I seem to recall mentioning once before my concern about the combination of arrogance and ignorance, especially as it is found in government employees. A story I saw on the Internet recently reminded me of that.
Senators Charles Schumer and Lindsey Graham have proposed a new law (that’s what we need: another law!!) that would put steep tariffs on Chinese goods, unless the Chinese raise the value of the yuan significantly. The senators were kind enough to give the Chinese time to think it over: they have until September 30 to conform to the senators’ will. Fortunately, this proposed law will never get off the ground. Senator Arlen Specter, speaking of the bill, has assured one and all that "It was never about to be passed." (Specter was recently in China for talks with Chinese rulers about various things, no doubt the yuan being one of them.)
I wonder if the senators’ memories are long enough to reach back to May of 2005. At that time, senators from both sides of the aisle were demanding that China reduce the value of the yuan, calling the Chinese government a "currency manipulator." That can hardly be considered a term of derogation, however, since the outraged senators were calling upon China to do precisely that — to manipulate the currency — but in the direction that the U.S. senators wanted.
Now, a year and a half later, the senators are upset because the value of the yuan is too low, and they want it raised! More currency manipulation!
Firstly, it is rather misleading, if not downright dishonest, to speak of the "value" of modern currency. The value of a monetary unit consists of its weight and purity. Thus, the value of the dollar was 412.5 grains of standard (90%) silver. When there is no tangible money, and therefore, no standardized amount ("dollar," "yuan") of it, the term "value" becomes meaningless. One can speak of the "buying power" of the scrip, of course, but that is a rather pathetic stratagem to attempt to associate value with the paper. The buying power of the money is equivalent to a (periodically changed!) market basket of commodities, but those commodities themselves are evaluated in terms of — the money. It’s similar to declaring the value of a grugle to be three mittzels, and then defining the mittzel as a third of a grugle. Swell, but what are we talking about? Obviously, when the terms are familiar ones, we don’t appreciate the absurdity.
Secondly, there is the breathtaking arrogance of it all. Senators Schumer and Graham are upset because so much Chinese merchandise is being sold in this country. But what does that mean? What else could it mean but that American people are satisfied with Chinese goods and its price? If the Chinese are selling a lot of stuff here, it’s because Americans are buying it! Who’s being hurt? No doubt the incensed senators would say that American workers are being hurt by the influx of Chinese goods, and that is regrettable; but does imposing an economic burden upon everyone else rectify the situation? If our much-lauded democracy means the rule of the majority, then whose "rule" should determine the price: the buyers of the goods, or the workers manufacturing more expensive competing goods? Which group is the larger? The senators are saying, in effect, "The will of the people be damned, let special interests rule."
Had Schumer and Graham been around in 1959, would they have urged a surtax on every automobile (except the Edsel) manufactured in this country, so as to save the jobs of the Edsel workers?
Ultimately, the cries for and against "currency manipulation" amount to efforts to save the dollar; in other words, to convince people that dollars are worth having and saving. (Obviously, there’s no point in printing them if nobody wants to use them.) When the dollar was an amount of money, America made the best and most varied goods in the world. Whatever anyone wanted, it was likely to be made in America, of good quality, at a good price. When America — and the rest of the world — abandoned money in favor of fiat, economic disaster stuck its nose under the tent, and by now, has wriggled nearly all the way in. Thanks to the use of fiat, decisions made by a handful of regulators have repercussions in millions of households, in nations scattered around the world. If the Chinese rulers were to act upon the recommendations of Schumer and Graham, the lives of literally billions of people would be affected. This is the arrogance that I deplore. When combined with economic ignorance — or indifference — the result is downright immoral — and government as usual.