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HiPointDem

(20,729 posts)
80. sigh. it ain't that simple. there is collusion between the us & china because the arrangement
Fri May 18, 2012, 07:02 AM
May 2012

benefits certain interests in both places.

The peg is often referred to as "manipulation," but it doesn't really fit the bill for two reasons. First, it is an official policy. China targets the value of its currency quite openly; it is not doing it in the middle of the night when no one is looking.

The second reason is that China's mechanism for targeting the value of its currency is something that on alternate days our Treasury actually requests. They buy up U.S. government debt.

If this seems absurd, it should because it is. The way in which China keeps its currency down against the dollar (or keeps the dollar up against its currency) is by buying huge amounts of U.S. government bonds.

The media often tells us that we need China to buy our debt. This is not true. There are plenty of other potential investors, including the Federal Reserve Board. However we cannot both want China to buy U.S. government debt and then complain about China's currency manipulation. This is how they "manipulate" their currency.


http://www.huffingtonpost.com/dean-baker/economic-conflicts-with-c_b_1144116.html


The NYT did a piece on Governor Mitt Romney's pledge to impose tariffs on China to pressure it to lower the value of the dollar relative to the yuan. At one point it noted that many business people are opposed to this position:

"business leaders, while pressing for China to open its markets and protect intellectual property, caution that labeling China a currency manipulator could backfire, harming those efforts."

There is a direct conflict in the interests of most workers and many businesses in U.S. policy toward China.

Financial firms like Goldman Sachs and Citigroup have a major interest in getting more access to China's market. Firms with claims to intellectual property like Microsoft and Pfizer have a major interest in getting China to offer increased protection for their copyrights and patents.

By contrast, workers in the United States have a major interest in lowering the value of the dollar against the yuan. Since other countries would likely follow China in allowing their currencies to rise relative to the dollar (this is exactly what happened in 2005, the last time China had a large re-valuation of its currency), the result could be millions of new jobs in manufacturing. This would offer a large number of relatively good-paying jobs for less educated workers, putting upward pressure on the wages of these workers.

The Obama or Romney administration must decide which goals it will prioritize in its negotiations with China. If it makes more progress in getting access to China's financial markets for Goldman Sachs and Citigroup or increased protection of Microsoft's copyrights then it will make less progress in persuading China to raise the value of its currency.

Whoever is in the White House will have to decide which group's interests are pursued and which group's interests are downplayed. It would have been worth making this conflict more clear to readers.


http://www.cepr.net/index.php/blogs/beat-the-press/china-policy-the-99-percent-versus-the-1-percent

The government could even counter China’s currency peg by establishing a peg of its own of the dollar against the yuan. It could offer to buy yuan at a considerably higher value than the official Chinese rate, thereby putting upward pressure on the Chinese currency. If China tried to counter such a move, they would end up paying vast amounts of money to acquire over-valued dollars. They lose big in this story.

However, the Obama Administration, like the Bush and Clinton administrations before it, has opted not to try to push down the value of the dollar. In fact, as a matter of official policy, the Obama Administration claims to be committed to a strong dollar.

If the United States is not prepared to take steps to lower the dollar, then we are pursuing a policy that makes us like Greece. We have an over-valued currency that makes our goods and services uncompetitive in international markets. Therefore we run huge trade deficits and cannot get back to full employment without enormous stimulus from the government sector.


http://www.cepr.net/index.php/korean-op-eds/greece-and-the-united-states/


To take a third case, the value of the dollar is enormously important in determining the distribution of income. The over-valued dollar is the main factor behind the US trade deficit. It swamps everything else we may or may not want done in terms of trade policy, competitiveness policy or industrial policy. If the dollar is over-valued by 30 percent it is roughly the same as giving a 30 percent subsidy on all the goods that we import while imposing a 30 percent tariff on all of our exports. It is incredibly difficult for domestic producers to overcome this sort of disadvantage.

Furthermore, it is not an accident what sectors of the economy are exposed to international competition. In principle, almost any sector of the economy can be opened up to trade. For example, in the case of health care, we can have laws that make it very easy for foreign born doctors to train to US standards and then practice wherever they want in the United States. We can also set up a legal and institutional structure that makes it easy for people to travel overseas for major operations to take advantage of the much lower prices charged in many countries.

However, neither path has been pursued in our trade negotiations. The main area where our negotiators wanted ‘free trade’ was in manufactured goods. This put US manufacturing workers in direct competition with their much lower paid counterparts in the developing world. This policy has the predicted and actual effect of lowering the wages of manufacturing workers in the United States. And since manufacturing has historically been a source of relatively high paying jobs for the 70 percent of workers without college degrees, this trade policy put downward pressure on the wages of this group of workers as whole.

This downward wage pressure is aggravated by the over-valuation of the dollar. The over-valuation of the dollar is conscious policy that dates back from Robert Rubin taking over as Treasury Secretary in the Clinton years. Rubin publicly advocated a high dollar since his first days as Treasurer, but he got the chance to put real muscle behind this policy through his engineering of the bailout following the East Asian financial crisis. Rubin’s deal was that the countries of the region would repay their debts in full (no write-downs), but we give them the ability to do this by allowing them to run huge trade surpluses with the United States.

The harsh treatment of the East Asian countries was a warning to the rest of the developing world. They adopted a policy of accumulating massive amounts of reserves to avoid ever being in the same situation as the East Asian countries. This means lowering the value of their currencies against the dollar so that they could run large trade surpluses. This continues to be the policy pursued by most developing countries so that the flow of capital is running from poor countries to the United States, rather than the other way around as the story goes in economics textbooks.

In short the United States has deliberately put in place a trade and dollar policy that disadvantages the bulk of the workforce for the benefit of employers, importers and those looking to invest overseas. The fact that manufacturing workers have done badly over the last two decades has nothing to do with random market outcomes. It was the result of deliberate policy.

http://www.nakedcapitalism.com/2011/11/the-end-of-loser-liberalism-an-interview-with-dean-baker-part-i.html



How do you know these people have jobs in the first place? Fumesucker May 2012 #1
Holy provincial oversimplification Batman. redgreenandblue May 2012 #2
Unfortunately, there's a deep racist, nativist vein running through America that this taps into. baldguy May 2012 #3
How dare the rest of the world have jobs. All your base are belong to us! leveymg May 2012 #4
Exactly. So why don't you give up your job and hire one of them in your place? Zalatix May 2012 #5
If one of them could do it as well, and cheaper, they would already have it. leveymg May 2012 #7
So if an American worker is in a vulnerable job then they can just suck it, right? Zalatix May 2012 #9
No, I'm not saying that. But, I can't safely assume that I "own" my job. leveymg May 2012 #17
You kinda are saying that. You show absolutely no pity for America's working class. Zalatix May 2012 #19
I am very much part of America's working class. Knowledge industry "no-collar" 1099 Proletariat, leveymg May 2012 #22
Your claim is that you have a *good reason* to undermine American workers. The rebuttal is Romulox May 2012 #23
I didn't make any such claim. You mischaracterized my statement. Read it again. leveymg May 2012 #26
Nonsense. You don't get to dictate how your attack on workers is received. You're transparent. nt Romulox May 2012 #28
Once again: You have no sympathy for America's working class. Your arguments work to their detriment Zalatix May 2012 #36
You don't seem to grasp the difference between Trade in Services and Trade in Goods, leveymg May 2012 #44
Yup, you still don't understand much of this at all. You didn't even address most of my points. Zalatix May 2012 #45
I don't think "we're" in a war at all, if by we you mean the US as a government + its corporations. HiPointDem May 2012 #78
Sigh... Zalatix May 2012 #79
sigh. it ain't that simple. there is collusion between the us & china because the arrangement HiPointDem May 2012 #80
TL;DR version: But *LEVEYMG* works in the service industry. So *these* jobs are important! nt Romulox May 2012 #47
^ Correct ^ Why were America's basic jobs offshored ? Mimosa May 2012 #58
Then the poor things should quit buying stuff made elsewhere because it is cheaper treestar May 2012 #25
As always, you are a font of both compassion and reason. nt Romulox May 2012 #27
Well I am a font of not just blaming others for our own acts treestar May 2012 #31
What's this "us" stuff? I'm blaming *you* for promoting a rightwing economics. nt Romulox May 2012 #34
Ah yes, blame American workers. The US Chamber of Commerce loves that argument. Zalatix May 2012 #35
That just means you're in a field where it doesn't happen. Head in sand. Honeycombe8 May 2012 #74
It's a Corporatist meme used to divide the Cultural Left from the Economic Left Odin2005 May 2012 #6
Ding, ding, ding!! hifiguy May 2012 #8
Thanks! Odin2005 May 2012 #12
You have hit it dead on center, Odin. TheKentuckian May 2012 #10
Headshot!!! Zalatix May 2012 #11
+1 HiPointDem May 2012 #13
And sadly, some DUers have fallen for it over the years. HughBeaumont May 2012 #14
Shameful. Mimosa May 2012 #60
I think that's one way to look at it, but not the only way RZM May 2012 #18
Question: Have you ever left the country? redgreenandblue May 2012 #20
I wish I had the money to travel overseas. Odin2005 May 2012 #30
... redgreenandblue May 2012 #51
Wait, China has tariffs and currency manipulation but you don't call them isolationist Zalatix May 2012 #69
Reread my post. I did not mention trade tariffs anywhere. redgreenandblue May 2012 #76
Sorry about getting on you about tariffs Zalatix May 2012 #77
Americans would need jobs in order to do that. Said jobs moved overseas. Any further questions? Zalatix May 2012 #46
Spot on. 99Forever May 2012 #29
Is it the Economic Left if "opposition to Globalist Corporatism" is more a right-wing phenomenon? pampango May 2012 #32
You're like a corporatist Nero, fiddling while the EU burns... Romulox May 2012 #33
You've been pushing that crap argument forever now. It is wrong and outdated. Zalatix May 2012 #38
Marine Le Pen wears pants. Pampango wears pants. Draw your own conclusion!!!! nt Romulox May 2012 #49
Ayn Rand supported abortion rights. Ergo we are all Ayn Rand! Zalatix May 2012 #54
Besides, pampango's bizarre contention that laissez-faire economics are not of the HARD RIGHT Romulox May 2012 #50
I wonder what Pampango has to say now that his argument has been destroyed. AGAIN. Zalatix May 2012 #55
Nothing, apparently, because he hasn't replied after his hit-and-run. Odin2005 May 2012 #63
Pampango is a good example of the "cultural left" that I'm talking about. Odin2005 May 2012 #62
He's not cultural left; he's a free trader. Zalatix May 2012 #66
There's nothing "left" about pampango--she spouts Rightwing economics here, and nothing else. Romulox May 2012 #75
+1 Poll_Blind May 2012 #41
It isn't corporatists who accuse me of being a racist for believing that americans should have jobs. lumberjack_jeff May 2012 #59
+1! uponit7771 May 2012 #61
love it or leave it frylock May 2012 #15
I support two big issues: 1) Abortion rights; 2) race-to-the-bottom "free trade" (prison labor AOK!) Romulox May 2012 #16
I don't think it's quite that simple... cynatnite May 2012 #21
How do you assign a nationality to a job? treestar May 2012 #24
Simple. If it's sold here, it must be made here. Zalatix May 2012 #37
It is comprehensible, but impractical treestar May 2012 #52
Impractical to you, maybe. Zalatix May 2012 #53
Gawd, it's not 'racist,' it's 'chauvinist' or 'nationalist'. The way coalition_unwilling May 2012 #39
It's done intentionally, to shame American workers into letting globalism fleece them out of jobs. Zalatix May 2012 #40
It's not an honest mistake. It's a concerted effort by the Right to appropriate the language of the Romulox May 2012 #48
Yes, because those pesky foreigners working in sweat shops are the reason for unemployment. Puregonzo1188 May 2012 #42
Workers of the World UNITE! Tierra_y_Libertad May 2012 #43
It Isn't Racist... chickypea May 2012 #56
Americans having jobs is silly? How so? Zalatix May 2012 #57
Who Are thes Big Bad People Stealing America's Jobs? chickypea May 2012 #64
Again, I will ask you, how is Americans having jobs silly in your book? Zalatix May 2012 #65
Change American Habits, Jobs will Follow chickypea May 2012 #70
You're wrong again. American habits aren't the problem, and you are lying about American students. Zalatix May 2012 #71
Post removed Post removed May 2012 #72
YES, LYING. Mass defamation. Without any supporting facts, no less. Zalatix May 2012 #73
Some people have a real problem with the idea that a government should act in the interests of... JVS May 2012 #67
Bad global citizen! I revoke your Global ID Card! Zalatix May 2012 #68
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