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Damn Those Stubborn American Consumers!

Posted By Don Boudreaux On October 14, 2011 @ 8:37 am In Balance of Payments,Trade | Comments Disabled

Here I shamelessly, again, steal a brilliant tactic from Carpe Diem [1]‘s Mark Perry: I edit what is roughly the first half of a news report [2] (HT Andy Roth) in ways that do not alter its factual accuracy but, hopefully, that reveal the dangers lurking in familiar yet flawed modes of thinking.  This report is on Americans’ trade with the Chinese:

The Obama administration, under fire for not taking a harder line on China over its currency on American consumers who stubbornly take advantage of good deals offered by Chinese sellers and, allegedly, made even more attractive by Beijing’s monetary policy appears set to move against the Asia export powerhouse on other fronts these politically unorganized Americans as next year’s U.S. elections approach.

The United States is likely to launch fresh challenges against China American consumers at the World Trade Organization, probably stoking tensions between the world’s two biggest economies.

“I expect the United States will be bringing more cases against China in the coming year,” said James Bacchus, who as a former WTO appellate judge used to sit in judgment of international trade disputes.

Already firmly in campaign mode, President Barack Obama recently boasted of taking a tougher line on trade economic change, including consumers’ decisions to change how they spend their own money than his predecessors.  In particular, American consumers’ voluntary choices to buy more goods and services from China, its currency and other trade issues have already become a big issue in the election campaigning.

Republican presidential hopeful Mitt Romney has ratcheted up his criticism of China American consumers’ choices despite his party’s traditionally pro-free trade stance.

“If you are not willing to stand up to China, you will get run over by China, and that’s what’s happened for 20 years,” the former Massachusetts governor said on Tuesday – apparently suffering the bizarre delusion that lower-priced inputs and consumer goods and services harm the U.S. economy.

He was speaking shortly after the U.S. Senate passed legislation to crack down on Chinese currency American-consumers’ practices that U.S. lawmakers legislation-makers blame for millions of lost jobs.

Sensitive to how the criticism of China plays with U.S. voters, Obama has not yet explicitly said he would veto the bill. In any case, the legislation is unlikely to pass the House of Representatives where Republican leaders have voiced concern that it might breach WTO rules and could spark a trade war which would damage U.S. corporations.  Even non-Romneyite GOP politicians remain oblivious to the fact that trade is ultimately to be judged by how well it promotes consumption opportunities and not by how well it does, or does not, enhance the bottom line of corporations.

But Obama is likely to want to show voters his mettle on trade issues consumer sovereignty and trade experts say he has plenty of options to pursue which, unlike the Senate currency bill, are likely to conform with WTO rules.

New government data on Thursday that showed the U.S. trade deficit capital-account surplus with China hit a record $29 billion in August and is also likely to set a record for the year could add to the pressure on Obama to act to stop the Chinese and other foreigners from investing so much in America.

Last week, U.S. trade officials notified the WTO of some 200 Chinese government subsidy programs and scolded Beijing for not halting its self-destructive actions of taxing its own people to make non-Chinese people, including Americans, richer. taking the action itself as required under WTO rules.

U.S. officials at the WTO’s headquarters in Geneva also recently took China to task over agricultural policies much like the policies that Uncle Sam himself has hypocritically and harmfully employed for decades that they said unfairly discriminated against foreign suppliers.

…..

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[1] Carpe Diem: http://mjperry.blogspot.com/

[2] a news report: http://www.reuters.com/article/2011/10/13/us-usa-china-trade-idUSTRE79C72820111013?feedType=RSS&feedName=everything&virtualBrandChannel=11563

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