I didn’t want to let this paper by Robert E. Scott from the progressive Economic Policy Institute go by without comment. I’ve made no secret of my belief many of the United State’s economic woes can be dated to China’s effectgively pegging the yuan to the dollar in the early 1990s and Dr. Scott’s article documents the costs that the actions of China and other countries that have engaged in currency manipulation have had on us. As he points out the currency manipulation practice not only by China but by Denmark, Hong Kong, South Korea, Malaysia, Singapore, Switzerland, Taiwan, and Japan have increased our trade deficit beyond what it would otherwise have been and cost us a significant number of manufacturing jobs:
Overall, reducing U.S. goods trade deficits would create between 891,500 and 2,337,300 jobs in manufacturing (38.8 percent to 40.3 percent of jobs gained across industries), representing the largest jobs gain of any major industry. Within manufacturing, the largest gains would occur in durable goods, specifically “machinery, except electrical,” with 170,500 to 353,900 jobs gained (respectively, 7.4 percent and 6.1 percent of total jobs gained). Jobs gained in non-electrical machinery would increase total employment by 14.4 percent to 29.8 percent in that sector. Other manufacturing industries with large gains would include transportation equipment (164,100 to 352,400 jobs), computer and electronic parts (127,600 to 338,000 jobs), fabricated metal products (104,200 jobs to 251,800 jobs), and miscellaneous manufactured commodities (99,400 to 243,300 jobs).
Major job winners outside of manufacturing include agriculture, forestry, and fisheries (246,800 to 486,100 jobs); health care and social assistance (167,900 to 430,600 jobs); administrative and support industries (166,700 to 413,900 jobs); professional, scientific, and technical services (140,300 to 357,100 jobs); and accommodation and food services (142,500 to 358,600 jobs).
It could be retorted that the out-sized purchases of dollars by various other countries is the price that the U. S. pays for the dollar being the world’s reserve currency. That could well be true but
- All of the countries listed above with the possible exception of Switzerland (the Swiss have a tendency not to be participants in international accords) have engaged in trade in dollars in violation of commitments they’ve made.
- It’s not enough to point out that the dollar is the reserve currency. Critics of the analysis have an obligation to quantify the net costs to us incurred by the dollar being a reserve currency and IMO the individuals and companies that benefit from that should be taxed by that amount and the proceeds used to support wage subsidies, apprenticeship programs, and other policies that would foster job creation here.