| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

Analysis/Comment Last Updated: Nov 18, 2010 - 2:00:52 AM


Dr. Peter Morici: Facing up to China
By Professor Peter Morici
Nov 18, 2010 - 1:53:01 AM

Email this article
 Printer friendly page
Shanghai's World Financial Center - - China's tallest building

Dr. Peter Morici: Facing up to China: In 1876, Europeans visiting the Philadelphia Centennial Exposition were astonished by American industrial prowess. In two generations, the United States had progressed from a simple agrarian society to challenge the most advanced European economies. Now, China confronts America in an historic test transcending commerce.

Americans believe individuals, each defining their own lives, best chart the progress of the nation. Governments draw legitimacy from collective approval - - citizens are the sovereign.

Markets and democracy define America. Our institutions cultivate competition among individuals and ideas that shape our common material and civic lives.

Recently, Democrats and moderate Republicans lost sight of those fundamentals, and imposed health care reforms, bailouts and huge deficit voters simply don’t want. They were soundly defeated in mid-term elections.

Markets and democracy are mutually reinforcing. Markets work best when personal freedoms are protected, and democracy best safeguards those liberties. Free markets give individuals a strong interest in securing democracy.

Since World War II, the United States has worked with allies in Europe and elsewhere to build international institutions that promote open markets, human rights and democracy.

China is no champion of those values.

The Communist Party imposes an authoritarian regime and assumes parental authority over its citizens. It prefers state capitalism to private enterprise, and embraces market reforms only as needed to participate in global commerce on terms unfairly tilted to China’s advantage. Unless compelled by necessity, it will not adopt market reforms that could instigate popular sentiment for democracy.

China is no 19th Century America.

Nineteenth Century America made pioneering contributions to steam, railroad, telegraph, and electrical technologies. Wages were higher than in Europe and attracted skilled immigrants. Considerable resource wealth powered development.

China accomplishes growth with appropriated technology and cheap labor, and is desperately dependent on imported oil and resources. It compensates for shortcomings by compelling western companies to transfer knowhow and with an undervalued currency that subsidizes exports and suppresses the real wages of industrial workers. Its middle class prosperity is built on exploited factory labor.

During the Cold War, U.S. moderates advocated engagement with the Soviet Union. They believed, through our example, its citizens would see the power of individual liberty and compel change. Subsequently, Washington adopted that strategy toward China.

That is folly.

The Soviet Union collapsed, not because it bought into Jeffersonian ideas, but because its economy failed. China's economy is succeeding. Don't look for its leaders to call for free elections anytime soon.

To sustain the Communist Party, Beijing has a strong interest in selling its brand of authoritarian capitalism to others and redefining international institutions that promote open global markets and human rights.

To secure oil and other resources and enhance global influence, China is investing abroad, building a blue-water navy and modernizing its army.

Through mercantilism, China has accomplished huge trade surpluses and breakneck growth, imposed on the United States huge trade deficits and high unemployment, and made American free market prescriptions for the global economy appear foolish and outdated.

Through diplomacy, the United States has failed to persuade China to abandon currency and other mercantilist policies that harm the US economy.

At the IMF and G20 meetings, German and other key Western allies abandoned the United States, leaving it to fend for itself.

America stands on a lonely perch, and the time for talk is over. Washington must respond to Chinese mercantilism with actions, not words.

China’s purchases of dollars and foreign securities to maintain undervalued yuan come to 35 percent of exports. Washington should impose proportionate tax on purchases of yuan used to buy Chinese goods or invest in China, and intervene in currency markets to push up the value of the yuan.

Washington should place limits on Chinese technology sales and investments in the United States that mirror the restrictions China imposes on imports and foreign investments.

Across the board and without exception, the United States should decisively answer Chinese protectionism.

Failure to act aids China's success. It is appeasement and courts disaster.

Insight on who is the real currency manipulator: China or the U.S., with Prof. Peter Morici, of the University of Maryland and Zachary Karabell, River Twice Research:

Peter Morici,

Professor, Robert H. Smith School of Business, University of Maryland,

College Park, MD 20742-1815,

703 549 4338 Phone

703 618 4338 Cell Phone

pmorici@rhsmith.umd.edu

http://www.smith.umd.edu/lbpp/faculty/morici.html

http://www.smith.umd.edu/faculty/pmorici/cv_pmorici.htm

Related Articles
Related Articles


© Copyright 2010 by Finfacts.com

Top of Page

Analysis/Comment
Latest Headlines
Disastrous 44-year War on Drugs and ignoring the evidence
HSBC & Tax Evasion: France/ Belgium issued criminal charges; UK/ Ireland nothing
Analysis: Germany world's top surplus economy; UK tops deficit ranks
Facts do not always change minds - can even entrench misinformed
Finfacts changes from 2015
Facts of 2014: Guinness not Irish; 110 people own 35% of Russia's wealth
In defence of dissent and Ireland's nattering nabobs of negativism
Dreams of European Growth: France and Italy facing pre-euro economic problems
Globalization's new normal needs permanent underclass - Part 1
MH17 and Gaza: who is responsible?
Israel vs Palestine: Colonization set for major expansion
Aviva Ireland's 'fund' runs dry and life cover to die for
We wish Martin Shanahan - new IDA Ireland chief - well but...
Ireland as an Organised Hypocrisy is in lots of company
Dr Peter Morici: Friday’s US jobs report won’t alter Fed plans to raise interest rates
Own Goal: Could FIFA have picked worse World Cup hosts?
Ireland: Spin and spending will not save bewildered Coalition
Irish Government parties set for 2-year vote buying spending spree
European Parliament: Vote No. 1 for Diarmuid O'Flynn in Ireland South
Dr Peter Morici: US April jobs report may show 215,000 added in April
Dr Peter Morici: Hardly time to call Obamacare a success
Celtic Tiger RIP: Change in conservative Ireland six years after crash
Dr Peter Morici: Five things to know about the Fed’s obsession with inflation
In age of acronym/ Google, Trinity to rebrand as 'Trinity College, the University of Dublin’
Hoeness case part of ‘painful’ change for Swiss bankers
Dr Peter Morici: The Cold War was only on vacation
Dr Peter Morici: US economy drags on Obama's approval ratings; Don’t look for changes in Washington
Dr Peter Morici: Bitcoin debacle shatters the myth of virtual money
Dr Peter Morici: US Tax Reform: Eliminate the income tax and IRS altogether
Wealth threatens the simple life in Gstaad, Switzerland
Irish journalists get cash payouts over 'homophobic' defamation claim
Irish academics get lavish pension top-ups as private pensions struggle
Dr Peter Morici: Inequality is President Obama’s highest priority, but solutions are naive
The Finfacts Troika: Better times ahead and a hangover to forget?
Dr Peter Morici: Volcker Rule arrives with the hidden jewel in Dodd-Frank financial reforms
Ireland's toothless fiscal watchdog threatens to bark
Analysis: Germany's current account surplus - - Part 2
The end of western affluence?
Bono's hypocrisy on Africa, corporate tax avoidance in Ireland
France like Ireland is run for the benefit of the old