I heard a short snippet of Treasury Secretary Timothy Geithner the other day on NPR. He was whining about how the Chinese government-run corporations have a competitive advantage over private corporations in places like the United States. I was unable to find the exact quote on NPR's website (I looked for about 90 seconds) but this story covers the gist of it.
Timothy Geithner, the Secretary of the Treasury of the United States who had difficulty filing his income taxes over several years, seems to me the perfect poster child for this country's contradictions between economic policy and stated economic beliefs. Every conservative/Republican (they have become synonymous) loves to talk about the virtues of the "free market" and the benefits of deregulation and lower taxes. First of all, the U.S. has anything but a free market, but that is a post for another time. My point today is that while these folks go around trumpeting the advantages in efficiency of free market capitalism (think Mitt Romney and that buffoon Newt Gingrich) their friends are complaining about China's unfair advantages in currency control and state-owned, taxpayer supported corporations. I will forgo the opportunity here to take a shot at our recent taxpayer funded bailouts of AIG and GM.
While I am far from an expert in Chinese economic policy, or economics in general, my understanding is that China keeps it's currency undervalued intentionally because this allows them to sell a greater number of goods internationally at artificially lower prices. Their reason for doing this is to keep unemployment low and keep lots of manufacturing jobs at home, and those workers paying taxes. So this system can essentially be described as an elegant form of unemployment control. In our "free market" the taxpayers write checks to the unemployed for doing nothing, in China the taxpayers write checks to the government in order to keep unemployment low. If I have misunderstood or missed something here, please point it out.
Anyway, regardless of whether or not I correctly understand currency control incentives, the big contradiction here is that the free market capitalist champion is blubbering because a different economic system is out-competing the capitalist corporations in the U.S. All I'm saying is that if their system is such a threat to us, maybe there would be some value in discussing its pros and cons rather than treating it like some evil satanic religion.
