Thursday, March 18, 2010

Silicon Valley Guilty of "Technology Manipulation"

Congressman Mike Michaud urges Treasury Secretary Tim Geithner and Commerce Secretary Gary Locke "to immediately address the growing problems associated with China’s continued currency manipulation."

Don Boudreaux responds:

"After you’ve succeeded in denying Americans access to the lower prices and larger quantities of goods made possible by Beijing’s current monetary policy, will you and your colleagues take similar action against Silicon Valley? After all, firms there famously engage in technology manipulation, which – by improving the productivity of nearly every industry in the economy – essentially (as you would say) subsidizes production of countless industries and imposes tariffs on the outputs of workers who compete with these advanced techniques. Such advanced techniques present an insurmountable barrier to the ability of many such workers to continue in their old jobs."

23 Comments:

At 3/18/2010 11:39 PM, Anonymous svend said...

Absurd anology. Prices are driven down by innovation. The RMB is driven down by state policy.

Good god. Now we have libertarians defending the economic policies of China.

America doesn't need "consumer goods" from China at prices below cost. America needs J.O.B.S. Not "census jobs". Or "defense contractor jobs". But gawd damn manufacturing jobs.

 
At 3/19/2010 12:06 AM, Anonymous Former GMU Student said...

You may want to make a reference to petition of candlemakers too.

 
At 3/19/2010 6:35 AM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 3/19/2010 6:37 AM, Blogger sethstorm said...


You may want to make a reference to petition of candlemakers too.

You just want to defend another government's policy. It is interesting that you want to use that to defend a government with larger amounts of government intervention that just happens to favor business entities.

Enact the tariff, and then have it apply in such a way that also affects the other countries that receive diverted production. Leave no way to circumvent it.


After all, firms there famously engage in technology manipulation


With all due respect, you are trying to make a case where no such case really exists. Retraining exists, but that would get in the way of your example.

There's also labor force manipulation, courtesy of 20 CFR 655 and 20 CFR 656 such that it tilts the nation against itself by importing "talent not found or able to be created" in the US. The reality is that it is used to create an artificial shortage.

The lack of enforcement in it (as stated by the GAO twice over in 2000 & 2006) further prove that point.

 
At 3/19/2010 8:05 AM, Blogger randian said...

America doesn't need "consumer goods" from China at prices below cost. America needs J.O.B.S. Not "census jobs". Or "defense contractor jobs". But gawd damn manufacturing jobs.

America doesn't need manufacturing jobs any more than it needs farming jobs. If China wants to send us goods at below cost (and you haven't provided evidence that they are) that's ok with me. Everybody is better off, and workers can do something more useful than what they were doing before.

 
At 3/19/2010 9:54 AM, Anonymous Anonymous said...

svend and sethstorm no longer need to worry about finding that manufacturing job, it seems that Obama has them covered:

The IRS will have lots to do to implement and enforce the new taxes and mandates included in the bill. In fact, the Senate Democrats' bill references or amends the Internal Revenue Code 180 times.

Based on the current cost to employ this division's workforce, an additional $1 billion per year would mean 12,500 new employees at the IRS. That's more than 12,000 IRS employees that will be examining taxpayer records to enforce the government's definition of "affordable" and "acceptable" insurance coverage, and working to comply with the bill to get people into government-run insurance.

National Review

I here that you'll be wearing a real spiffy uniform, complete with brown shirt, black boots and armband. They'll even teach you songs. You'll be making sure that your friends and family are in compliance with the dear leader's wishes and stickin' it to "the man". And best of all, from your perspective, you'll be making Americans poorer. Hope and Change.

 
At 3/19/2010 10:37 AM, Anonymous gettingrational said...

Candle makers and Don Boudreaux go well together -- smokey results based on out-dated talking points. Attacks on U.S. producers by defending a basically non-market economy is bewildering.

Don Boudreaux implies free market promotion but belittles the efforts to trade Chinese currency.

" According to Article 45 of the Regulations on Foreign Exchange Control of the People's Republic of China, those who have conducted unauthorized purchases and sales of foreign exchange will be warned by the foreign exchange control authorities, the foreign exchange in their possession will be converted in a compulsorymanner, the unlawful income from such transactions will be confiscated, and a fine between 30 percent and three times of the amount of foreign exchange involved shall be imposed."

Implying support for the free exchange of goods and services is coy but not truthfully supportive.

 
At 3/19/2010 10:59 AM, Blogger Ron H. said...

If a tariff is enacted that effectively halts imports from China, then China will no longer have US dollars with which to buy US treasury bills.

Who, then, will loan us the money to finance the current federal budget deficit of nearly $1.5 trillion and future deficits?

 
At 3/19/2010 11:10 AM, Blogger sethstorm said...


America doesn't need manufacturing jobs any more than it needs farming jobs. If China wants to send us goods at below cost (and you haven't provided evidence that they are) that's ok with me.

It's fine w/ you since you aren't affected by the uglier side of it.


Everybody is better off, and workers can do something more useful than what they were doing before.

You presume that people just simply down their tools and pick up something better as if were relatively pain-free and cost-free. Another view is that you think they deserve the pain and struggle in some warped form of market-derived "social justice".

 
At 3/19/2010 11:16 AM, Blogger sethstorm said...


Anonymous said...

svend and sethstorm no longer need to worry about finding that manufacturing job, it seems that

You seem fine with it, since that's what China, India, Russia, Vietnam, Burma, and a few other "offshoring-friendly" countries do. Spiffy uniforms, critics that disappear or die, and party bosses in European/European knockoff cars doing things that the US abandoned long ago.

You presume that I support that individual, which is not the case.

 
At 3/19/2010 11:21 AM, Blogger sethstorm said...

Anonymous:
Even further, you presume that it's only simplistic manufacturing that is being attacked. Skilled work including IT is getting attacked. The sciences are getting attacked. Advanced manufacturing is being attacked (knockoffs).

You just want to be able to lord over people as a non-governmental entity.

 
At 3/19/2010 11:29 AM, Blogger juandos said...

Apparently sethstorm just refuses to accept the realities of government intervention into the marketplace of employment...

Government Regulation: Enemy of Individualism

August 15, 2000

by Dr. Edward Younkins
Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia and author of Capitalism and Commerce

'Government intervention into private markets produces costs and unintended consequences more harmful than the targeted problem itself. Government actions create obstacles to prosperity and economic growth. Initially, the impacts of government regulation are to increase firms' costs, slow down their decision making processes, and reduce the resources available to produce goods and services. Ultimately, it is the consumer who is at the receiving end of the repercussions generated by regulation. It is imperative to look at the effects on all groups and in the long run'...

 
At 3/19/2010 11:44 AM, Blogger sethstorm said...

Juandos said:

What you suggest does not change it for the better. It puts the regulation in a more easily-bought entity.

 
At 3/19/2010 12:21 PM, Anonymous Benny The Man said...

I think Dr. Perry smoked some libertarian cigarettes before he made this analogy.

 
At 3/19/2010 2:57 PM, Blogger juandos said...

sethstorm proving yet again he never tires of being wrong says: "What you suggest does not change it for the better. It puts the regulation in a more easily-bought entity"....

That is just laughable...

sethstorm, ever heard of something called, 'personal responsibility'?

pseudo Benny must enjoy the tasting of foot: "I think Dr. Perry smoked some libertarian cigarettes before he made this analogy"...

Go back to huffing the exhaust manifold on your vehicle...

 
At 3/19/2010 4:24 PM, Blogger sethstorm said...


sethstorm proving yet again he never tires of being wrong says:

The problem is that you find a business of a large enough size, it has enough influence to kill regulation.

 
At 3/19/2010 5:32 PM, Anonymous Anonymous said...

Don't you people get it? SETHSTORM is here to rile you up and will counter everything rational just to get you to write more.
It is obvious because NOBODY could be as dumb as sethstorm pretends to be.

 
At 3/19/2010 7:11 PM, Blogger juandos said...

Funny how Mike Michaud can find time and effort to whine about China's alledged monetary manipulations but seems to be at a loss for words when confronting a tax cheat like Geithner...

"It is obvious because NOBODY could be as dumb as sethstorm pretends to be"...

Sure somebody could be as dumb as sethstorm, one just has to work at ignoring the realities of the world...

Personally I really don't think sethstorm is dumb but he's mighty teed off about something and that seems to block clear thinking at times...

 
At 3/19/2010 10:42 PM, Blogger bobble said...

ok, silicon valley created high paying jobs in the united states. china's currency intervention is not doing that. so that analogy is busted.

 
At 3/19/2010 11:04 PM, Blogger Ron H. said...

Say, does anyone know where I can find some of those libertarian cigarettes?

 
At 3/20/2010 1:08 PM, Blogger Ron H. said...

bobble, you said

ok, silicon valley created high paying jobs in the united states. china's currency intervention is not doing that.

China's currency intervention DOES create high paying jobs in the US. By buying things cheaper from China, I am wealthier, because I have more money left over to spend on other things.

One of the other things I enjoy is eating out on occasion at an upscale restaurant, where my favorite waiter makes $90k/yr.

This is one of the first things I would cut out if I had less to spend. If enough other people also had to cut back in this way, my waiter might be laid off.

Feel free to substitute your own discretionary expense for 'eating out' in the above example.

 
At 3/20/2010 3:20 PM, Blogger bobble said...

RonH:"China's currency intervention DOES create high paying jobs in the US. By buying things cheaper from China, I am wealthier, because I have more money left over to spend on other things."

yes, i get that.

but silicon valley did the same thing, ie made things cheaper,
while directly creating high value/high pay U.S. jobs.

china's currency manipulation only makes things cheaper (which, as a side effect may create some jobs) while directly causing jobs to leave the U.S.

analogy busted.

 
At 3/21/2010 7:33 AM, Blogger sethstorm said...


China's currency intervention DOES create high paying jobs in the US

...only if your industry is not being targeted by offshoring. Once it is, it also destroys those jobs as well. Most certainly, it will be, no matter what level.

It just leaves more room for more Chinese junk. It would be better to just end the stream of dumped junk with dumped RMB's.

 

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