Offshoring - the snake that is eating itself.

Well, there have been numerous allegations of dumping, bu that’s neither here or there. I’m talking about currency manipulation. Your response is a non-sequitur.

Uh, no it doesn’t. I’ve made an argument about marginal costs being lower in other parts of the world. If the marginal costs is low enough, you could still get a lower overall price. Instead of responding to this argument, you’ve assumed that this sort of move must raise prices. If you have economic data to back this assumption up, then provide it. Until then, you’re as guilty as hand-waving as I am.

Ok, so your argument is now that tariffs are bad if everyone does them, but if only some people do them, then tariffs are okay. Can you outline a rule for us when tariffs are okay and when they aren’t? Or is the rule that tariffs are always okay when the Chinese do them, but bad when the US does them?

They are not demanding we turn over anything- they are setting up conditions for trade in their country. If they want to make foreign investors do the chicken dance before every meeting on Chinese soil, that’s their right. If the WTO has a problem with it, i’m sure they have procedures for resolving these disputes. And if China is too big for the WTO to deal with- well what can you do? Do we really have to be so bitter than another superpower is on the block?

I just find it kind of silly to say “OMG How dare China set up trade conditions that benefit their country? And OMG how dare they not agree to trade conditions that benefit our country?” Not only is it hypocritical, but it doesn’t have a chance of being realistic. Every country with any muscle is going to use that muscle in the way that best benefits their country. There is literally no other logical way for them to act.

Geez, you’d think we’d be a little happy about the greatest reduction of poverty in human history. We’ve spent sixty years telling Africa what to do and have achieved next to nothing. Meanwhile China tells us to screw off, and it works. In the 1960s, Chinese people were dying of famine in the streets. Now they’ve got money for moped and off-brand TVs, and all we can do is act all butthurt because why? We feel like all economic progress in the world rightfully belongs to us? We feel like every dollar a Chinese person spends on meat comes out of our vacation fund?

If those places exist, why aren’t companies moving there now instead of waiting for the US to put tariffs on China? It’s not always just about low wages, btw. There is a combination of wages, taxes, worker productivity, infrastructure, and probably a lot of other factors as well.

Tariffs are bad for whatever country uses them. If you want to accomplish some political goal, that’s one thing. But if you want to help your economy, you get rid of them.

BrightNShiny
Just to quantify the argument, what level of tariffs on all Chinese goods imported into the US are you proposing?

I agree that there’s other stuff going on. But you are completely ignoring a major market distortion that benefits them–which is their currency manipulation. There’s also another major market distortion which is their MFN status. So, basically, you lecture us about the wonder of markets, and then when it is pointed out to you that there is an artificial market distortion which incentives the flow of production to China, you completely ignore it. Why should we allow the Chinese to uniquely benefit in this manner?

Here we go again. The Chinese currency peg is the equivalent of both an import tariff and an export subsidy. Make up your mind. Either tariffs hurt the economy or they help. Your argument is completely contradictory.

I’m proposing a tariff level that’s tied to their currency peg. As they let their currency appreciate to a more realistic valuation, the tariff goes down. I’m not an economic number cruncher, so if you’re asking for specific numbers, I don’t have them. I’ve seen estimates that the Chinese currency is undervalued by anywhere from 25-40%. I don’t know exactly how that translates into real tariff numbers (that is, if there’s some kind of multiplier you use to figure out the equivalent), but it’s something that’s completely calculable.

And it would be a tariff that’s phased in over time.

Take the 40% level, counterbalanced by tariffs phased in over 10 years.

At what increase in import prices would you think would see the US manufacturing becoming cost competitive and the revival of US employment?
4%, 8%, 12%, 16%, 20%?

You might still be an order of magnitude below where you need to be.

Oh, and if due to economic circumstances in the next decade, the USD:RMB exchange rate weakened from where it is now, would your program reverse and offer Chinese trade credits?

I’ll tell you what? Instead of posting cryptic questions or ignoring my questions (such as in post #48), why don’t you make an argument?

(such as in post #48),

Your presumption that US is a free trade market doesn’t hold.

It’s easier trading in sugar with China than the US because of US trade regulations, quotas, punitive tariffs etc and consequently US consumers pay around double world parity prices.

Is that to protect jobs in US manufacturing or US sugar beet producers?

Since I never had presumption that the US is a free trade market in total, then I don’t have a presumption that doesn’t hold. I am refuting the notion that the US has a free trade regime with China. This is the second time you have attempted to attribute an argument to me that I haven’t made. So, why don’t you try presenting an argument that responds to the actual points I’ve been making?

Canada? Australia?

Do you consider Canada and Australia to be major economic (industrial) powers in the immediate post-WWII era??

-XT

You mean like when you proposed:

I thought you said you were being facetious.

That is being facetious. It’s basically what China does with its currency, which I was facetiously suggesting the US do too, and I subsequently pointed out to you that I was being facetious.

Of course, even if I was being serious, there’s nothing in there that suggests that I think the US has a free trade regime in total, so this is something you made up. Why don’t you actually present an argument?

I think it’s you who are confused. I never said tariffs benefit a country. You are the one who said, on the one hand that:

And then, on the other hand, that it benefits them. How does it benefit them by lowering their standard of living?

I think it’s you who’s confused. Even though the Chinese have the equivalent of an across-the-board tariff, you want to claim that this equivalent tariff is beneficial for both our economies while at the same time claiming that tariffs are generally bad for economic growth.

It benefits certain sectors of China, specifically the government and export industries and the shareholders thereof. It artificially lowers the standard of living for everyone else by making both domestically produced items and imported items artificially expensive. This is currency exchange 101 stuff. Do you not really see how export subsidies and import tariffs work to distort prices?

Well, you need to be more precise when you talk about benefits. I know how tariffs work, and it’s you who don’t. Why would you want to do what the Chinese do? Why do you want to line the pockets of American corporations and lower the standard of living of Americans, as a whole?

Right. That’s why you keep trying to pretend the currency peg isn’t the equivalent of a tariff. Either you don’t understand how tariffs work, or you are trying to hand-wave away the currency peg in order to pretend that that the Chinese don’t already have the equivalent of a tariff on our goods.

I want them to remove the currency peg. I’ve already made that clear.

You should ask yourself that. Why is it so important to you that we participate in regimes that artificially incentivize driving manufacturing overseas? Why is it so important to you that we create these non-free trade regimes? What do you have against letting the market decide where manufacturing should go? If anybody wants to lower the living standard of Americans, it’s you, not me.

The question dealt with “major industrialized countries.” I’d suggest Canada and Australia fit those criteria. Besides the fact that neither’s economies were primarily agrarian (though they certainly contributed a great deal to world agriculture), I can state that in Canada’s case, there was a great deal of industry. Located primarily in Ontario and Quebec, you found steel and other metal refining, petrolium refining, shipbuilding, automobile manufacture–heck, where do you think General Motors, Ford, Chrysler, and even Studebaker established plants to build cars and engines? Oshawa, Oakville, Scarborough, London, and Windsor, Ontario, among other Canadian locations, is where. Alberta contributed oil and refining, British Columbia, the Yukon, and the NWT contributed minerals and refining.

Ignoring the resource-based industries, you had the stock exchanges in Toronto and Montreal; and a federally-chartered banking and financial system that circled the world. This allowed Canadian banks (unlike all but a few American banks) to be serious players on the world financial scene in the post-WWII years. Here’s a hint–the “TD” financial and investing group that has recently popped up in the US is actually the “Toronto-Dominion,” is headquartered in Toronto, and is an offshoot of the TD bank that has operated for many years in Canada. “TD Waterhouse,” with its ads featuring Sam Waterston? Guess where that’s headquartered. Same for the “RBC,” (Royal Bank of Canada) and the “BOM” (Bank of Montreal), both of which have head offices at the corner of King and Bay Streets in Toronto. Canadian banks play on the world scene, using whatever currency will make them a buck (no, they don’t delude themselves that US dollars are the only currency worth trading); and they have for many, many, years. But as a result of the Depression in the 1930s, they will not play fast and loose; nor will our government allow them to, and as a result, we have perhaps the world’s most stable banking system. This recession/depression you Americans are facing right now? Not here. Our banks won’t allow it.

Transportation? Okay, let’s look at both Canadian Pacific and Canadian National. Originally railroads, both expanded. CP was one of the few travel systems that could get you completely around the world by itself, using a combinations of ships, aircraft, and railroads. CN wasn’t quite all that, but was close. What CN did offer was not only Canadian railroads, but also (hope you’re sitting down) American railroads. To this day, CN owns a number of American railroads; and through its partnership with Burlington Northern Santa Fe, reaches across Canada and pretty much all of the US west of the Mississippi.

While my knowledge of Australia is admittedly lacking, I’d say that Canada–then, as today, a modern First World nation–was a major economic industrial power, with an equivalent standard of living to the US, in the post WWII era. Definitely not some tinpot US-wannabe. We competed fairly with the US, and we were pretty much the same, industrially and financially. Not bad, I’d suggest, for a country with one-tenth the population.