SEARCH BLOG: CHINA and TRADE
I noticed a post at Cafe Hayek directed at me and those who share similar thoughts about trade issues and I invite you to check out Dr. Don Boudreaux' site. He is Chairman of the Economics Department at George Mason University and I have the utmost respect for his academic credentials and that university (where one of my sisters-in-law is a professor in another department). George Mason could be considered the "Michigan of the Mid-Atlantic" except there is a decidedly more "conservative" tendency than that found at UM.
Dr. Boudreaux wonders why...
A frequent commentor here at the Cafe, Bruce Hall, is convinced that American trade with China ultimately will hurt Americans.I don't doubt that there are benefits for some... maybe many... as a result of importing products from China. Wal-Mart and its customers are doing just fine by them.
I can't figure out why, though, Mr. Hall is worried. His comments, along with his posts at his blog Hall of Record, suggest that he fears that Chinese government policy -- for example, the alleged undervaluation of the Chinese yuan -- threaten American economic prosperity.
This is my response...
It's not about China because they are Chinese (or Japanese because they are Japanese), it's about the trade practices and results that are undermining whole segments of our economy. Yes, I suppose we could be a nation that produces nothing but ideas, but somehow I don't believe that will do us a lot of good in a world where our ideas seem to be pirated rather than paid for. As long as we only look at the price of the product rather than the price of trade the way it is practiced, I think we will be blind to the long term dangers... which may include not just the weakening of U.S. manufacturing capabilities, but significant weakening of the dollar and perhaps longer-term "stagflation".
I continue to appreciate your efforts to educate me; however, I will also continue to distinguish between trade that is open and equitable and countries whose trade practices are designed to weaken U.S. (and other) manufacturers in order to strengthen their own.
U.S. manufacturers have had to deal with counterfeiting, theft of proprietary information, currency manipulation and being locked out of lucrative markets by various tactics such as the Japanese requiring individual "safety inspections" of each vehicle destined for their country from the U.S. (the U.S. only requires certification of a model, not individual vehicles)... among the methods used to ensure that "free trade" is only a figment of the academics imagination.
I guess we'll see how far the subsidies go when the dollar continues to slide. I know, that will just improve the position of our manufacturers for exporting... all of those flat screen TVs that are not made in the U.S. among the other high tech items no longer made here.
But I do enjoy your site and, in a perfect world, might actually agree with you most of the time. But then, economists don't necessarily agree with each other, so....
Yes, my concerns could be unfounded, but I have seen and read enough in over 30 years of business to understand that the expression "all is fair in love and war" should also include "and free trade"... with the same irony.