These statements caught my eye in Mankiw’s article in the NYT on trade relations between the US and China, cautioning against protectionism, whatever that actually means:
Critics of China say it is keeping the yuan undervalued to gain an advantage in the international marketplace. A cheaper yuan makes Chinese goods less expensive in the United States and American goods more expensive in China. As a result, American producers find it harder to compete with Chinese imports in the United States and to sell their own exports in China.
There is, however, another side to the story. The loss to American producers comes with a gain to the many millions of American consumers who prefer to pay less for the goods they buy.
So when the Treasury secretary complains about the undervalued yuan, his message to the Chinese boils down to this: Stop lending us money.
Here at Angry Bear we are trying to expand the issue into a more accurate picture rather than a dichotomy of code words…see the most recent series on mercantilism, China’s domestic problems, and the results of our “free trade” policies, which also were a particular set of rules for only capital through the World Trade Organization and trade agreements. “Free trade” and less defined “fair trade” have become code words in the public conversation that relate to little in reality.