China! Bad?

We’ve been hearing a lot about the tariff war going on right now between the United States and China. President Trump is trying to strong arm China into changing some of its business practices and to punish it for others.

I don’t disagree that many Chinese policies need to be addressed, such as human rights violations, how it treat dissidents, and how it has a practice of stealing business secrets then packaging them as its own. The policies harming people are more egregious than the latter in my opinion though.

It seems the latter is more important to the President though.

Does China play unfairly? I would say yes from a competitive practice. It manipulates its currency, keeps wages low, allows unsafe working environments, and makes sharing intellectual property as a condition to do business within its borders (or just steals it).

We helped create or perpetuate some of these practices. As consumers, we want to pay as little as possible for a product we want, no matter where it is made. Then we complain we can’t find anything made in America anymore.

We helped create or perpetuate some of these practices. As capitalists, we want to produce things as cheaply as possible and sell as high as possible. Then complain our manufacturing plants have all closed and businesses have moved overseas.

We helped create or perpetuate some of these practices. As voters, we continue to elect politicians who continue to pass legislation to incentivize businesses to move jobs offshore.

We helped create or perpetuate some of these practices. As taxpayers, we don’t want to pay more in taxes which means we must borrow large sums of money to continue to subsidize large corporations and massive tax cuts for the rich, with our largest creditor being China.

Unfortunately, because of all of our wants, it will be almost impossible to punish China enough for them to change their practices.

If we push too hard, all they have to do is start selling our treasury bonds they own on the open market, which hurts the value of the dollar.

If we push too hard, all they have to do is begin lowering its exports to us, meaning we will have fewer products to buy, many of which we no longer manufacture here at home.

If we push too hard, all they have to do is to stop allowing U.S. businesses to set-up shop meaning again, we will have fewer products to buy.

If we push too hard, they stop buying our products, such as agriculture products, hurting our farmers—big and small.

So what are we to do?

A few simple things will go a long way, but it will mean some short-term pain for long-term gain:

  1. Increase taxes, especially on the uber rich, stock trades and capital gains, and directing the increase to pay down our debt, while also eliminating tax loopholes or favorable codes allowing companies to write off millions in tax deductions.
  2. Government investment in companies to build manufacturing plants here.
  3. Start buying at our local small businesses and being willing to pay a little more for products made in the U.S. (remember the higher prices are a result of creating good working conditions for employees and paying livable wages).
  4. Outlawing companies selling their intellectual secrets to foreign companies acting as agents for the government.
  5. Push on elected officials to only create trade deals in which unfair business practices are not allowed, and allowing U.S. firms to only do business in countries honoring safe working conditions and livable wages for all citizens.

Will taking these steps be easy? No. Will change be fast? No. Will it have a positive impact? I believe so. We won’t know until we start moving in the right direction.

All I know, what I believe, is that someday, unfortunately, the world will be Pax China rather than Pax Americana because we let it happen, all for a cheap shirt.

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