Mitt Romney promises to “crack down on China when they cheat,” particularly as a currency manipulator. This even though Bain Capital, which he founded and led, has invested in China and outsourcing of American jobs. President Obama talks about setting up a task force “that goes after anybody who is taking advantage of American workers or businesses and not creating a level playing field” and bringing a few World Trade Organization cases against the PRC.
I’m sure the neocons would love to make China the next enemy of the United States, the better to keep funneling trillions to the Military-Industrial Complex — even though that war is one we might lose, with severe consequences. But the candidates miss the larger point. If being a currency manipulator is such a big deal, why did we trumpet the completion of the trade agreement with South Korea, one of the world’s biggest currency manipulators?
As with gas prices, climate change and so much else, the candidates fear telling the American people the truth. First, our appetites, buying endless amounts of cheap stuff on credit from China, are one of the big drivers of the trade deficit, the loss of jobs here and the damage to the middle class.
Second, China plays by its own rules and is barely concerned with the WTO. One big example is the insistence that American companies that want to sell in China set up production there and export from there. Historically, Americans would produce things and they would be loaded on ships for export. Not now. Those containers going to China are either empty, or often filled with scrap from dismantled American factories. Another problem is China increasingly insisting on American firms transferring technology to state-owned Chinese firms as a price of doing business; this happened with General Electric and avionics. Neither candidate wants to touch these critical problems.
Anyone who wants the reality of the situation should be a regular reader of Clyde Prestowitz’s blog. He’s a former top Reagan administration trade negotiator and knows the score.
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Today’s Econ Haiku:
The leaves change color
Candidates change positions
Let this season pass