"This is no longer a free-market issue, but a foreign policy one. The simple solution to the economic crisis: Tariffs
‘…We hear China chiming in with all the other critics of America’s monetary policy. They proudly lead this charge as the new, up and coming super power of the world. They boldly talk about the importance of reform while dancing around this skirmish over the 45% subsidy for their currency. China acts as if removing this subsidy would strip out much of their manufacturing advantage. Would it? If so, it reveals a telling truth about China. It would suggest they are little more than a one pony act. Their act: gross economic subsidy. If true, this would be the final testament to American manufacturing. China would be formally recognizing that they really can’t match American manufacturing on a level playing field. Maybe China knows this. Somehow, we don’t.’
‘…the Republican Free-market formulas will also fail to work because China will blunt the returns of those economic rewards as well. This is no longer a free-market issue, but a foreign policy one. It DEMANDS a Gov’t response. The response from a Democrat or Republican will look much like we are getting from Pres. Obama’s policies today. Conservatives may not agree with these policy choices during times of peace, but they are likely to follow in kind during times of economic aggression.’
Our political reforms are still operating under the banner of ‘free markets’ and so we send the best of American enterprise to compete against China. We are losing these valiant companies to China’s superior fire-power of unlimited money and levers of market controls unparalleled in history. The full power of the Chinese gov’t is there at work – as much with cash subsidy as with raw, political might. They operate at full force behind their many facades of international companies. No private business can complete against the might of the entire Chinese gov’t. And so, we see the unraveling of American enterprise and all the dominance that goes along with it.
The most famous of these subsides is China’s 45% undervalued currency. This is worth hundreds of billions - if not trillions - in direct cash subsidies to their manufacturers. Correcting this one subsidy could alone return millions of American jobs. Combine this 45% subsidy with the cost of transport. This would raise the price of China Made goods by as much as 60%.
The American worker can complete against this 60% price difference. Rebalancing this one disparity would put America’s labor force in the running against the best China has to offer. Tallying all of China’s market subsidies from currency, to environmental, to regulatory and worker compensation could be 100% of its present price point. Maybe more. From this perspective, China starts looking more like a lumbering producer. They somehow have the look of a capitalist like economy (with the price advantage of low cost manufacturing), but peek just behind this façade and we find a different picture. We may discover the classic typecast of a communist run economy. China may prove the greatest example of it. This would be a startling revelation for all of us"..............READ MORE
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