Rising Yuan ,Boats, Etc.
In the New York Times
today, Eduardo Porter wonders
whether a rising yuan (i.e., a serious rise, not the small uptick seen thus far) would be enough to stop the shrinkage of manufacturing jobs here in the United States. Nicholas Lardy of IIE points out that some production, like that of DVD players, say, have simply vanished here at home, and we'll never fire it back up no matter how expensive imports get. On the other hand, the rising yuan might
prevent a few other key industries, like semiconductors or molded plastics, from shifting production to China.
Okay, this isn't exactly my specialty, but doesn't it seem clear that manufacturing will continue to decline no matter what, and this isn't necessarily all China's fault? A study
done in late 2003 by Joseph Carson, the chief economist at Alliance Capital, argued that factory employment in twenty major economies had declined by 11 percent between 1995 and 2002. Even China
had lost 15 percent of its factory jobs (mainly because of the collapse of state-owned businesses, but still). In fact, very few countries actually saw a rise in factory employment, and those increases were mostly insignificant. So who's taking away all the good jobs? Why, the machines of course, and they do a pretty good job of it.
Now low-wage Chinese and Indian workers are "taking away" some
American factory jobs, sure, and perhaps one can argue that we should try to slow this down—I'm not convinced, but some are. (Whining about countries that have been pillaged since the 1800s and are only now catching up economically? Not my thing. Although Clyde Prestowitz has made some counter-arguments here
.) But stop or reverse the trend? Eventually, or so it would seem, Congress needs to look inward rather than out for solutions—worker retraining and a stronger safety net come to mind. Though at the moment Chuck Schumer and Lindsey Graham seem to be having too much fun blaming China for all our woes.