I had to skip my second night with the Palin book to attend (and work at) a town hall meeting in Baltimore about U.S. manufacturing policy, or rather, the need for a U.S. manufacturing policy.

I’ve been working on this issue for a while but I finally understood more about why U.S. manufacturing has declined so significantly. I always understood that China was part of the problem, but I just assumed it was because they were winning in the market place: they could make and sell products more cheaply than we could. I thought this was only because they paid their workers much less and ignored the environmental damage their manufacturing methods cause.

That is only part of the problem.

China is not competing with U.S. manufacturers in an open market place. They are cheating.

“Chinese currency manipulation” is a term that gets thrown around by people who understand these issues.

I had no idea what this meant, other than the fact that “manipulation” is a bad thing. Last night, I finally understood and I think it’s important that more people do too.

Basically, if China operated as other countries do (and as they are supposed to do under international agreements), our trade imbalance would tilt out of their favor, jobs would be saved and created here in the U.S. and we could fairly compete (and even win) in the international marketplace.

China is artificially setting the exchange rates of their currency in order to gain an unfair advantage. That’s why Chinese products are so cheap. As AAM, the host of last night’s town hall, describes it:

“This made China?s exports to the U.S. relatively cheaper than they should have been and made U.S. exports to China more expensive than they should have been. This had two-fold negative effects on American industry. On one hand, the relatively cheap Chinese imports drove domestic manufacturers, who could not compete with that price, out of business. On the other, the relatively expensive imports of U.S. products into China limited consumption of U.S. goods there, putting many export-intensive U.S. companies out of business.”

And China has taken full advantage – to our detriment – since they entered the World Trade Organization in 2001 and then established Normal Trade Relations with the U.S. Check out this graphic:
Job loss

I grew up in Cleveland in the 1980s and my dad was a machinist. I remember the dips shown on this graphic. I had no idea how much worse it’s been in this decade! Looking at this graphic, it is NO wonder our economy is in the shape it’s in now.

But it also points to some solutions – like requiring China to compete fairly. If they don’t, we should do exactly what the Obama administration has started doing: enforce international trade rules. Tariffs were recently added to Chinese tires which had been flooding U.S markets at artificially low prices (and costing U.S companies and U.S. workers). The result of the tariff: American companies have actually been able to successfully compete and have even started rehiring workers.

Imagine what would happen if we fully enforced the trade rules. It’s only fair.

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  • I didn't realize Pat Buchanan was now writing for Plunderbund.

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  • Amber

    Nice.

    I am always a little disturbed when I agree with Pat, but everyone is right about something!

  • It took you more than one night to read Palin's book?

  • Amber

    Sorry – only spent about 2 minutes on it so far…been busy!!

  • Well said, Amber.

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  • This is one of the major reasons causing Fenton Art Glass Workers, recently seen on “Dirty Jobs”, to lose our jobs. Imported knock-offs have been a major contributer to the decline from 600 to 127, give or take one or two, jobs at Fentons. This has happened over the last 9 years. Sadly, we are one factory amongst thousands. Sincerely, Trudy Mendenhall, Pres. USW, LU 508-01

  • Hello,

    The U.S. Constitution gives Congress the power to set trade policy and currency policy. our tariffs, our duties, our limits, our currency exchange rules.

    not China's currency, not china's tariffs, not china's trade policies.

    China isn't cheating.

    American politicians are cheating Americans.

    It makes a good show for politicians to complain about China pegging their currency. but in the earlier stages(and this stage), most of them want their friends to get rich collecting the mark-up on imports. In the present stage…we rely on China to fund the national debt(blame the trade policies, and blame reaganomics). In the past, the rich and the middle class of america funded the national debt. government bonds/t-notes/etc offered a moderately decent rate of return. Our modern post-industrial economy is based on real estate sprawl and appreciation: that requires cheap credit, which is ultimately tied to government set interest rates.

  • Hello,

    The U.S. Constitution gives Congress the power to set trade policy and currency policy. our tariffs, our duties, our limits, our currency exchange rules.

    not China's currency, not china's tariffs, not china's trade policies.

    China isn't cheating.

    American politicians are cheating Americans.

    It makes a good show for politicians to complain about China pegging their currency. but in the earlier stages(and this stage), most of them want their friends to get rich collecting the mark-up on imports. In the present stage…we rely on China to fund the national debt(blame the trade policies, and blame reaganomics). In the past, the rich and the middle class of america funded the national debt. government bonds/t-notes/etc offered a moderately decent rate of return. Our modern post-industrial economy is based on real estate sprawl and appreciation: that requires cheap credit, which is ultimately tied to government set interest rates.

  • michaelbme

    Hey Amber, I have a quick question for you: Do you have the source that indicates American tire companies being able to successfully compete and even rehire workers because of tariffs? I am not disagreeing with you, and I think what you are saying is true, but I would like to see your source (to make sure I don't fall victim of false hope)

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