Anti-Consumer Trade Policy

I have to reprint this Carpe Diem post nearly in its entirety.  Mark Perry does some editing on a Harold Meyerson WaPo article:

"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.

There are certainly plenty of senators and congressmen -- and Main Street Americans U.S. producers that compete with China -- who'd like to see the White House place some tariffs taxes on American consumers and businesses who purchase the underpriced low-priced Chinese imports. If the administration doesn't act, Congress may just consider mandating some tariffs punitive taxes against American consumers and business on its own."

  • Ron H.

    I only today found Meyerson's column because of the Carpe Diem posting, and I'm really glad I did. Now, when the world seems just too gloomy to bear, I know I can get some comic relief from Meyerson.

  • http://www.freemktproject.com Pat

    Nice. The elites in government make no connection between anything they do and what the real world consequence is.

  • http://evilredscandi.blogspot.com Evil Red Scandi

    "Dey dirk our dirrrrrr!" - South Park (no, if you didn't see the episode, you won't get it)

  • caseyboy

    Great editing job to illustrate the wrongheaded thinking of our NYC & Wash DC elites. Where do you think union leadership comes down on this? What is wrong with low prices anyway? What arrogance! Not only does our government want to manage ever aspect of American business and life, but now they want to tell China how to manage its monetary policy.

  • GaryP

    I have always been a free trader and libertarian on the grounds that having the government restrict free trade was worse than the alternative.
    However, the societal costs of allowing slave labor(no other word for it) in China and other "Asian Tigers" to compete with free labor is unacceptable.
    Free trade with Korea, Europe, Japan and Canada is one thing (however, even in those cases, govt subsidies, such as those given to Airbus--and, to a lesser extent, Boeing--need to be balanced to ensure that foreign governments (or our government) don't use taxpayer dollars to destroy an industry in another country using dumping of goods below cost, followed by raising prices once the competitor is gone.
    Students of history should know the social cost of slave labor on poor whites in the antebellum South. The only jobs available to non-land owning whites were jobs too dangerous for slaves (such as draining swamps). My ancestors lived that. They struggled to feed themselves because they were competing for jobs with slaves and didn't emigrate to the free parts of the US (for family reasons, lack of vision, whatever). American workers competing with foreign slave labor have no options unless tariffs are used to minimize the incentive for multinationals to use slave labor to cut their costs by moving jobs offshore.
    Multi-nationals have become the new plantation owners. They export any job they can to countries with no laws, no social structure, and people desperate for any job less arduous than rice paddy work.
    US workers loose their jobs, their futures, and work ethic and skills, not because they were unable to compete (competition is good) but because they could never compete with slaves. The gap between the cost of a Chinese workers and an American worker is so large that it is not a question of competing. No competition is possible because most of the cost of the Chinese worker is hidden because he or she has no options but to take whatever wage is offered. Chinese workers are starting to try to change this but with they have little or no chance to be economically free because they have no political freedom.
    The effects of competition from high quality foreign auto manufacturers on inefficient, union-hampered, US auto manufacturers has been good. GM and Chrysler should have been allowed to fail. If GM can't compete against a Japanese or German car company that employs people in a free country, that is one thing. Not being able to compete against a command economy with slave labor is another.
    I don't have all the answers. Certainly tariffs are a blunt instrument whose use to protect inefficiency is wrong. However, to prevent Americans from becoming serfs because they have no other way to provide food for themselves is not acceptable either.
    No one can take a logical, consistent position on any subject because it is not a logical, consistent world. For example, I believe in democratic elections but if the one side is performing massive voter fraud, you can't expect the other side to just accept the election results because they believe in democracy.

  • MJ

    "...but now they want to tell China how to manage its monetary policy."

    Yes, because they did such a bang-up job with our own monetary policy.

  • EconStudent

    The argument you use for not allowing other countries to lower prices can be directly applied to not allowing WalMart to lower prices. If we allow WalMart to subsidize it's sales in Colorado by being a powerhouse in Arkansas, and it drives other grocer's out of the market, and they will then raise prices. But that never happens. If Airbus were to lower prices enough to drive Boeing out of business (which, by the way, would completely bankrupt already precarious financial positions in Europe), then when they raised prices another company would buy Boeing's old equipment and plans and bring it back into business.

    Directly to this post, by allowing China to sell us goods at low prices, regardless of the labor source, we are allowed to spend less money on necessities and more on luxuries that will employ more skilled American workers. If China uses slave labor for this (which I would love to see sources for), then more benefits to us, other than it's not a sustainable labor system. Regardless of that, by devaluing their currency as China does, it provides benefits to the rest of the world and they almost individually absorb the costs. What right does out government have to say 'They are giving us too good of a deal, so we need to correct that?' If the supermarket sells you items below cost, do you tell them 'Wait a second, I should pay you more for that'?

  • NJConservative

    They are losing a bit on each sale, but making it up on volume.

  • http://http//www.tinyvital.com/blog John Moore

    I doubt the Chinese can keep this up much longer. There's every sign that their economy is in a Japanese-style bubble, and ready to burst. For example, there is enough empty housing in China to hold the whole US population - and that housing exists because families are buying as investments - empty, no rent, not living in it.

    The place is going to implode, at which point our problems with China will be a lot worse than exchange rates.

  • Nathan Benedict

    GaryP--care to provide some evidence of this slave labor? I mean, evidence that some large % of China's workforce is literally enslaved. I'm sure you can find anecdotal instances, just like you can in the U.S. But the huge majority of Chinese who work 12 hours a day in sweatshops do so not because they are chained to their machines, but because it beats working 16 hours a day on a farm.

  • http://genericconfusion.blogspot.com Greg

    It's a standard problem, seen in tax policy and elsewhere. The people who get the good domestic manufacturing jobs that pay far above their value (or government earmarks, etc.) receive a significant benefit, and are easily identifiable. The people who suffer, by having to pay more for the products produced at a premium (or pay higher taxes, etc.), pay a fractional cost that can't easily be identified. The more of the former group exist, the greater burden on everyone else.

  • http://evilredscandi.blogspot.com Evil Red Scandi

    @Nathan - 'slavery' is being used in the usual context of absurd hyperbole that leftists use when describing something they don't approve of.

  • Lewis

    I would be really happy to make the trade-off: higher consumer prices in the US in exchange for more manufacturing jobs in the US. What good do cheap TVS and jeans do us if 20% of us are out of work? I'm retired, so I fall into the category of consumer and not into that of manufacturing worker, but that doesn't matter to me and I'll bet a lot of other consumers feel the same way.

  • Not Sure

    Lewis:

    Do you mean to say you can't find any expensive tvs or jeans to buy where you live?

    Or that you want other people to have to pay more for tvs and jeans than they want to, because you think it's a good idea?

    I bet it's #2- what do I win?

    Know what would make me really happy? If people didn't think forcing their personal preferences on other people was an acceptable way to behave.

  • spiro

    Lewis wrote:
    "but that doesn’t matter to me and I’ll bet a lot of other consumers feel the same way."

    Actually, judging by the monstrous success of Wal-Mart, most consumers ardently disagree with your stance. Sorry Lewis.

    ps. how would an increase in manufacturing jobs in the U.S. generate more income for the people working in other professions? Or do you just expect everyone else to sacrifice a larger portion of their incomes for "the common good"?

  • Roark

    I have to admit I'm with the Coyote on this one. I got a 32" HDTV at Sam's Club for $299 last week. Like the Coyote, I don't give a fuck if it was produced by some Chink making a bowl of rice a day.

  • Ignoramus

    “I don’t give a fuck if it was produced by some Chink making a bowl of rice a day.”

    But you should give a fuck.

    If we didn’t have social welfare programs, etc, etc. you and Coyote would be correct from a strictly microeconomic standpoint.

    But that’s not what the facts are on the ground. I’m legally required right now to pay for the shelter and healthcare of some other guy’s retired parents – it’d help if the other guy had a job so he can kick in too.

    I didn’t invent it, but it’s the world we actually live in – not a purist microeconomic fantasy world.

  • SunSword

    Actually there is a percentage of the Chinese labor force that is enslaved, or as close to it as makes no difference. They work typically 12 to 14 hours per day, with no workplace safeguards (e.g. they are exposed to toxic fumes and chemicals without ventilation). The prison factories are owned and controlled by the Chinese army.

    Now what makes this a bit different from the US prison system is that prisoners there can have their time extended at the Warden's discretion -- for years. Also people can be picked up and imprisoned to work without trial for up to 3 years. The charge is endangering state security -- which since it is not formally defined leads to obvious abuse.

    Do a bit of research.

  • http://www.affidavitform.net affidavit forms

    the word cheap would hold no meaning to customers unless & until they are employed. so w should rather think about it.

  • mishu

    The government outlawed cheap incandescent light bulbs manufactured in the US that provided good middle class jobs. Soon we can only buy mercury laden CFL bulbs made in China because the former allegedly kills polar bears or something.

    As far as the evidence for slave labor in China, just search for Foxconn using your favorite search engine.

  • http://www.affirmativeactionplan.org affirmative action plans

    the word cheap would hold no meaning to customers unless & until they are employed. so we should rather think about it.

  • Ignoramus

    Speaking of China, Tom Friedman is a big time op-ed columnist at The New York Times. A lot of people take him seriously. He's at the World Economic Forum in China right now. What he's been saying and writing is a window into how the Left thinks these days.

    I heard him on the Imus radio program yesterday. Friedman was complaining that the USA should be more like China. We lack their “can do” spirit that gets things done. We lack their commitment to going Green. Friedman fears that we’re going to go from importing Saudi oil to importing Chinese solar panels. He blames Obama for not using his bully pulpit to put us on proper course. He wants a Green Tea Party revolution. He wants a $1.00 per gallon tax to cut the deficit and to fund Green initiatives.

    I couldn’t make that up if I tried.

    Here he is again today on the op-ed page of the NYT:
    http://www.nytimes.com/2010/09/22/opinion/22friedman.html