China’s Currency Policy Makes Sense: American Advice is Merely Self-Serving

By Chic Hollis – Philosophical Musings

American leaders always begin with thinking, “What works for us?” Bad idea, wrong approach, futile effort! Every issue has at least two sides to it. It’s best to begin by talking with adversaries and understanding their interests, orientation, and reasons for their position about the unresolved issue. Negotiating always requires coming to some middle ground where both sides feel less exploited or manipulated when a decision is finally reached.

Would anyone change a policy, economic or political, that seems to be working? Of course not. The major issue about any exchange rate for a currency is: Would changing the rate have a plus or minus impact on exportations? The “Mercantile” economic philosophy never passed away with the death of the British Empire. The exportation of goods and services means jobs for local citizens in the exporting country. Providing jobs is essential for political tranquility as the Great Recession is teaching those who were born in the U.S. during the last fifty years.

The creation of jobs is not well understood by politicians who don’t realize that the desire to rule a company or a state requires success in minimizing unrest among humans somehow. Working people may be unhappy with their jobs, but unemployed and marginalized people can become vocal, active, and dangerous. Giving people hope for the future by creating new jobs that they anticipate being capable of obtaining is key to quieting the Vox Populi.

Let’s look at the Renminbi Yuan revaluation from the Chinese standpoint. The nation has created an economic environment that fits well with the present globalization of business. That triumph has pleased Chinese people and given the younger generation hope for a more modern lifestyle. It is founded on a redefinition of the “global wage structure” for jobs that anyone anywhere can do. Competition, which the outspoken capitalists welcome, has made the Asian wage per hour the criteria that must be used in costing out the production of a product.

The current exchange rate for the Yuan has brought new jobs, foreign investment in equipment and technology, and foreign reserves to China. All of these benefits cannot be ignored when so many people are still tied to the land, and jobs for the uneducated are scarce and unrewarding. Can anyone blame the Chinese for globalization? It was introduced to their leaders by ambitious foreign business people hungry for making bonuses for themselves at home and profit for their international companies.

So, as Abe Lincoln would say, “We are met on the battlefield between two selfish nations, testing whether a compromise can be worked out or an outright winner anointed after a vicious struggle.”

The U.S. is a spoiled nation. Its businessmen and women who have invested in China are reaping benefits from their investments. The federal government is a recipient of the generosity of the Chinese who are helping to finance the huge deficit of our federal government. And the consumers in the U.S. are enjoying the low cost of imported products which their diminishing purchasing power can afford. Isn’t everyone on this side of the Pacific benefitting?

No, because many jobs were given away, unemployment has increased, imports far exceed exports since we have fewer products to export, tax revenue is disappointing, and the deficit spending in D.C. has caused our government to sign IOUs to cover their mismanagement of the US economy and its numerous irresponsible speculators.

Should the leaders of China acquiesce to our bold petitions for reevaluating the Yuan? They have many more underemployed citizens to bring into the new materialistic Western way of life. No country wants to impede its progress by acceding to external pressure, so the Western leaders must come to terms with the global economic reality and stop blaming the Chinese leaders for doing what comes naturally: looking out for their own interests.

So, what are our options? Understanding our dilemma comes first. Our overall wage structure is not competitive in the global market. The expanding use of technology has eliminated many jobs that humans were required to do only a few years ago. Look at the banking industry for example. ATMs mean less bank tellers. Supermarkets, the post office, and filling stations use the latest machines that reduce the demand for human laborers. And the customer service business is being outsourced to India!

Can that dynamic which destroys human jobs in the U.S. be reversed? This is the real dilemma we face in America today, not reevaluating the Yuan. How can entrepreneurs create new jobs that won’t be outsourced: work which the unemployed can be trained to perform quickly? The texting, the chatting on the cell phones, the computer games don’t prepare our young men and women for future work because they are not learning how to solve problems. Problem solving is crucial to the creation of new services and products that make human life easier, simpler, and safer.

That is the real challenge that Americans must tackle at home immediately. Jawboning Chinese leaders to reevaluate the Yuan is just a political ruse to cover up the important task of replacing the obsolete jobs that are being phased out in this country. “The fault, Dear Brutus, is not in the Chinese, but in ourselves, that we have this economic problem!” Good luck, Americans!

Chic Hollis
Chic Hollis is a longtime drummer and motorcyclist, who served in the US Air Force in North Africa. Married 4 times with 5 children born in 5 different countries on four continents, Chic is a politically independent citizen of the world interested in helping Americans understand the reality that is life overseas where many intelligent, educated, and industrious people aren't as privileged as we are in the US. He studied Latin, Greek, Russian, French, Spanish, Portuguese, and German and ran several large companies. Sadly, Chic Has left this planet and we miss him very much, but we are very pleased to display his amazing writing works.