For the record, our trade deficit last year (through November) with the UK was about a billion dollars. With Canada it was $24 billion, and most of that was oil and gas. With France, it was $10 billion. With Germany, it was a too-high $31 billion. Combined, our trade deficits with these four economic powers come to $65 billion or so—about one quarter our deficit with China alone.
Which brings us to a big hole in Klein’s column: That one of the big reasons we can’t compete on price is because the Chinese manipulate their currency (undervaluing it by 40 percent, some say) and illegally subsidize their companies.
And we let them do it, in large part because “even the liberals” like Klein say it’s cool.
great post. he was in his element with specific health care policy. macro and complex bank/monetary policy don't seem to be.
#1 Posted by rglvr, CJR on Tue 25 Jan 2011 at 07:37 PM
Way. To. Go. Ryan! Exquisite data-based fisking of the young Mr. Klein ramblings. I like Ezra but he has a tendency to pull this kind of stuff out of his ...ear and everyone just lets it go.
I hope he has an answer for you soon. I've got the popcorn in the micro. Better'n the SOTU. Much better'n the SOTU.
(applause)
#2 Posted by James, CJR on Tue 25 Jan 2011 at 07:44 PM
"[O]ne of the big reasons we can’t compete on price is because the Chinese manipulate their currency (undervaluing it by 40 percent, some say) and illegally subsidize their companies."
As though the U.S. govt does not manipulate the currency, nor engage in corporatism?
"And we let them do it ..."
I had no idea it was our duty to control Chinese govt policy. Anyway, what should the U.S. govt do now? Escalate the trade war? Greater naval threat? Embargo? Military war? And what would the authority fall under? The interstate commerce clause? Divine Right of Kings?
And about that trade deficit, it might just be useful to consider this:
"[D]ollars being sold to the Chinese for their goods aren't just sitting in a tall pile in the center of Beijing, or stashed under Chinese mattresses. The Chinese aren't purchasing American goods, because American public debt has shown itself to be a much more lucrative buy. Dollars not spent on American goods are being used to purchase Washington's growing debt: $889 billion worth. The dollars 'accumulated' by the Chinese through their trade surplus are being spent by the US government! If there is anything deserving of blame for wasting dollars, it is the American government." (Jonathan M. Finegold Catalan, "A Closer Look at China's Currency Manipulation," mises.org; bold mine)
It is helpful, also, to realize that U.S. govt's hyper-interventionist monetary and economic policies discourage savings and investment, thereby inhibiting business start-up and growth; none of which is good for employment or health care affordability.
#3 Posted by Dan A., CJR on Tue 25 Jan 2011 at 10:51 PM
China’s Innovative Way of Skinning the United States!
Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.
In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
#4 Posted by Hugh Campbell, CJR on Wed 26 Jan 2011 at 09:36 PM
China’s Innovative Way of Skinning the United States!
Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.
In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
#5 Posted by Hugh Campbell, CJR on Wed 26 Jan 2011 at 09:37 PM
China’s Innovative Way of Skinning the United States!
Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.
In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
#6 Posted by Hugh Campbell, CJR on Wed 26 Jan 2011 at 09:45 PM