The Chinamen did it. In the great American tradition of finding foreign scapegoats for our problems, the hunt is on to somehow hold China responsible for the misery that Wall Street financiers inflicted upon the world. Even the normally restrained New York Times editorial page argued Tuesday that China’s tying its currency to the dollar was a devious trick that “is exacerbating economic weakness around the globe.”
Tell that to the shoppers at Wal-Mart and Costco who are managing to stay decently clothed while still affording some of the diversionary electronic trinkets that keep them from going crazy-mad at the bankers who cost them their jobs and homes. How absurd to blame China for a crisis brought on by Wall Street hustlers operating within a mile of the Times’ home office. The bankers’ greed was unleashed by a radical deregulation of the financial industry that the newspaper had once encouraged.
Back on April 8, 1998, a Times editorial applauded the “Monster Merger” of Citicorp bank and the Travelers insurance company to form the too-big-to-fail financial conglomerate that a decade later had to be bailed out by U.S. taxpayers. The merger represented a clear violation of the Depression-era Glass-Steagall Act, which Congress at that point had refused to repeal despite decades of lobbying by the banking industry. The Clinton administration issued a temporary waiver to allow the merger, and the Times couldn’t have been more pleased:
“Congress dithers, so John Reed of Citicorp and Sanford Weill of Travelers Group grandly propose to modernize financial markets on their own. They have announced a $70 billion merger—the biggest in history—that would create the largest financial services company in the world, worth more than $140 billion. … In one stroke, Mr. Reed and Mr. Weill will have temporarily demolished the increasingly unnecessary walls built during the Depression to separate commercial banks from investment banks and insurance companies.”
Citigroup led the way into the massive marketing of toxic collateralized debt obligations that has brought the world’s economy to its knees, and China, which did nothing to create that problem, suffered mightily as a result. Yet instead of attacking the U.S. and its dubious dollar, the Chinese continued to buy our questionable paper. For that reason alone we should be happy that China recently managed to turn the corner on the adversity we created for it, thanks to a stimulus program that makes ours pale in comparison. As a result, not only did China’s exports rise 18 percent last month, as compared to the previous December, but imports rose an astounding 56 percent. China is now not only the world’s biggest exporter, having surpassed Germany, but it topped the United States as the world’s leader in auto sales last year.
All of this is good news, given the fact that hundreds of millions of people in China have witnessed a dramatic improvement in their lives. Instead of being a source of misery at home and undesired migration abroad, the once-feared Chinese population bomb is now a source of increasingly skilled labor and the most promising emerging market for the rest of the world’s products. Of course, with its vast population of more than 1.3 billion, China remains a very poor country, and if it doesn’t manage to spread the wealth to rural areas and solve major environmental problems the future may be dreary for the Chinese as well as for us.
That is precisely the reason we should welcome China’s success rather than bemoan it. If China has figured out how to cope with a U.S.-engineered financial meltdown so as to feed its people instead of starving them, isn’t that a victory for human rights that we all should applaud? But if that weepy sentiment doesn’t cut it for you, do we really want a trade war with China that might compel it to shun the dollar and stop carrying our debt load?
The Times’ editorial warns correctly that a “trade war with China would be disastrous” but then shifts the blame to China, stating “we fear no one is going to feel restrained if China doesn’t change its strategy.”
Suddenly, after a century of preaching the virtues of the free market to the world when we held the upper hand, we will now play the protectionist game? I think not. Too many jobs in this country, and too much profit for our big multinational corporations, would be lost to other industrialized nations. Anyway, it’s just absurd to blame a Made-in-the-U.S.A. crisis on a foreign import.
AP / Eugene Hoshiko
U.S. Commerce Secretary Gary Locke, left, and China’s Vice Premier Wang Qishan make a toast during the signing ceremony of the 20th China and U.S. Joint Commission on Commerce and Trade, last October in Hangzhou, China.