM (for “dual mode”), goes farther on a single charge – 62 miles – than other electric vehicles and sells for about $22,000, less than the plug-in Prius and much-hyped Chevy Volt are expected to cost when they hit the market in late 2010. Put simply, this little-known upstart has accelerated ahead of its much bigger rivals in the race to build an affordable electric car.

Isn’t that special? The Big Three take eons to get anything to market, and when they do, it’s often disappointing. But this Chinese nobody appears to be able to put competent innovative products on showroom floors, and he has only been making cars–not just electric cars, but cars, period–since 2003.

What’s the quality like? It doesn’t matter. Two reasons. First, the price is so low, the quality would have to be abysmal to affect sales, and it’s probably not abysmal. Second, the quality is getting better. I don’t know that because I checked. I know it because I’ve seen the trend in Chinese products AND I’m not a moron.

It looks like we may be headed in the sad direction of electric cars and other depressing little poverty jalopies. We are told that these machines are “progressive” and “green,” but that’s leftist lipstick on a very big and smelly pig. In reality, they reflect our decline as a nation. They are symptoms of failure.

The Chinese ride bicycles to work. It’s green as hell, but that’s not why they do it. They can’t afford cars. We’re headed in that direction, and they’re headed in ours. The Chinese will upgrade from bicycles, and we’ll downgrade from real cars that provide safety, comfort, and jobs. So there is probably a bright future in BYD’s silly little half-cars. And if there isn’t, they can make ordinary cars and still beat us like rag dolls. There is no law that says they can only make nutty little Urkel vehicles. The Japanese started with econoboxes, and now they sell big belching land yachts.

The sense that I get when I look at the world is that God doesn’t bless the US the way he used to, but he continues to bless individual believers very powerfully. I continue to believe that our rebellion–our disgusting behavior and attitudes–have cost us our role as the world’s leader, and that we’re never going to get it back. China and India aren’t going away. Neither is Russia, which sabotages us and assists our enemies whenever possible. When I read stories like the BYD article, it confirms what I have suspected. It’s time for individuals to put God first and work to get his blessings, because the rising tide that used to lift all boats has disappeared. In the past, anyone could make it in the US. In the future, you’ll have to make it on your own merit.

I read another article recently which bolstered this notion. Some guy who used to be a stockbroker was delivering pizzas for a living. He had a huge house, and his income had been as high as $750,000 per year, and he was working for a pizzeria to feed his family. That’s a great example of what I’m talking about. I know utterly ordinary people who have gotten rich simply because the US was a prosperous country where even the most unimpressive human being could get lucky. Some of these people credited themselves; that’s human nature. But the fertile, friendly environment in which they worked is what made them. God provided that.

I’ll tell you what qualifications you need to be a stockbroker. None. You do not have to be a financial expert. You do not need an IQ above 90. You do not need any talents. You don’t need to be able to predict what the market will do. All you have to do is persuade other people to buy and sell securities. Period. Bottom line. End of story. That’s it. If you can sell a TV at Best Buy, you can be a stockbroker. It’s a fantastic job for someone who isn’t bright and doesn’t have a postgraduate degree. A chicken can do it. And jobs like that used to be a lot easier to come by, because of America’s wealth. Now they’re drying up, and people who thought they were successful because of their innate superiority are finding out how lucky they really were.

If you don’t believe any of this, get in your car and go talk to three brokers. While you’re there, ask how they did on the SAT. Give them a crossword puzzle, and tell them if they can do it in an hour, you’ll give them your retirement money. Good luck.

The pizza job is not the anomaly, here. The anomaly is an ordinary person with pizza-delivery-grade skills, making $750,000 a year in commissions. It’s so easy to be greatly blessed and not realize it.

I say the Chinese will dominate the US auto market within ten years. And the Big Three will be gone or bought out. I’ve been told I’m wrong, because the Japanese used to be in this same situation, and their labor costs went up. Are labor costs going to go up in China, where they have almost a billion and a half people who need work? Compared to the US, Taiwan has low labor costs, and they pay about eight times what the Chinese do. EIGHT. I think there’s still a lot of headroom in the Chinese cost structure. I’m no expert, but I don’t think Chinese manufacturing expenses are going to increase fast enough to help the Big Three. It didn’t happen in Taiwan, and China is in a much better situation.

Get ready for your first Chinese car. It’s coming.