Here’s a letter to the New York Times:
Paul Krugman accuses the Chinese government of harming America by (allegedly) keeping the value of the yuan artificially low (“Taking on China,” March 15). Because a low yuan allows Americans to get more for less from China, Prof. Krugman believes that the resulting reduced demand for American-made products promotes higher unemployment in the U.S.
Given Prof. Krugman’s beliefs, he should aim his mighty rhetorical artillery at a phenomenon whose impact on American labor is vastly greater than that of Beijing’s monetary policy – namely, applied science. Applied science – such as software engineering and industrial R&D – do far more than any low-priced foreign currency can ever hope to do to destroy American jobs.
If Chinese subsidization of U.S. consumption really is a problem, then labor-saving technologies are also a problem – but one immeasurably larger and more ominous than undervalued foreign currencies.
Donald J. Boudreaux