Wednesday, April 11, 2007

Cheap Goods From China Are a "Complication"?

From a USA Today article "Surging Chinese Exports Complicate U.S. Position:"

Even as the Bush administration toughens its approach to trade disputes with China, an export surge from Chinese factories is raising the stakes for high-level talks scheduled next month in Washington. The $46.4 billion first-quarter global trade surplus China reported Tuesday was twice the figure for the comparable period last year.

Thanks to productivity gains, Chinese imports today are on average 3% cheaper in dollar terms than they were in December 2003, according to the Bureau of Labor Statistics.

As the Foundation for Economic Education points out, Only in the crazy world of politics are more inexpensive consumer goods a "complication."

What's so complicated? China produces cheap goods and U.S. consumers and businesses voluntary buy them. Volunatry trade. Win-win. Very simple. Not complicated.

Thomas Sowell explains:

“At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment.”

Only in a political fantasy world of trade as a zero-sum game would inexpensive goods produced on the other side of an imaginary line called a national border be considered a "complication."


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