Economist Mark Perry, a visiting scholar at the American Enterprise Institute, has a piece up there about what Mitt Romney and President Obama call China's manipulation of its currency. He writes: "instead of complaining, we should be thankful for China's foreign aid to Americans through an undervalued yuan, overvalued dollar, and undervalued goods that collectively save American consumers and companies billions of dollars every year.... If you wouldn't object to China sending products to the United States for free, then on what basis would you object to currency 'manipulation' that allows you to purchase undervalued Chinese imports at a huge discount and great bargain?"
Link via the Wall Street Journal editorial page's "Notable & Quotable" section, which did a fine job of noticing this piece and excerpting it, but lamely doesn't provide a link back to to the piece that is quoted.
The line of argument is somewhat similar to that Nathan Myhrvold expressed the other day in his piece touching on China's subsidies of alternative energy: "at worst, the net effect is that the Chinese government is helping American taxpayers get more power plants for their money. Why is that such a bad thing?"
What neither Mr. Perry nor Mr. Myhrvold mention is that Chinese goods aren't cheap only because of monetary policy or government subsidies for alternative energy, but because of a Chinese government policy that bans labor unions that aren't controlled by the communist party. As the State Department puts it in its annual human rights report on China: "workers were not free to organize or join unions of their own choosing. Independent unions are illegal, and the right to strike is not protected in law....Labor activists detained in previous years reportedly remained in detention at year's end, including Wang Sen, Hu Mingjun, Li Wangyang, Kong Youping, Ning Xianhua, Li Jianfeng, Lin Shun'an, Chen Wei, She Wanbao, Zhu Fangming, Zhao Dongming, Ren Fengyu, Liu Jian, Wang Miaogen, Feng Xinchun, Huang Zhuyu, Xu Haiyan, Wang Jun, Huang Yunmin, Li Xintao, Liu Jian, Liu Jianjun, Yang Chunlin, Yu Changwu, Xu Zexin, Yuan Xianchen, You Jingyou, Zhang Qizhong, and Zhao Wuhu."
If part of the "great bargain" of Chinese goods for American consumers is that the government in China throws labor leaders in jail when they try to start a union that isn't controlled by the Communist Party, the answers to Mr. Perry's question — "on what basis would you object?" — and Mr. Myhrvold's — "Why is that such a bad thing?" — start to formulate themselves. It's not clear to me exactly how much of China's price advantage versus America in manufacturing is attributable to "currency manipulation" or subsidies, how much is attributable to the government's ban on free and independent labor unions, and how much is attributable to other factors. American politicians may be reluctant to raise the labor rights issue in respect of China because they know that public employee unions are causing problems for state and local government budgets and that even private unions played a role in pushing GM and Chrysler into bankruptcy, so championing unions isn't exactly a ticket to guaranteed popularity, especially in a Republican primary.
But it strikes me that it'd be a healthy thing if American politicians spent less time talking about Chinese "currency manipulation" and more time talking about Chinese labor freedom, or, more precisely, the lack of it. It might wind up making made-in-China goods more expensive for American consumers. But it also might help free Wang Sen, Hu Mingjun, Li Wangyang, Kong Youping, Ning Xianhua, Li Jianfeng, Lin Shun'an, Chen Wei, She Wanbao, Zhu Fangming, Zhao Dongming, Ren Fengyu, Liu Jian, Wang Miaogen, Feng Xinchun, Huang Zhuyu, Xu Haiyan, Wang Jun, Huang Yunmin, Li Xintao, Liu Jian, Liu Jianjun, Yang Chunlin, Yu Changwu, Xu Zexin, Yuan Xianchen, You Jingyou, Zhang Qizhong, and Zhao Wuhu. And then American workers and manufacturers could start competing with China on the basis of value delivered, rather than on the basis of which country's laws make it easier to throw the labor leaders in jail.
