Global| Aug 28 2019China, Please Stop Selling US Goods at Prices Less Than We Can Produce Them
|in:Viewpoints
Summary
Chinese government, are you subsidizing your manufacturers/assemblers such that they are selling us goods at less than their costs of production? Regardless of whether you are doing so, you keep selling us goods at prices less than we [...]
Chinese government, are you subsidizing your manufacturers/assemblers such that they are selling us goods at less than their costs of production? Regardless of whether you are doing so, you keep selling us goods at prices less than we can produce them here in the US of A. Please stop. I want to use our labor and other resources to produce these goods at a higher price to me. Also, I want to divert our resources away from producing other goods and services that others and I like to buy or away from rebuilding our infrastructure (have you driven I-294 around Chicago lately?). In other words, Chinese government, I want MASA, Make America Stagflationary Again!
You see, if we start diverting our resources from more productive uses to producing the goods you have been selling us at bargain prices, growth in our aggregate production will slow. It will be akin to a negative technology shock. So, we will have slower economic growth than otherwise. The Fed will probably think that this slower growth is a result of insufficient aggregate demand for goods and services rather than a negative supply shock. In so thinking, the Fed will increase the growth in thin-air credit (everyone knock back a shot now) by lowering the federal funds rate. And that’s the recipe for MASA!
And by the way U.S. corporations, no one is forcing you to open operations in China when you know full well those crafty Chinese are going to “steal” your technology. Evidently, you did the calculation that the theft of your technology, a cost of doing business, was worth it to gain access to the 1.4 billion Chinese potential customers or to produce goods in China cheaper than the U.S. for the rest of the world. Quit your whining.
Viewpoint commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Paul L. Kasriel
AuthorMore in Author Profile »Mr. Kasriel is founder of Econtrarian, LLC, an economic-analysis consulting firm. Paul’s economic commentaries can be read on his blog, The Econtrarian. After 25 years of employment at The Northern Trust Company of Chicago, Paul retired from the chief economist position at the end of April 2012. Prior to joining The Northern Trust Company in August 1986, Paul was on the official staff of the Federal Reserve Bank of Chicago in the economic research department. Paul is a recipient of the annual Lawrence R. Klein award for the most accurate economic forecast over a four-year period among the approximately 50 participants in the Blue Chip Economic Indicators forecast survey. In January 2009, both The Wall Street Journal and Forbes cited Paul as one of the few economists who identified early on the formation of the housing bubble and the economic and financial market havoc that would ensue after the bubble inevitably burst. Under Paul’s leadership, The Northern Trust’s economic website was ranked in the top ten “most interesting” by The Wall Street Journal. Paul is the co-author of a book entitled Seven Indicators That Move Markets (McGraw-Hill, 2002). Paul resides on the beautiful peninsula of Door County, Wisconsin where he sails his salty 1967 Pearson Commander 26, sings in a community choir and struggles to learn how to play the bass guitar (actually the bass ukulele). Paul can be contacted by email at econtrarian@gmail.com or by telephone at 1-920-559-0375.