currency

Ohio Sen. Brown Pushes Revival Of China Currency Bill

Dave Johnson — Thu, 20 Sep 2012 13:15:09 -0400

The "China Currency Bill" has passed the Senate but is stalled in the House by Republican leadership. Republicans are trying to have it both ways on China and manufacturing, saying they want to do something, but blocking doing something. It could come to the floor and pass if just a few of the 60+ Republican cosponsors asked for it. Meanwhile Mitt Romney says he wants to do something about China currency but opposes actually doing something.

Ohio Senator Sherrod Brown is pushing to revive the China Currency bill that has passed the Senate and is being blocked by Republican leadership in the House. Columbus (Ohio) Dispatch: Senate Democrats press Boehner for vote on Chinese currency bill,

More than 20 Democratic senators -- including Sherrod Brown of Ohio -- are urging House Speaker John Boehner, R-West Chester, to allow a floor vote on the House on a bill aimed at making U.S. exports more competitive to China.

The bill, which passed the Senate by a 63-35 vote last year, would require the Obama administration to impose tariffs on Chinese exports to the United States if the U.S. Department of the Treasury concludes that China is keeping its currency artifically low. By doing so, critics charge that China can flood the United States with less expensive goods that hurt U.S. manufacturers.

"Legislation is necessary to actually give American businesses and workers tools to fight back,'' according to the letter, which was written by Brown.

Greg Sargent at The Plum Line, in Ratcheting up pressure on GOP (and Obama) over China,

Senator Sherrod Brown, the lead sponsor, is organizing to increase the pressure on his fellow Ohioan, John Boehner, to hold a vote on the bill. He is circulating a letter today among fellow Senators, addressed to Boehner, demanding a vote, and noting that a similar version passed in 2010 with the support of 80 House Republicans still in office.

... “I’m confident Obama will sign this bill,” Brown said, adding that his conversations with the White House had persuaded him of this. “This will pass if Boehner schedules it.”

Brown added that the bill, and the ideas behind it, resonate heavily with working class voters, such as those in industrial swing states like Ohio and Wisconsin. “People recognize that trade policy and tax policy have undermined the middle class and manufacturing,” Brown said. “The public knows the game has been rigged.”

Who Is Against?

Polling shows that Americans across the political spectrum overwhelmingly want changes, including a crackdown on currency manipulation, "Buy America" policies, ending tax incentives for offshoring jobs, etc. Yet Republican leadership continues to block action.

So who could possibly be against this? Aside from China, there are a few American interests making a ton of cash off of shipping jobs, factories, industries and our prosperity. Over at FDL, David Dayen writes in, Sherrod Brown Tries to Jump-Start Languishing Currency Manipulation Bill, Which Covers More Than Just China,

The constituency that really doesn’t want to see a currency manipulation bill pass Congress would be multinational corporations, who see value in siting their factories overseas and taking advantage of the low currency to deliver cheap imports.

OK, there is on -- giant multinationals. And there is another interest: Wall Street. The "Club For Growth" is a Wall Street front group, that has made the China currency bill a litmus test. Politico: Club for Growth warns GOP on China currency bill,

The influential Club for Growth is pressuring Republican presidential candidates and lawmakers to oppose bipartisan legislation cracking down on China’s currency policies.

The anti-tax, free-market group on Thursday called on GOP presidential contenders to take a stand against the bill, authored by Democratic Sens. Sherrod Brown (Ohio) and Chuck Schumer (N.Y.), that would slap tariffs on imports from China and other countries that artificially keep their currency low.

And, just this week the Club for ~~Wall Street~~ Growth asked both Presidential candidates to lay off China.

So on one side we have overwhelming support from Americans with both Republicans and Democrats polling up into the 90s. On the other side we have Wall Street, multinational corporations and, of course, China itself. And we have the Republican leadership and Presidential candidate siding with ... guess which side? But they are able to block action, and here we are.

Romney Etch-A-Sketching On China Currency

Dave Johnson — Fri, 15 Jun 2012 13:11:23 -0400

Yesterday in Ohio candidate Mitt Romney said he would clamp down on China's currency manipulation. Today he is still not asking the House Republicans to bring the China currency bill up for a vote. Mr. Romney has the opportunity to demonstrate leadership and put his actions where his campaign words are -- or not. He can ask Republicans in the House to vote on the bill to do something about the problem - or not.

The Currency Manipulation Issue

China has been manipulating its currency rate, keeping it as much as 30% below market value. This means that things made in China cost as much as 30% less than things made elsewhere. This is 30% before taking into account the various subsidies China gives to companies manufacturing in China, or how China allows companies to pollute freely. This gives them a competitive advantage in world markets, and lures our own companies to outsource their manufacturing to China. And it contributes to our dramatic, huge, bloodsucking trade deficit that drains hundreds of billions of dollars a year out of our economy.

Steven Capozzola explained in Why Should Congress Pass China Currency Legislation?,

What few seem to understand is that we are already in a trade war with China. It’s not one that we launched, nor one that we wanted. But China’s undervaluation of its currency, which violates world trade rules, is part of a deliberate, well-coordinated strategy to undercut U.S. manufacturers.

... How did this happen? China intervenes in the currency market to buy dollars and set its own currency at an artificially low exchange rate. This makes Chinese goods 40% cheaper when entering the U.S. market while making our goods significantly more costly when exported to China.

... This is a bipartisan issue, one that marks a clear chance for Congress to stand up to a very protectionist, predatory campaign. China can purchase dollars, which are freely traded, in order to set its currency peg. But conversely, it is illegal to buy China’s closely held currency.

The Currency Bill And Discharge Petition

To address this (and other) currency manipulation the Senate passed a bill requiring our government to act against countries that manipulate their currency. This bill is waiting for the House to act because Speaker Boehner will not allow it to come to the floor for a vote.

The House has a procedure for forcing a bill to come to the floor when House leadership is blocking a vote. This is called a Discharge Petition. If enough Representatives sign a discharge petition it must be brought up for a vote. There are 67* Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). If enough of them sign the discharge petition it has to be voted on, and it will pass.

From 61 House Republicans Co-Sponsored China Currency Bill, Now Side With China,

61 House Republicans ... had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.

[. . .] The Club For Growth, a Wall Street front-group that backs China's positions on these issues, has demanded that Republicans side with China on this, and has called it a "litmus test." One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!

Romney's Etch-A-Sketch On Currency

At campaign stop after campaign stop Mitt Romney says that he will crack down on China's currency manipulation on his first day in office. Yet he has an opportunity to do something about it right now. Romney has the opportunity right now to demonstrate that he will live up to his words. He can ask Speaker Boehner to bring the currency bill to the floor of the House for a vote. And he can ask Republicans in Congress to sign a discharge petition to bring up for a vote a currency manipulation bill that 61 of them co-sponsored. It is his own party that is holding this up.

So it this another Etch-A-Sketch or does Romney really mean what he says about China's currency manipulation. He can show us right now.

*The number of Republican co-sponsors (who also refuse to sign the discharge petition) has risen.

Update - After writing this post earlier today, a petition came in my email, clicking through to:

Tell Congress to take a stand on China's currency manipulation

End Currency Manipulation Now
Tell Congress to stop China's cheating on currency manipulation, which stands in the way of free and fair trade, job creation, and a higher standard of living for millions of Americans.

Romney On China: Talks The Talk, Will He Walk The Walk?

Dave Johnson — Fri, 25 May 2012 12:25:21 -0400

The Mitt Romney campaign is airing an ad promising that on his first day in office Romney would "stand up to China" and demand "they play by the rules." Romney has the opportunity right now to demonstrate that he will live up to these words. He can ask Republicans in Congress to sign a discharge petition to bring up for a vote a currency manipulation bill that 61 of them co-sponsored. It is his own party that is holding this up. So will Romney do it, or is this just more words waiting for the "etch-a-sketch" treatment?

Here is the new Romney ad:

If he means it, all he has to do is ask the 61 Republican co-sponsors of the Currency Reform for Fair Trade Act to ask that the bill they co-sponsored come up for a vote. That is all he has to do. Will he?

Why Is This Important?

What is this currency legislation about, and why is it so important? China has been manipulating its currency rate, holding it well below market value -- as much as 30%. What this means is that things made in China cost as much as 30% less than things made elsewhere, before you take any other factors into account. This is 30% before you even look the various subsidies China gives to companies manufacturing in China, This is 35% before you look at how China allows companies to pollute freely. This is 30% before you look at all the other things China is doing!

Steven Capozzola explained in Why Should Congress Pass China Currency Legislation?,

What few seem to understand is that we are already in a trade war with China. It’s not one that we launched, nor one that we wanted. But China’s undervaluation of its currency, which violates world trade rules, is part of a deliberate, well-coordinated strategy to undercut U.S. manufacturers.

Currency manipulation has helped fuel China’s massive rise as a manufacturing powerhouse. And it’s also helped drive our massive trade deficit with Beijing, which reached a record $273 billion in 2010. This huge trade gap has cost 2.8 million U.S. jobs over the past decade—jobs in every state and congressional district, jobs in manufacturing, jobs in high-tech sectors… It’s a terribly one-sided trade relationship.

How did this happen? China intervenes in the currency market to buy dollars and set its own currency at an artificially low exchange rate. This makes Chinese goods 40% cheaper when entering the U.S. market while making our goods significantly more costly when exported to China.

... This is a bipartisan issue, one that marks a clear chance for Congress to stand up to a very protectionist, predatory campaign. China can purchase dollars, which are freely traded, in order to set its currency peg. But conversely, it is illegal to buy China’s closely held currency.

What Is This "Discharge Petition" About?

The House has a procedure for forcing a bill to come to the floor when House leadership is blocking a vote. This is called a Discharge Petition. If enough Representatives sign a discharge petition it must be brought up for a vote. There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). If enough of them (here is a list) sign the discharge petition it has to be voted on, and it will pass.

From 61 House Republicans Co-Sponsored China Currency Bill, Now Side With China,

61 House Republicans ... had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.

[. . .] The Club For Growth, a Wall Street front-group that backs China's positions on these issues, has demanded that Republicans side with China on this, and has called it a "litmus test." One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!

Click here to see the actual discharge petition.

So if Romney is serious, there is something he can do without waiting for the election: tell House Republicans to bring the bill to the floor for a vote.

For homework see: China Currency Fight In Congress.

Rick Santorum Pushes Manufacturing But Silent On House GOP Blocking Currency Bill

Dave Johnson — Fri, 17 Feb 2012 12:03:51 -0500

Presidential candidate Rick Santorum has gained popularity by saying he supports efforts to revitalize American manufacturing. But he remains silent about House Republicans keeping the China Currency Bill from being brought to the floor for a vote. That includes 61 Republicans who co-sponsored the bill. So if Romney is serious, there is something he can do without waiting for the election: tell House Republicans to bring the bill to the floor for a vote.

Watch him say it. From the Telegraph: Mitt Romney and Rick Santorum pledge tough stance on China,

(If video is not visible, click here to see it.)

"I know folks are concerned about currencies. I'm concerned about it too. Governments should not set currencies. Markets should set currency values. And that includes the United States of America," Mr Santorum told supporters in Detroit.

US lawmakers have complained that China's yuan currency is significantly undervalued, giving Chinese companies an unfair price advantage that helped lift the US trade deficit with China to a record $295.5 billion in 2011.

The House Bill

China manipulates its currency so things made in China have a price advantage of as much as 30-40% in world markets even before China's other trade cheating comes into play. This means that our jobs, factories, industries and economy lose. There is a bill in Congress to take action to stop this currency manipulation. For more background, see: China Currency Fight In Congress.

The bill is stalled in the House. Speaker Boehner refuses to let it come to the floor for a vote, and even though the bill has 61 Republican co-sponsors no Republicans have signed the "discharge petition" to force a vote.

From Will The U.S. House Side With China On Currency?,

The bill can be forced onto the House floor using a "discharge petition." You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

Tell Congress to stop China's cheating on currency manipulation, which stands in the way of free and fair trade, job creation, and a higher standard of living for millions of Americans.

Click here to see the actual discharge petition.

From These Are The House Republicans Blocking The Crackdown On China Currency Manipulation. Call Them.,

One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a "discharge petition" that will make that vote happen.

... There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the "discharge petition." They are: (click through to see...)

From 61 House Republicans Co-Sponsored China Currency Bill, Now Side With China,

61 House Republicans ... had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.

[. . .] The Club For Growth, a Wall Street front-group that backs China's positions on these issues, has demanded that Republicans side with China on this, and has called it a "litmus test." One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!

Does Santorum Want To Do Something Or Not?

Santorum says he supports American manufacturing. Does he mean it, or is he just saying it to get votes, only to go back on it later?

There is a way for Santorum to demonstrate that he means it. He can demand that Speaker Boehner bring the China Currency bill to the floor for a vote, and demand that Republicans in the House sign the discharge petition to force a vote, if Boehner refuses.

Will he?

China's VP Visit Becomes Campaign Issue - Will Romney Ask GOP To Allow China Bill Vote?

Dave Johnson — Thu, 16 Feb 2012 14:22:02 -0500

As China's Vice President Xi Jinping visits the US Republican Presidential candidate Mitt Romney blasts President Obama for not being tough enough on China. Meanwhile Romney says nothing about House Republicans keeping the China Currency Bill from being brought to the floor for a vote. That includes 61 Republicans who co-sponsored the bill. So if Romney is serious, there is something he can do without waiting for the election: tell House Republicans to bring the bill to the floor for a vote.

Reuters: Romney, Obama campaign spar over US-China policy,

Mitt Romney lashed out at Beijing and President Barack Obama's China policy on Thursday, criticizing the president for going in "precisely the wrong direction" and calling meetings this week with visiting Chinese Vice President Xi Jinping "empty pomp.

... Romney's comments come as China's vice president and presumed future leader visits the United States to build ties and urge greater cooperation between the two countries. Obama and other administration officials have pressed Xi to improve China's human rights record and play by the rules of the world economy.

... "Today's tough talk on China stands in stark opposition to his position two years ago, when Romney called the president's decision to enforce trade laws against China 'bad for the nation and our workers,'" said campaign spokesman Ben LaBolt, quoting from Romney's book, "No Apology."

The House Bill

As Romney says on the campaign trail, China manipulates its currency so things made in China have a price advantage of as much as 30-40% in world markets even before China's other trade cheating comes into play. This means that our jobs, factories, industries and economy lose. There is a bill in Congress to take action to stop this currency manipulation. For more background, see: China Currency Fight In Congress.

From Will The U.S. House Side With China On Currency?,

The bill can be forced onto the House floor using a "discharge petition." You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

Tell Congress to stop China's cheating on currency manipulation, which stands in the way of free and fair trade, job creation, and a higher standard of living for millions of Americans.

Click here to see the actual discharge petition.

From These Are The House Republicans Blocking The Crackdown On China Currency Manipulation. Call Them.,

One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a "discharge petition" that will make that vote happen.

... There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the "discharge petition." They are: (click through to see...)

From 61 House Republicans Co-Sponsored China Currency Bill, Now Side With China,

61 House Republicans ... had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.

[. . .] The Club For Growth, a Wall Street front-group that backs China's positions on these issues, has demanded that Republicans side with China on this, and has called it a "litmus test." One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!

Does Romney Want To Do Something Or Not?

Romney says he supports cracking down on China's currency manipulation. Does he mean it, or is he just saying it to get votes, only to go back on it later?

There is a way for Romney to demonstrate that he means it. He can demand that Speaker Boehner bring the China Currency bill to the floor for a vote, and demand that Republicans in the House sign the discharge petition to force a vote, if Boehner refuses.

Will he?

China Is Very "Business-Friendly"

Dave Johnson — Wed, 15 Feb 2012 14:52:02 -0500

China is very, very "business-friendly." Corporate conservatives lecture us that we should be more "business-friendly," in order to "compete" with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay -- even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be "business-friendly" enough to compete with China, and here is why.

Workers In Dormatories, 12 To A Room, Rousted At Midnight

China is very, very "business friendly." Recent stories about Apple's manufacturing contractors have started to reveal just how "business-friendly" China is. Recently the NY Times' Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple's Chinese suppliers, in How the U.S. Lost Out on iPhone Work. They describe how China's massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, “Those jobs aren’t coming back.”

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. ... New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift. And the corporate conservatives criticize America for this, not China, saying we are not "business-friendly" enough to compete. This is because we are a place where We, the People still have at least some say in how things are done. (Don't we?) Later in the story,

The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones.

“Business-friendly” = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.

Forced Labor Is The Real "Business-Friendly"

Arun Gupta at AlterNet, in iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months'-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.

... Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.

... The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlterNet piece, iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think. These things are not “costs” that we can compete with by lowering our wages, these things are something else.

Not JUST Low Taxes -- Massive Government Subsidies

These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies. The Chinese government is very "business-friendly." They hand money to businesses so they are much more able to "compete." They are so friendly to business that they even own many businesses.

Trade Secret Theft

Another area where China has very "business-friendly" policies is when their own businesses steal from non-Chinese businesses. This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the "unbelievably endemic" problem of Chinese theft of "intellectual property" -- the trade secrets that keep businesses competitive. In this case China's Sinovel sole the software that ran an American company's products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China’s Sinovel, the world’s second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor’s wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm’s revenues.

... Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don't have to pay them and you can just make the things yourself. When you get in bed with a very "business-friendly" country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating "market."

Trade Deficit Drains Our Economy

As a result of our ideological blindness, refusing to understand China's game, we have a massive trade deficit with them. This means hundreds of billions of dollars are drained from our economy, year after year. And to make up for this we borrow from them in order to keep buying from them. But this does not cause their currency to strengthen in the "markets" because China loves this game the way it is going, and intervenes against the markets to keep their currency low. And so it continues, year after year. We believe in "markets" they believe in rigging markets so they come out ahead...

Markets Can't "Compete" With This

Corporate conservatives tell us we need to be more "business-friendly" to "compete" with China. But at the same time Steve Jobs was being a realist when he said "the jobs are never coming back" because he understood that the current political climate, controlled by a wealthy few who benefit from China's "business-friendly" policies will not let us fight this. Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices? Why should they, unless We, the People tell them they can't do that to people, and that we won't let them profit from it?

As long as we continue to think that this is about "markets" competing, we will lose. China sees itself as a nation, and they have a national strategy to continue to be so "business-friendly" that our businesses can't compete. Our leaders and corporations may have "moved on" past this quaint nation thing but China has not.

We, The People Need To Act To Fix This

As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose. But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem. Maybe the companies they manage won't be around later, but that is not their problem. Others are concerned, but are forced to play the game because no one can compete with national systems like China's.

When everyone is in a position where something isn't their problem, or where they can't do anything about it on their own, it means this is a larger problem, and this is where government -- We, the People -- needs to get involved. It is our problem but we have been convinced that we -- government -- shouldn't interfere, or "protect" our industries, because "the markets" don't like "government" -- We, the People -- butting in. This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.

We Need A Plan

In U.S. must end China's rulers' free pass at Politico, AAM's Scott Paul writes, Read it, read it, read it!)

We shouldn’t fear China’s citizens. But we should be worried about the actions of its authoritarian — and, yes, still communist — regime that tightly controls the People’s Republic. And we should be downright terrified by some of our own leaders’ attitudes toward China.

... China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.

[. . .] History didn’t do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites — and seduced them into believing these policies were no longer necessary.

... There has been no strategy, no effort to prevail economically.

... No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China’s intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan. We need to understand that China is not competing with us in "markets' they are competing with us as a nation. We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.

It’s not just price, it is things a democracy cannot allow. We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People -- the 99% -- are in a real fight here to keep our democracy, or we will lose what is left of it.

Democracy Is The Best Economics

When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job. We need more of that, not less of that. We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.

As long as we let democracy be a competitive disadvantage, We, the People will lose.

Can We 'Insource' Jobs?

Dave Johnson — Tue, 10 Jan 2012 13:51:34 -0500

President Obama will host a forum on insourcing jobs Wednesday. The forum will feature leaders of several companies who have already shifted jobs back home and are encouraging others to do the same. According to the White House,

On Wednesday, January 11, 2012, President Obama and Vice President Biden will host an “Insourcing American Jobs” forum at the White House focused on the increasing trend of companies choosing to “insource” jobs and invest in growing in the United States.

As part of the “Insourcing American Jobs” forum, the President will meet with business leaders, as well as experts on the topic, to discuss why it’s competitive to locate in the United States and what more can be done to work with companies to take similar steps to insource American jobs. Following the meeting, the President will deliver remarks to a group that will include leaders from the government and the private sector that are taking steps to encourage companies to insource and invest in America. In the afternoon, Cabinet officials will host panel discussions with both small and large businesses and experts on insourcing and investing in America.

Leading up to this White House forum, the President said in his Weekly Address, "On Wednesday the White House will host a forum called “Insourcing American Jobs.” We’ll hear from business leaders who are bringing jobs back home and see how we can help other businesses follow their lead."

Headwinds

There are still headwinds pushing against efforts to bring jobs back. While China has allowed its currency to appreciate a bit, it is still undervalued by as much as 30% to 40%, which means goods made in China are priced 30% to 40% lower than goods made here. That's even before the effect of Chinese subsidies, trade violations, suppression of labor rights, cost savings from allowing environmental degradation and other advantages, including their massive investment in infrastructure, are taken into account.

The Wall Street Journal highlighted another problem for manufacturing: In spite of conservative complaints about debt, in truth the safety of U.S. currency makes it attractive and therefore "stronger," especially now, with the worries over the euro. This "flight to safety" has the reverse effect of China's currency manipulation. Where China manipulates its currency to make it "weaker," the strength of the U.S. dollar increases the price in international markets of goods made in the U.S. The WSJ explains, in U.S. Factories Could Suffer From Dollar’s Appeal,

Being a safe haven can be a drag. The euro zone remains the albatross around the global economy’s neck. Any hint about default, a euro-zone break up or banking collapse sends skittish investors into the secure embrace of the U.S. dollar.

... A strong dollar may enhance the U.S.’s sense of pride. But it will be a headwind for U.S. manufacturing.

That isn’t because a weak euro will cut U.S. exports to Europe. The euro zone is in recession and won’t be buying much from any nation.

The challenge will come in emerging markets that have the money and pent-up demand for foreign-made goods.

... A weak euro will give European producers a price advantage in emerging markets. This is especially true for commodity materials, such as chemicals and paper, that compete on price more than brand-name preference.

Can insourcing brings jobs back? Michael Mandel asks at the Wall Street Pit, Can Insourcing Be A Major Source of Job Creation?

Can insourcing be a major source of job creation for the U.S.? The answer is yes, with a caveat. Widespread insourcing–or import recapture, as I like to call it–won’t happen without some help from government policy. In particular, the main role of the government is to provide better data about the relative cost of insourcing vs outsourcing.

Why would better statistics help create new jobs in the U.S. and accelerate insourcing? The reason is hysteresis. Hysteresis is defined as a “lag in response” when the forces acting on a situation have changed. Originally hysteresis worked in favor of keeping jobs in this country, because businesses didn’t want to switch their production to a country thousands of miles away, even if it might be cheaper.But now, with production firmly established in China, India, Mexico, and other low-cost countries, hysteresis is working against the U.S.

Mandel says that the loss of manufacturing ecosystem will make it difficult to bring these jobs back. We have lost suppliers, we have lost some of the "ecosystem" as we "hollowed out" our own manufacturing and our smaller manufacturers will find it very expensive to find the suppliers, etc. if they wish to return manufacturing here. Government can help this by providing better information:

Assuming that production costs really are converging, better information would make it easier for companies to justify the decision to bring jobs back to this country. Right now the safe decision for executives is to continue sourcing from China and India, since they are generally accepted to be ‘low-cost’ countries. It’s like they used to say, you can’t get fired for buying from IBM. It’s the same today–execs can’t get fired for buying from China and India, because everyone assumes that prices are lower there.

In For 2012 Let's Restore Our "Industrial Commons", I explained this phenomenon,

We have been dismantling our "industrial commons." By sending manufacturing out of the country we have been taking apart the supply chains and abandoning the expertise and skills and culture that go with it.

Other Warnings

Last year former Intel CEO Andy Grove sounded a warning about this problem. In How to Make an American Job Before It's Too Late. Grove wrote that we are not just losing jobs to China, we are losing the "chain of experience" that enables new companies and industries to form and to create new jobs and argues for a national economic strategy to preserve our manufacturing and technology base. He lays out a plan: "rebuild our industrial commons,"

The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.

We have to start now rebuilding the manufacturing ecosystem - the "industrial commons" that helps us make things here.

61 House Republicans Co-Sponsored China Currency Bill, Now Side With China

Dave Johnson — Wed, 19 Oct 2011 10:40:56 -0400

Last week, in These Are The House Republicans Blocking The Crackdown On China Currency Manipulation. Call Them. I named 61 House Republicans who had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.

From last week's post,

We buy a lot from China, and they don't buy much from us. Some call that "trade." The result is that our jobs, factories, companies, industries and wealth are moving to China. One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a "discharge petition" that will make that vote happen.

Why Is This Important?

From Trade Deals Pass Congress -- China Currency Bill More Important Than Ever,

Congress just passed three more NAFTA-like trade deals, so our country's trade deficit is going to get even worse. And pressure on working people to accept pay and benefit cuts and longer and harder working hours is going to get even worse. And the rewards to the top 1%, at the expense of the rest of us, are going to get even greater. But we can still win the fight over China's manipulation of its currency. If we win this it lessens the difference between prices of goods made there and goods made here and can bring some jobs, factories, countries, industries and wealth back to the 99% of our country that doesn't benefit from these trade deals.

... China manipulates its currency to keep it "weak" (low) compared to the "strong" dollar. This means that goods made in China cost much less - up to 40% less - than goods made here, even before any wage differentials, exploitation of the environment, trade cheating, special subsidies and other trade violations are taken into account. China does this in order to capture the jobs, factories, companies and industries that make a country strong. We have let them do this for many years, leading to the economic situation we find ourselves in today.

One reason this continues is that big companies can threaten workers here with moving a job or factory there if they don't go along with big cuts in wages and benefits and working standards -- or just move the factory or company to take advantage of the differential. This benefits a wealthy few in the short term, and China in the long term after those wealthy few have sold the rest of out and cashed out for themselves.

This trade situation with China, while greatly enriching the top 1% here (and there), has hurt the rest of us so much, and drained so much wealth from the country, that even some Republicans are willing to support doing something about it. There are 61 Republican cosponsors of the bill to confront China over their currency manipulation!

The Club For Growth, a Wall Street front-group that backs China's positions on these issues, has demanded that Republicans side with China on this, and has called it a "litmus test." One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!

What You Can Do

There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the "discharge petition." They are:

Tim Murphy (PA)
Todd Aiken (MO)
Steve Austria (OH)
Lou Barletta (PA)
Brian Bilbray (CA)
Rob Bishop (UT)
Mo Brooks (AL)
Dan Burton (IN)
Shelley Moore Capito (WV)
Howard Coble (NC)
Chip Cravaack (MN)
Rick Crawford (AR)
Charles Dent (PA)
Jo Ann Emerson (MO)
Michael Fitzpatrick (PA)
Randy Forbes (VA)
Jeff Fortenberry (NE)
Jim Gerlach (PA)
Chris Gibson (NY)
Sam Graves (MO)
Morgan Griffith (VA)
Gregg Harper (MS)
Duncan Hunter (CA)
Bill Johnson (OH)
Tim Johnson (IL)
Walter Jones (NC)
Mike Kelly (PA)
Blaine Luetkemeyer (MO)
Steven LaTourette (OH)
Frank LoBiondo (NJ)
Donald Manzullo (IL)
Tom Marino (PA)
Thaddeus McCotter (MI)
Patrick McHenry (NC)
David McKinley (WV)
Patrick Meehan (PA)
Candice Miller (MI)
Sue Myrick (NC)
Tom Petri (WI)
Joe Pitts (PA)
Todd Platts (PA)
Jim Renacci (OH)
Scott Rigell (VA)
Dana Rohrabacher (CA)
Harold Rogers (KY)
Mike Rogers (AL)
Mike Rogers (MI)
Dennis Ross (FL)
John Runyan (NJ)
James Sensenbrenner (WI)
John Shimkus (IL)
Bill Shuster (PA)
Marlin Stutzman (IN)
Glenn Thompson (PA)
Michael Turner (OH)
Lynn Westmoreland (GA)
Ed Whitfield (KY)
Joe Wilson (SC)
Rob Wittman (VA)
Frank Wolf (VA)

These Are The House Republicans Blocking The Crackdown On China Currency Manipulation. Call Them.

Dave Johnson — Wed, 12 Oct 2011 15:08:26 -0400

We buy a lot from China, and they don't buy much from us. Some call that "trade." The result is that our jobs, factories, companies, industries and wealth are moving to China. One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a "discharge petition" that will make that vote happen.

As Steven Capozzola explained yesterday in Why Should Congress Pass China Currency Legislation?,

What few seem to understand is that we are already in a trade war with China. It’s not one that we launched, nor one that we wanted. But China’s undervaluation of its currency, which violates world trade rules, is part of a deliberate, well-coordinated strategy to undercut U.S. manufacturers.

Currency manipulation has helped fuel China’s massive rise as a manufacturing powerhouse. And it’s also helped drive our massive trade deficit with Beijing, which reached a record $273 billion in 2010. This huge trade gap has cost 2.8 million U.S. jobs over the past decade—jobs in every state and congressional district, jobs in manufacturing, jobs in high-tech sectors… It’s a terribly one-sided trade relationship.

How did this happen? China intervenes in the currency market to buy dollars and set its own currency at an artificially low exchange rate. This makes Chinese goods 40% cheaper when entering the U.S. market while making our goods significantly more costly when exported to China.

... This is a bipartisan issue, one that marks a clear chance for Congress to stand up to a very protectionist, predatory campaign. China can purchase dollars, which are freely traded, in order to set its currency peg. But conversely, it is illegal to buy China’s closely held currency.

I wrote yesterday, in Will The U.S. House Side With China On Currency?

If we want to bring jobs and wealth back to the United States for the 99% of us who have been under extreme pressure we're going to have to do something about trade. The huge trade imbalances -- especially with China -- are sucking our jobs and factories and companies and industries and money out of the country. The biggest thing that can be done right now is to take action on China's currency manipulation.

...Speaker of the House Boehner is siding with China and is refusing to allow it to come before the House for a vote. (Reminder to self: do some research into the Citizens United Supreme Court decision enabling foreign money to influence our elections.)

The bill can be forced onto the House floor using a "discharge petition." You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

What You Can Do

There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the "discharge petition." They are:

Will The U.S. House Side With China On Currency?

Dave Johnson — Tue, 11 Oct 2011 07:14:24 -0400

If we want to bring jobs and wealth back to the United States for the 99% of us who have been under extreme pressure we're going to have to do something about trade. The huge trade imbalances -- especially with China -- are sucking our jobs and factories and companies and industries and money out of the country. The biggest thing that can be done right now is to take action on China's currency manipulation. Here are two things you can do today.

The Senate votes today on a bill to push back against China's (and a few other countries') currency manipulation, and the bill is expected to pass. The bill also has to pass the House and be signed by the President before it can take effect. CNN explains, in Senate targets China's currency,

For years, U.S. officials have been pressuring China to allow its renminbi -- or yuan -- to appreciate more rapidly. Between 2008 and 2010, China had pegged the yuan to the dollar, keeping its value artificially low and Chinese exports comparatively cheap.

Besides hiking tariffs on Chinese goods, the bill also takes aim at the administration, which already has some ability to point out nations that purposefully manipulate their currency but has avoided doing so.

The bill would:
-- Force the administration to officially red-flag nations whose currencies are undervalued for long periods with the term "fundamentally misaligned currency."
-- Make it tougher for the Commerce Department to ignore calls to investigate accusations of undervalued currencies.
-- Force the administration to give Congress a list of nations with "misaligned" currencies.
And if a nation is accused of having an undervalued currency and makes no effort to rebalance the currency for three months or more, that's when the tariffs kick in.

Jobs And Wealth

It's complicated, but by manipulating its currency instead of letting it "float" to world market value, China can sell goods to other countries at a much lower price than they would cost without the manipulation. In effect China puts its own money into the currency markets, which works out the same as subsidizing the products directly so they have a lower price, in order to get the orders. While this might seem like a dumb thing to do the long-term result is that China is buying themselves a very big chunk of the world's manufacturing business. In the long term this pays off for them in jobs, industries, wealth and power.

And as we now know, the result for us is a big loss of jobs and wealth and factories and companies and industries -- in other words, our ability to make a living in the world.

The House

Even as the bill likely passes the Senate today, Speaker of the House Boehner is siding with China and is refusing to allow it to come before the House for a vote. (Reminder to self: do some research into the Citizens United Supreme Court decision enabling foreign money to influence our elections.)

The bill can be forced onto the House floor using a "discharge petition." You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

Tell Congress to stop China's cheating on currency manipulation, which stands in the way of free and fair trade, job creation, and a higher standard of living for millions of Americans.

Click here to see the actual discharge petition.

The President

In his news conference last week President Obama said that China is manipulating their currency but that he doesn't want a law that is just "symbolic." He was not clear about whether he would sign this bill or not, should it pass. He said,

"...China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States. And I have said that publicly, but I've also said it privately to Chinese leaders. And currency manipulation is one example of it. [. . .] My main concern -- and I've expressed this to Senator Schumer -- is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations. I don't want a situation where we're just passing laws that are symbolic knowing that they're probably not going to be upheld by the World Trade Organization, for example, and then suddenly U.S. companies are subject to a whole bunch of sanctions. We've got a -- I think we've got a strong case to make, but we've just got to make sure that we do it in a way that's going to be effective."

So it is not clear if he intends to sign this legislation. You can sign a petition encouraging him to sign it, should it pass, and take other steps to push China to stop their trade violations. Click the following: WE PETITION THE OBAMA ADMINISTRATION TO: Take Action to Stop China’s Job-Killing Currency Manipulation.

Please take the time to urge members of Congress to sign the discharge petition, and to urge President Obama to sign the bill if&when it passes.