Robert (No Relation to Paul) Samuelson on the China Trade Time Bomb

If this stupidity were arguing for free trade, it would have to be run over at the National Review. But Robert Samuelson is coming up with some incredibly stupid arguments for trade protection. He starts off with a few facts:

It sometimes seems as if almost everything we buy comes from China: DVD players, computers, shoes, toys, socks. This is, of course, a myth. In 2006, imports from China totaled $288 billion, about 16 percent of all U.S. imports and equal to only 2 percent of America’s $13.2 trillion economic output

OK – we bought almost as much from China as we did from Canada in 2006. But here is where this gets really silly:

On its present course, it threatens to wreck the entire post-World War II trading system. Constructed largely by the United States, that system has flourished because its benefits are widely shared. Since 1950, global trade has expanded by a factor of 25. By contrast, China’s trade is mercantilist: It’s designed to benefit China even if it harms its trading partners.

Accusing a trade partner of being mercantilist as an excuse to adopt trade protection?! The mind boggles. When Robert Samuelson complains about the undervalued exchange rate, he is on somewhat stronger grounds, but then he returns to sheer insanity:

Personal consumption spending is a meager 38 percent of GDP; that’s half the U.S. rate of 70 percent. The Chinese save at astonishingly high levels, partly because they’re scared of emergencies. The social safety net is skimpy. Health insurance is modest: Out-of-pocket spending covers half of medical costs, reports economist Nicholas Lardy of the Peterson Institute. There’s no universal Social Security, and only 17 percent of workers have pensions. A mere 14 percent are covered by unemployment insurance. The surplus of personal savings, supplemented by business savings and foreign capital, means that Chinese and multinational firms can build more factories – and that raises the need to export.

Let’s be honest. We don’t really have a great handle on why the Chinese consumption to GDP ratio is less than 40%. My view is that part of this may be a measurement issue. But let’s concede that Americans save less than the Chinese. As our national savings falls short of our domestic investment, we tend to borrow from nations that saving more than they invest. On the other hand, Chinese is lending funds to American firms that invest here. We could also get into the fallacy that American firms are doing a massive amount of direct investment abroad – but didn’t we cover this showing that the data isn’t quite there?

OK, China is not only lending to us so we can invest more than we save but they are also investing a lot in their own factories. Which would tend to increase the demand for Chinese workers, which will eventually increase their wages. And as their incomes rise, won’t that mean they’ll consume more someday?

Someone please call Paul Samuelson. Maybe he’ll take the time to explain the basics to Robert Samuelson. Or maybe he’ll simply ask Robert to use a different last name for such incredibly dumb opeds.