Why elected officials insist on feel- good measures is a mystery to me. Maybe it is a lack of creativity or maybe it is populism. Whatever it is, such solutions are often ineffective, a waste of time, and some even have unintended consequences.
Recently the U.S. Senate passed a bill with strong bipartisanship that would impose tariffs on China for its devalued currency. The significance of a devalued currency is that such a currency allows China to sell goods cheaper to the United States and other countries at lower cost than they would cost to produce in the U.S.
The upside of imposing a tariff on the imports from China is that it increases the costs of China to export goods and creates a source of revenue for the U.S. The downside is that it could result in a trade war, which is not in the best interest of the U.S.; that it is illegal by the treaties the U.S. has agreed to under the WTO; and that it is not the best way to deal with the problem.
China's economy is run on cheap labor. So long as China's domestic worker exploitation isn't resolved, the U.S. can't expect to compete with China in manufacturing.
Virtually all experts have predicted that China's economy will surpass America's economy within a decade or two. However, old analyses are based on liner
projections and, as it turns out, the situation in China is changing. Social indicators and international relations will affect China's growth.
As China becomes a bigger domestic consumer (currently, it is primarily an international exporter), Chinese citizens' median pay will rise, as it is doing. Consequently a middle class seems on the cusp of being born. A middle class will demand rights, something that the communist party rule in China is afraid of.
China has already started to slow down its manufacturing, which could create an opening for U.S. manufacturing. But China's problems don't stop there. China is already experiencing problems with its property market. There is very good evidence to suggest that China is in the midst of a property bubble; history tells us that all bubbles burst. If this happens, considering the level of interdependence between the U.S. and China, the U.S. would be negatively affected.
I've written about the need for performance measures in government to enhance transparency. However, if the measures are intentionally distorted at the local and provincial levels to appease the central government, as is the situation in China, we can expect that any crash to their economy will be much worse than the econometric analyses predict.
The 18th century French philosopher Alexis de Tocqueville said: "America is great because she is good. If America ceases to be good, America will cease to be great."
It is not our economy or our military that have made us the greatest nation in the world. It is our value for civil rights, human rights, due process and liberty.
China's record on freedom, liberty, civil rights, due process and justice are abysmal. For example, in China there are virtually no civil rights as we know them. Moreover, in terms of international human rights, China is going to need to reform. In exchange for economic growth, China currently supports many countries and regimes that treat their citizens poorly. As the U.S. learned in recent years, this is not sustainable or in our long-term interest. China will soon be subjected to the same lesson whereby resentment will arise towards China's foreign policies and this is going to complicate its economic development.
And if it responds in draconian ways abroad as it does domestically, China will undermine its growth.
President Reagan said we find "peace through strength." However, the definition of strength is changing. We have seen recently in the Middle East revolutions that powerful dictators with far more arms than citizens can be brought down by information technology and social media. As the information age becomes more important than military power (which will always be important), it would be in the interest of the U.S. to get behind the promotion of human rights in China and in countries that China is exploiting. Native populations are much more likely to work with humble foreign governments that support liberty and rights.
PAUL HEROUX of Attleboro is a contributing columnist. He can be reached at PaulHeroux.MPA@gmail.com.