Treasury Secretary Tim Geithner appeared this week on Charlie Rose. Watch as he brilliantly explains why we have to let China continue along its current path. Watching this brings to mind how he so brilliantly advocated for Wall Street and the giant banks. But who takes the side of The American Majority? Who advocates for We, the People?
This week Treasury Secretary Tim Geithner and Chinese Vice Premier Wang Qishan were interviewed together on the Charlie Rose television show:
It was fascinating to watch this interview and gain a little bit of understanding of the mindset of the people who run the world. Geithner was brilliant, and clearly understood the issues, especially from China’s perspective. He so clearly articulated the struggle China faces as it emerges into a leadership position in the world. Geitner is so full of understanding and empathy and advocacy for the Chinese position.
Summarizing Geithner in the interview:
Starting at 7:04:
“They’re moving very gradually because they want to be careful how they do this. … But if you adjust for inflation … it is appreciating more rapidly ... necessary for China … reinforce the strategy … moving carefully [so] they don’t undermine … very encouraging … leadership of China has a very sophisticated understanding of how to balance those forces … they will come to the right judgment.”
11:45:
“Vice Premier was right … Can't look at this economic relationship just through the prism of the exchange rate… 30 years ago started putting in place sweeping reforms to expand the economy … enormously successful … we export more than $100 billion a year to China … of course in the exchange rate the Chinese authorities are moving.”
14:45:
“The Chinese when they make a commitment they deliver on that commitment, and they are moving forward to put those things in place, make sure those things have traction on the ground, and those commitments will endure.”
You can't argue that Geithner was anything but brilliant here, understanding China's emerging role in the world and the internal pressures they are dealing with. It is vitally important that this understanding is conveyed within the administration. But is that really his job?
Adversarial System
International relations is an "adversarial system." In an adversarial system one side fights for its position, the other for its position. And they leave it to the other side to fight for the other side's position. Each side has a responsibility to present their own side's best case. Each side expects and leaves it to the other side to present that side's best case.
An adversarial system falls out of balance if each sides does not meet its responsibility to present its own best case. I think this is what we are seeing now in the U.S.-China relationship. The fact that Geithner understands and empathizes with China's position and approach is great, but when he takes on the role of presenting China's case it leaves no one with the job of presenting ours.
Wall Street vs. Main Street
Since the bailouts it seems that our own Treasury Department has worked hard for the interests of Wall Street and the big banks, but not so hard for the interests of Main Street and the rest of the American people. The people Treasury Secretary Geither has surrounded himself with are seen as advocates for Wall Street and the big banks, and few if any advocate for Main Street. Geithner can often be heard in interviews brilliantly stating the reasons that Wall Street and the big banks do what they do, and the good they do for our economy.
Our Justice Department seems similarly ... uh ... respectful of Wall Street and the big banks. In fact, while the Savings and Loan Crisis led to thousands of investigations and prosecutions, with over 1,000 sent to jail, our current law enforcement mechanisms have become so respectful and understanding of Wall Street and the big banks that there have been ... uh ... well there haven't been hardly any ... but I'm sure you understand and respect their decision.
“Captured” is the word that comes to mind.
The American Majority Position
According to polls, The American Majority position is at odds with the things Geithner appears to be advocating for. People want us to confront China and impose a tariff on goods from China if they don't change and change fast. Who advocates for the American People in this confrontation?
Last years' Alliance for American Manufacturing (AAM) poll found that:
- A majority believe the U.S. no longer has the world’s strongest economy, with China our chief competitor
- Goods manufactured in China and companies that move there are extremely unpopular
- We should impose tariffs on products from China unless it stops cheating on its trade commitments to the
United States
An April 1 Gallup poll, headlined, Americans' Top Job-Creation Idea: Stop Sending Work Overseas that asked Americans to offer their own ideas for creating jobs found that about 25% of respondents chose the "no outsourcing" option as their key choice, double the next two most popular choices of "creating more infrastructure work" and "lowering taxes."
US-China Strategic and Economic Dialogue Concludes
This week's this week's US-China Strategic and Economic Dialogue has concluded. AAM's ManufactureThis blog sums up ,
Begninning the summit with high hopes (NYT), the U.S. and China made progress on talks (Reuters), including an end to China’s illegal subsidies (The Hill) . But still, no progress on currency (WaPo).
AAM's Scott Paul, on the summit:
"The Chinese regime accomplished its main objective of the talks: to avoid any consequences for its harmful, mercantilist economic policies. With only two more sessions of the S&ED likely to take place prior to the 2012 U.S. elections, I suspect that Beijing's strategy will be to run out the clock.
"I doubt if the communique will be worth the paper it is printed on because it lacks objective criteria and an understanding of what the consequences will be if China fails to honor agreed-upon international norms on trade, exchange rates, and investment.
"Our trade deficit with China was a record $273 billion last year. We have seen high monthly bilateral trade deficits this year. Why are we not making any progress? It's precisely because the focus of these talks will not budge that statistic. Serious changes in exchange rates, eliminating state subsidies, and a move by China to raise interest rates and wages will move the trade deficit down. But the Administration's tactic on these issues has been to raise them politely and then to move on.
"For the millions of American workers and businesses facing state-supported competition from China, that's simply not good enough. Sure, we can be polite with China, but we also need to be firm. And that is what's missing right now."
