Thursday, September 16, 2010

The Two Sides of Trade

The Real Conundrum: Why the Hell Do We Care if China Manipulates Its Currency in Our Favor?

Here’s a little editing fun of Harold Meyerson’s article in today’s Washington Post:

“This week, committees on both sides of Capitol Hill will plumb the conundrum of Chinese currency manipulation. The conundrum isn’t that — or why — China is manipulating its currency: By undervaluing it, China is systematically able to underprice its exports, putting American (and other nations’) manufacturing consumers and businesses that purchase China’ cheap imports at a significant disadvantage. The conundrum is why the hell the United States isn’t doing thinks it should do anything about it.

The strike-throughs and bold are an intended to note the myopic nature of the original argument.

While of course both are caricatures and don't necessarily provide a completely accurate picture of the world as it is. The first view, that trade with China is all bad all the time, is one that has proven incredibly resilient to counter-argument.

International trade will be front and center in the race for WI-8. Steve Kagen has already made it clear that he is anti-trade and doesn't miss an opportunity to remind the voters of this.

The one thing I can't tell from his statements, however, is whether he's come to this position after a careful study of the effects of trade on consumers and employees, or if his anti-trade stance is based on the fact that Labor organizations provide so much of his campaign cash.

Posted via email from rhymeswithclown's posterous


Dad29 said...


While "saving money for consumers" is supposedly the trump argument over which none else is acceptable, it is not true.

Over the last several years, and at an accelerating rate in the last 2-3 years, PRC goods have demonstrated serious quality problems. This is not limited to food/medicine items. It is pandemic, including hard-goods such as computer components and steel fabrications.

Further, while currency-manipulation is problematic, the US' regulation-and-tax regimes are far more problematic for US manufacturers.

Finally, the argument that it is all "labor costs" is patently absurd. In any well-run manufacturing operation, the cost of (direct) labor is around 5% of the cost of goods sold. This happens to buttress the above argument: that reg/tax costs are the real difference, not "labor costs."

So, the question is one of equity, not of pure "cost." If "cost" is the issue, then certainly those who choose private education are economic morons and (by your inference) deleterious to the success of this Republic.

If "cost" is a problem, then the medical establishment in the US should be tried and hung as traitors.

Blogger said...

eToro is the ultimate forex broker for rookie and pro traders.