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Willisms

« Wednesday Caption Contest: Part 125. | WILLisms.com | Trivia Tidbit Of The Day: Part 470 -- Laffer Curve. »

Trivia Tidbit Of The Day: Part 469 -- China Is The New Japan.

China 2008 = Japan 1980s-

Today, a lot of people are worried about the American trade deficit with China. We hear that we should "do something" to fix the trade deficit with China; that we ought to stop our jobs from moving to China; that we will be slaves of China in a decade or two if we keep up our current pace.

Not long ago, people expressed the same worries about Japan. Indeed, in September of 1987, the Center for Media and Policy Analysis noted that, according to the American media, Japan must have been violating trade standards (.pdf):

chinaisthenewjapan.gif

Only 1 in 11 stories analyzed in 1987 cited the high quality of Japanese goods in stories dealing with Japanese trade supremacy. Most stories focused on Japan's alleged "dumping" (which really just means charging a low price in order to achieve success in a market) and Japan's protectionism against American goods (which was and remains a relatively valid point). While most media did not endorse a major trade war (with heavy, long-term sanctions and tariffs) with Japan, 62% supported at least limited trade protectionism against Japanese imports.

That was twenty years ago. Then, it was Japan. Today, it is China.

One wonders which country it will be twenty years from now. India? The entire African continent, perhaps? It seems as long as there are jobs that become obsolete or commoditized and can be performed by someone in the developing world, we'll continue to have the same discussion, generation after generation. Meanwhile, we'll all be wealthier in the end.

One bit of good news is that America is far less beholden to OPEC than before, as our economy is less energy intensive than it was decades ago:

tradedeficitchanges.gif

America's economy clearly relies less on exporting goods than it did twenty-seven years ago. Twenty-seven years later, the United States economy remains the most powerful on the planet. But, oddly enough-- maybe because there is an Iowa caucus coming up in a couple of weeks-- an entire political party and some of another political party are questioning whether trade is worth it.

Indeed, Professor Hanke, writing for the Cato Institute, agrees that China has replaced Japan as the whipping boy of American mercantilists.

China is a serial violator of human rights, some of its cities are among the most polluted in the world, and it very well may have mal-intentioned plans regarding the future of Taiwan. China is actively colonizing parts of Africa (Angola, for example) and the rest of the third world, very much under the radar screen. China vetoes all sorts of useful resolutions at the United Nations, while giving cover to the worst of the worst in the world. China has demonstrated a propensity to do what it can to undermine American interests, all while building up its military at a furious pace. China has failed to protect America's intellectual property rights, especially with regard to software, electronics, music, movies, or other entertainment. To the extent that China and the United States do cooperate, China has often abused America's trust, whether through shipping contaminated toys or bad food to the U.S.

There are a lot of reasons to be wary of China. China is not a good regime by any stretch of the imagination, but in many ways, China is the new Japan. There are clear differences, sure, but a lot of the rhetoric we hear today against free trade is exactly the same as it was 20 years ago.

As long as we take care of our business and remain vigilant about preventing bad tax/trade/regulatory/tort/labor/environmental/immigration/education policy from taking hold in this country, we may not remain the top producer of cars or Barbie dolls or khaki shorts, but our position in the world will sort itself out just fine.


-------------------------------------

Previous Trivia Tidbit: AIDS.

Posted by Will Franklin · 20 December 2007 04:03 PM

Comments

You always have such great graphics!

Posted by: Zsa Zsa at December 20, 2007 05:36 PM

Will, I have a suggestion, if such a topic falls into your range of knowledge.

I've heard on the news about China playing games with their currency - keeping it devalued and such.

What does that mean? What's the shenanigans and how does it affect us?

Posted by: Hoodlumman at December 21, 2007 07:55 AM

As a baby boomer, I can remember when every gift and curio shop was filled with nicknacks having "Made in Japan" stickers. I remember when door handles fell off those cheap Japanese autos. I do not think anyone in Japan is concerned about losing the nicknack market and their cars are rated very highly.

I used to tell everyone if they were concerned about China, wait until Sri Lanka enters the world market. Sometime ago, I bought a shirt with a label proudly stating, "Made in Sri Lanka"!

But I agree that we must watch China much more closely then was needed in the case of Japan.

Reading at a higher level!

Posted by: JGsez at December 23, 2007 11:05 AM