 | Obama and Romney Get Trade Wrong |
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| Posted Under: Trade |
The three debates have been very interesting. One thing we have noticed though is that both the President and the Governor want to "crack down" on China for being a "currency manipulator." They say that this is what is causing Americans to be put out of jobs, or causing jobs to go overseas. Take this comment from Obama last night "We had a tire case in which they (China) were flooding us with cheap domestic tires – or – or – or cheap Chinese tires. And we put a stop to it, and as a consequence, saved jobs throughout America...They (American workers) feel as if they had finally an administration who was going to take this issue seriously."
Well let's take a look at what Obama did. So, say in America we sell tires for $100 and Chinese companies sell them for $50 to Americans. If quality is exactly the same, which one would you choose? Why of course you would choose the Chinese ones because you would be saving $50. That $50 can now be used to buy other goods and services in the American economy. Maybe 1,200 American tire workers are put out of a job, but because Americans now have 50 extra dollars to spend somewhere else, this will create demand and jobs in other goods and service sectors, maybe even more than the 1,200 jobs lost. Look at it the other way, because Obama saved those 1,200 tire jobs, millions of consumers had less money to spend on other goods and services meaning there were less jobs created other places.
You see, as Sam Walton once said, "There is only one boss: The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else." It is not the government's role to decide which products consumers can purchase. When they do, it lowers everyone's living standards.
Despite the fact Governor Romney wants to label China as a "currency manipulator" we do not believe this is the case. China in general has lower production costs, lower wage costs, and many Chinese companies get subsidies from the Chinese government. This is what allows US consumers to buy quality goods for cheaper prices.
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