May 6, 2011
-- by Dave Johnson
China's Vice Finance Minister lectured US administration officials about our debt and told us to mind our own business when it comes to China's currency manipulation. It is about time the United States started minding our own business by taking steps to protect our business and bring manufacturing and jobs back home.
Leading up to next week’s US-China Strategic And Economic Dialogue, China's Vice Finance Minister Zhu Guangyao butted into our business and told the US we should reduce our debt. He also told us to keep out of their business and not bother them about their currency manipulation. In the story China Paying ‘Close Attention’ to U.S. Debate on Increasing Debt Ceiling, Bloomberg News reports,
“We are paying close attention to the domestic discussion in the U.S. on debt and deficits,” Zhu told reporters in Beijing today. “We hope the U.S. can take effective measures toward fiscal reorganization just as President Obama suggested.”
[. . .] Zhu also said that currency policy is the “sovereign right” of every country.
China says currency manipulation is their "sovereign right." They say we should mind our own business. But they insist that "free trade" means America does not have a right to mind our own business and protect our own workers, companies and jobs.
It's Time To Mind Our Own Business
It is time to finally mind our business and take action. For decades the United States has refused to mind our business by pursuing "free trade" policies that allow other countries to engage in all kinds of trade schemes, while we just sit back and let them. Our leaders have not protected American workers, companies and jobs, instead sending them out of the country. We are told that the resulting "low prices" at Wal-Mart justify letting manufacturing move out of the country,
It is time for us to mind our business, and engage in our own sovereign duty to protect American companies, workers and jobs from the trade manipulations and schemes others engage in. It is time to hold countries like China and Germany accountable for the damage done to our businesses by their mercantilist trade policies. Trade barriers, currency manipulation, even outright extortion - demanding that our companies transfer proprietary technologies and processes if they want to do business selling into other countries - has cost us factory after factory, job after job and company after company.
As an example of how this has worked, in 2008 George Bush made the following argument for a trade treaty with Columbia,
In other words, the current situation is one-sided. Our markets are open to Colombia products, but barriers exist to make it harder to sell American products in Colombia.
I think it makes sense to remedy this situation.
President Bush wasn't saying he was going to do something about the one-sided arrangement and hold Columbia accountable, he was saying that since we just let Columbia do this to us, therefore we need to reward them with a free-trade treaty that gus American jobs even more! But why not just mind our business and stop it? All we really have to do is tell Columbia we are going to do what they do, until they stop doing that, start paying workers a decent wage and protecting their safety and rights.
Why China Really Cares
The fearmeisters say China is concerned that we might not meet our debt obligations. This is not at all what China is concerned about. China holds $1.15 trillion in Treasuries, accumulated as they sell goods to us, and don't let us sell goods to them. What they are concerned about is that our currency might drop, which will help bring factories and jobs back to America. From the Bloomberg story,
“Reduced U.S. fiscal spending may lead to a higher possibility of the U.S. dollar appreciation, therefore it helps China to maintain the value of the U.S. debt it holds,” said Li Jun, a Shanghai-based strategist at Central China Securities Holdings.
Their concern about our debt is really just about keeping their currency low, which gives goods made in China a huge price advantage in world markets.
Let Trade Be Trade
It is time to mind our business and mind our businesses. It is time to take action on mercantilism and currency manipulation. It is time to stop China and others from flooding our markets with goods made without the wage, safety and environmental protections that democracy provides.
Let trade be trade. Trade is supposed to be about trading. It is not supposed to just be a scheme to drive wages and living standards down by packing up factories and moving them across borders. It is not supposed to be "take a pay cut and a cut in benefits or we'll move your job." It is not supposed to be "well, we have something called globalization now so everyone should expect to be poorer and poorer every year."
Trade is supposed to be we buy what they make and they use the money we pay them to buy things we make. And then we use the money they paid us to buy things made there. And then they use the money we paid them to buy things made here. It is supposed to go on like that, and everyone does better and better. Better and better, not poorer and poorer.
It really is time to mind our own business and tell countries that can't sell to us until they meet our conditions. Which is just what they do to us.
Posted by Dave Johnson at May 6, 2011 6:27 PM
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