… until Americans are paying more for a set of tires than Indians pay for an entire car (Tata Nano; also the subject of an analysis of what our Detroit bailout money would have bought). According to this New York Times story, President Obama has imposed a 35 percent tariff on Chinese tires, not because they were doing anything unfair, but simply because some American factories are unable to compete on price and quality, at least with their current union labor contracts. If you’re managing one of the businesses that is not fortunate enough to command Washington’s attention, e.g., a software company, you now have to pay your workers extra so that they can buy tires to get to work. This comes on top of the extra money that you have to give them because they are required to participate in the world’s most expensive health care system and the extra money you have to pay them so that they can pay enough property and state income tax to make good on public employee pension commitments from 30 years ago (more).
Separately, EMC, the data storage company, announced that it would invest $1.5 billion to expand its services, customer support, and research and development operations. Is the money going to be invested in Massachusetts, where EMC is headquartered and where we already have achieved the kind of health care reform currently being proposed in Washington? This Boston Globe article says that the money will be invested and the jobs created in India.
For an American of my age (45), there is something humiliating about being engaged in a trade war with China. The Chinese were supposed to be rural peasants in rags, too poor to feed themselves, and oppressed by Communism, the world’s worst system of government. Now it seems that our Democracy, supposedly the world’s best system of government, has transferred much of our wealth to cronies of the rulers (Wall Street executives, Detroit automakers, specific labor unions, health insurance companies (soon)). The evil and inefficient Communists, by contrast, spent their stimulus money on solar power and lithium battery technology and infrastructure. The Chinese economy is recovering nicely (source) while we continue to stagger. Can we afford to start a trade war with these guys? Aren’t we eventually going to need to buy renewable energy and battery technology from them?