Comments for The End of China Bashing: Toward a Serious Discussion of the Trade Deficit at http://www.cepr.net , comment 1 to 12 out of 12 comments http://www.cepr.net Sun, 19 May 2013 10:35:52 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19771 So, what if a particular nation (or, collectively, all nations) finds a way to "outcompete" us (Whether fairly or unfairly - and by what standards)? In a world economy constrained by lack of Demand, suppose we don't believe it is acceptable for other nations to reduce *our* nation's aggregate Demand, by collectively pegging their currency to a level which sustains a large and chronic trade imbalance? Suppose we find it unacceptable that these sustained imbalances result in large chronic Unemployment, as well as continually increasing our nations debt? Should we just say:  Oh, well - Nothing we can do? One example:  Our Nation's corporations (such as Boeing), are giving away our Nation's technical advantages (and other advantages), in exchange for access to China's markets.  In other words, we give concessions, in exchange for access to more of the much-coveted Demand which is holding back the world economy.  All while we are giving China (relatively) free access to what once was the world's largest source of Demand. Well, OK.  If lowering the US currency is too problematic, then we should compensate for the decrease in Demand due to the trade deficit.  Since China has effectively taken an amount of Demand equal to our cumulative trade deficit, suppose we give all US citizens an equal "tax credit" (whether they pay tax or not).  We can target an amount which (spread over some limited number of years), which equals the accumulated "trade DEBT" with foreign nations.  Now, one problem, is that those at the high end won't spend much (or any) of theirs.  Yes, but those at the high end are few enough that this would still be fairly efficient at increasing Demand. Another possible complaint:  This would be like printing US dollars, and artificially creating Demand.  Yes, and China's central bank purchases of US financial assets, combined with their chronic trade deficit, are equivalent to burning US dollars, and stealing the Demand needed by US business in order to thrive. I say that on net, that's a wash. Of course, debt-free spending on infrastructure would be great, as well. - A Populist Mon, 22 Oct 2012 22:36:20 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19770 What I find oddest is Ezra Klein's claim that Japan is "arguably" a worse currency manipulator than China. Or Switzerland. Ezra is quite smart but I still wonder how this 20-something with an undergrad degree in Poli Sci became an authoritative economist. Yes, the Swiss have interfered with a free float and so have the Japanese from time to time. But their exchange rates are not fixed by a central authority like China and more importantly it seems absurd to me to complain about Japan or especially Switzerland when the price levels there are far higher than the US. To the extent that Swiss or Japanese exporters are currently outcompeting US exporters it is IN SPITE OF their currencies. - Brian Dell Mon, 22 Oct 2012 19:46:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19769 "not even the biggest culprit, relative to the size of its economy." Ha Ha. Given a billion and three hundred million people and the volume of our imports in low-wage imports from China it is absolutely the biggest culprit far and away. - Luke Lea Mon, 22 Oct 2012 18:40:56 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19768 "A Populist, October 22, 2012 9:09 Dean, Paul Krugman seems to be saying that, since China's trade is balanced (if I read the graph correctly), that we no longer need to worry about the value of the dollar. Well, it seems to me that, as US citizens, we should be concerned about the *US* trade deficit. Which means, we need to lower the value of the dollar, until our trade is balanced - period." Exactly! And, almost all of the trade deficit is china and oil. One thing that would help is to have zero public debt and zero private debt. - Fed Up Mon, 22 Oct 2012 17:23:24 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19767 Is there some setting that I have to wait 240 seconds between posts? If so, can you please get rid of that? Thank you! - Fed Up Mon, 22 Oct 2012 17:15:12 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19766 "If we have negative national saving, then either we have a budget deficit (negative public saving) or we have negative private saving, or some combination." And, "It is a simple matter of logic. If you disagree, think about it more until you understand why there is no choice." I have thought about it, and I disagree. I'm pretty sure you are assuming all new medium of exchange has to be borrowed into existance. - Fed Up Mon, 22 Oct 2012 17:11:10 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19765 "As far as the second part, China is still accumulating U.S. assets as part of an official policy of pegging its exchange rate. In other words it is deliberately propping up the dollar against its currency." How about having them buy some assets that can go down in value or default? - Fed Up Mon, 22 Oct 2012 17:02:16 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19764 "To see the former point, it is important to remember that China is a fast growing developing country. Ordinarily such countries are expected to run large trade deficits." But these countries have figured out (correctly I believe) that trade deficits eventually lead to some kind of problem and then the IMF shows up with bad consequences for them. Run trade surpluses, and no IMF shows up. - Fed Up Mon, 22 Oct 2012 16:58:09 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19763 Dean, Paul Krugman seems to be saying that, since China's trade is balanced (if I read the graph correctly), that we no longer need to worry about the value of the dollar. Well, it seems to me that, as US citizens, we should be concerned about the *US* trade deficit.  Which means, we need to lower the value of the dollar, until our trade is balanced - period. I can hear all the "anti-protectionists" clearing their throats to shame me about "wanting to start a trade war"! Well:  They only call it a trade war when we fight back! Put another way:  So long as we have a trade deficit, by definition we are not (on net) protectionist. "Oh, but we just need to be better able to compete!". Yep! And what better way to compete, than to lower our prices while raising theirs, until trade is balanced. Back to criticism of Paul Krugman's column:  It seems a little bit obtuse, to suggest that because China's trade surplus is disappearing with ROW, that China's huge trade surplus with the US is therefore irrelevant, and therefore the dollar/renminbi exchange rate is irrelevant. - A Populist Mon, 22 Oct 2012 16:09:12 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19762 China-bashing is an extremely offensive term, by the way for gays. Remember, the term is borrowed from the original "gay-bashing" --- China is, needless to say, not a long abused and powerless sexual minority that is constantly being ridiculed and physically threatened... - Alex Hamilton Mon, 22 Oct 2012 14:22:46 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19759 It is interesting to think about the reason that the Chinese Government is keeping the dollar up. It is to keep their goods flowing rather than because they really want claims on our wealth. It seems quite foolish on their behalf and nonthreatening. I do not worry about it. If we had better fed policy I think that we would be fine. BTW I have been doing something about it myself by investing in stocks of companies based in China. - Floccina Mon, 22 Oct 2012 13:50:24 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-end-of-china-bashing-toward-a-serious-discussion-of-the-trade-deficit#comment-19756 Brilliant article! Answered all of my questions! - Harry Gindi Mon, 22 Oct 2012 11:02:07 +0100