Imagined in America
By THOMAS L. FRIEDMAN
NYT
Hong Kong
After spending last week talking with Hong Kong entrepreneurs about a bill, just passed by the U.S. Senate, to clear the way for tariffs on Chinese exports to America if China doesn’t revalue its currency, there are three things I have to say. One, I really hope the people pushing this bill do not give up. Two, I really hope the people pushing this bill do not succeed. And, three, I really hope no one thinks this legislation will make any sustainable dent in our unemployment problem, which requires much more radical rethinking.
I support this legislation in theory because China needs a wake-up call. I know, China never responds to in-your-face pressure — not immediately. But it began revaluing its currency upward in 2005, the last time the Senate brandished a big stick. The fact is, China’s strategy of using low wages and a cheap currency to build up an enormous export-led growth engine — while using its huge market to lure and compel companies to transfer their next-generation technology to China as well — is now hurting both sides.
China is spending tons of money manipulating its currency downward and, in the process, creating domestic inflation and a real estate bubble, which is weakening its competiveness. Meanwhile, it is hair-raising to hear stories in Hong Kong about the number of American companies feeling the need to transfer advanced technology to China under pressure from Beijing officials — and being afraid to complain to Washington about unfair trade practices. Yes, China’s leaders, fearing unemployment, will revalue their currency at their own pace. But if pushing this bill even marginally slows the pace of American firms shifting operations here, and gives others more time to adapt, it will be worth it.
But, Lord in heaven, do not let the House pass this bill. That would trigger a trade war in the middle of our Great Recession. We tried that in 1930. It didn’t end well. Worse, today it would distract us from thinking about the real issue: How do we adjust our labor market to the simultaneous intensification of globalization and the I.T. revolution, the biggest thing happening in the world today? The intensification of globalization means more parts of any product or service can be produced anywhere, and the intensification of the I.T. revolution means more parts of any product or service can be created by machines and software.
(More here.)
NYT
Hong Kong
After spending last week talking with Hong Kong entrepreneurs about a bill, just passed by the U.S. Senate, to clear the way for tariffs on Chinese exports to America if China doesn’t revalue its currency, there are three things I have to say. One, I really hope the people pushing this bill do not give up. Two, I really hope the people pushing this bill do not succeed. And, three, I really hope no one thinks this legislation will make any sustainable dent in our unemployment problem, which requires much more radical rethinking.
I support this legislation in theory because China needs a wake-up call. I know, China never responds to in-your-face pressure — not immediately. But it began revaluing its currency upward in 2005, the last time the Senate brandished a big stick. The fact is, China’s strategy of using low wages and a cheap currency to build up an enormous export-led growth engine — while using its huge market to lure and compel companies to transfer their next-generation technology to China as well — is now hurting both sides.
China is spending tons of money manipulating its currency downward and, in the process, creating domestic inflation and a real estate bubble, which is weakening its competiveness. Meanwhile, it is hair-raising to hear stories in Hong Kong about the number of American companies feeling the need to transfer advanced technology to China under pressure from Beijing officials — and being afraid to complain to Washington about unfair trade practices. Yes, China’s leaders, fearing unemployment, will revalue their currency at their own pace. But if pushing this bill even marginally slows the pace of American firms shifting operations here, and gives others more time to adapt, it will be worth it.
But, Lord in heaven, do not let the House pass this bill. That would trigger a trade war in the middle of our Great Recession. We tried that in 1930. It didn’t end well. Worse, today it would distract us from thinking about the real issue: How do we adjust our labor market to the simultaneous intensification of globalization and the I.T. revolution, the biggest thing happening in the world today? The intensification of globalization means more parts of any product or service can be produced anywhere, and the intensification of the I.T. revolution means more parts of any product or service can be created by machines and software.
(More here.)
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