Tuesday, November 29, 2005
China, Wal-Mart, Hurting Every American
An evil Colossus astride the land. Nay, two of them. We are not talking about the Bush administation, we are talking about the evil of charging prices that are too low. You know about Wal-Mart and how our politicians (bless their hearts) are pressuring it to raise its prices to avoid hurting the little guy. But you may not have realized that China is actually worse, and that our politicians are rising to the cause. Sure, it is a little more complicated, but bear with me, and you will see that not only is China hurting the little guy with low prices, it is also punishing him with low interest rates.
China has fixed its exchange rate so that the yuan (that is the Chinese shekel, and at $.21 the shekel better watch out too) is severly undervalued. That means that the price we pay for Chinese goods is too low, so we buy too much. That is why China sells 6 times as much to us as we to it. And not only that, the dollars pile up in China, where there is nothing to do with them except buy US Treasuries, which supports the price of the bond, which keeps interest rates too low. Not going too fast for you am I, Matilda? This economics stuff is a lot like evolution. Got to be an invisible hand in there somewhere. Or a pony.
Anyway, American manufactures are irked. Senator Charles E. Schumer (that E. wouldn't be Esterhaus, would it?) says that China's refusal to float the yuan, thereby raising prices, "hurts every American". He has a bill that will put a tariff on Chinese goods. That may help the consumer, but some doubt it will fix the whole problem. China, like Wal-Mart, has the advantage of cheap labor.
Of course, the Bush administration opposes the move, saying that it would jeopardize trade and hurt consumers. Hey, you think we were born yesterday on a turnip truck? Democrats like Mr. Chuck are the ones for protecting us little guys.
As for Wal-Mart, what do we do, Chucky? Charging for membership hasn't stopped Sam's from hurting us. Hey, what if we charge a tax at the front door, just like for China. That'll fixum.
