tag:blogger.com,1999:blog-3622225605650065211.post2544009589484543609..comments2024-02-15T03:13:49.505-08:00Comments on Economic Policy Advice for Barack Obama: X-change Rate, Trade, and ChinaUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3622225605650065211.post-2998679843089836252010-03-21T09:57:36.035-07:002010-03-21T09:57:36.035-07:00Mankiw's argument seems silly to me. His argum...Mankiw's argument seems silly to me. His argument essentially boils down to that because many people are able to get cheaper goods from China that it's actually a good thing for us. Well, I'm sure the millions who won't have jobs aren't too excited about those cheap goods from China, not to mention the drag on GDP. Plus, if Mankiw is really so concerned about the economic well-being of the lower/middle class and their purchasing power maybe he should be arguing for middle class and lower class tax cuts, rather than continuing to defend massive tax cuts for the wealthy who can afford to pay for Chinese goods whether or not their currency is appropriately valued. I simply don't understand Ryan Avent's argument at all so I'm not even going to try to understand it. <br /><br />Also, the political discussion of this is dumb. We would never have to institute a tariff, as long as the threat was credible, or at least we wouldn't have to have a tariff for very long. Mankiw thinks some trade war is going to come out of every tariff, but China would have to be retarded to try to engage us in a trade war - the damage to their economy would be massive. So, I think even a serious threat of a tariff / surcharge / whatever would be enough to get them to re-value. The political concern, in reality, isn't about that. The political concern is that the U.S. wants China on board for sanctions with Iran; on dealing with North Korea; and on committing to fighting climate change. If we push them to hard on the yuan they are likely to do none of those things. That's what the real calculus should be about.Tednoreply@blogger.com