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US Puts Tariff On Chinese Solar Panels 311

Posted by timothy
from the why-not-just-sink-5%-of-the-ships? dept.
retroworks writes "Two stories in Digitimes make a puzzle of economic policy. U.S. and European tax incentives and stimulus increase steady demand for solar panels. The Chinese government subsidizes production of solar panels to meet this growing demand. The U.S. and EU complain, and place tariffs on Chinese solar panels. Do allegations that China has used government funding to subsidize the production trump our desire for cheaper solar power? Subsidizing demand led to subsidized production. In other words, one market interference (subsidized demand for solar) leads to its counterpoint, government tariff and taxation of the same product."
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US Puts Tariff On Chinese Solar Panels

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  • by Arancaytar (966377) <arancaytar.ilyaran@gmail.com> on Saturday March 24, 2012 @10:34AM (#39460479) Homepage

    The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

  • by kanto (1851816) on Saturday March 24, 2012 @10:44AM (#39460533)

    The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

    These are inherently different things; the subsidies to buy solar panels only affects demand, but subsidising production creates an uneven playing field for those selling solar panels. There is also less incentive to create better and more affordable products if someone is just throwing money at you to keep production running. Everyone here of course understands this, but I'm guessing it's republican day at slantdot.

  • by TheGratefulNet (143330) on Saturday March 24, 2012 @10:47AM (#39460551)

    "they tuk uuur juuubs" idiots

    get back to us in 10-20 years from now and tell us if YOU are still employed.

    obviously you are well employed and proud of it.

    but what is now, won't always be. I was once like you are: young, arrogant and thought I owned the world.

    THINGS CHANGE.

    but people like you, in your current mind-frame, are NOT HELPING.

  • Re:well... (Score:5, Insightful)

    by funwithBSD (245349) on Saturday March 24, 2012 @10:48AM (#39460557)

    If by "rare" your mean "not well done", then yes, I agree.

  • Re:well... (Score:5, Insightful)

    by _Sharp'r_ (649297) <sharper AT booksunderreview DOT com> on Saturday March 24, 2012 @10:51AM (#39460571) Homepage Journal

    One government intervention in the market usually fails, which then leads to another intervention, which then fails, which then leads to another intervention... and so on. Wouldn't it be nice to have one of these laws/regulations come with a measurable goal and be automatically repealed if it didn't meet it?

    Speaking of wishful thinking...
    We have subsidies to buyers, then subsidies to suppliers, then loan guarantees to risky manufacturers, then tariffs on imports... what's next, skip it all with an individual mandate that all Americans purchase solar panels for their home, but only from certified U.S. union-run companies?

    It would be cheaper and less economically destructive if the government just gave a few billion directly to the bank accounts of their special interest buddies instead of distorting the Catallaxy [wikipedia.org] with this farce.

  • when youve spent (Score:2, Insightful)

    by nimbius (983462) on Saturday March 24, 2012 @10:54AM (#39460583) Homepage
    thirty years pushing manufacturing and technology jobs overseas to china under the guise of economic sense and prosperity for america, you dont get to turn around and cry foul when you get exactly what you asked for. namely, cheap foreign slave labor subsidized by a dictatorial ruling class operating under the guise of a communism it hasnt practiced in almost 40 years.
    tarrifs are okay. you use them to incense corporations to reconsider employing local labour, but they wont work in americas revolving door government where capitalism and legislation are essentially the same. and while the economic cost of producing solar technology in china may be cheaper, the environmental and social costs are never worth it in my opinion.
  • Re:well... (Score:3, Insightful)

    by amiga3D (567632) on Saturday March 24, 2012 @10:59AM (#39460607)

    I think the problem is that the American solar companies have bri....er....donated so much money to American lawmakers that they don't think they have to tolerate subsidized competition. Of course they see our subsidizing as being an investment.

  • by goombah99 (560566) on Saturday March 24, 2012 @11:04AM (#39460629)

    The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

    The point is plainly obvious: Equalize the manufacturing playfield. Solar panel production is not a static industry. It is a growth industry.

    Subsidizing production in one nation hurts development of the industry in another. In contract, subsidizing use in one country helps production in all countries.

    However if you subsize production in one, then a use subsidiy amplifies the problem.

    The US just fixed that.

  • Re:well... (Score:4, Insightful)

    by cpu6502 (1960974) on Saturday March 24, 2012 @11:08AM (#39460643)

    If the Congress can mandate you MUST buy a product (insurance), then they also have the power to mandate you buy other products. Like the solar panels you describe.

    Or hybrid cars.
    Or LED bulbs.
    Or thermostats controllable by your electric monopoly.
    Or PCs that enable at-home voting (note: the application only works on Windows 7/8. Sorry.).
    Or ......

  • Re:well... (Score:3, Insightful)

    by tmosley (996283) on Saturday March 24, 2012 @11:10AM (#39460649)
    Exactly. They are pissing away their taxpayers money to give us cheaper solar panels. I am ALL FOR IT.
  • Too late (Score:4, Insightful)

    by acoustix (123925) on Saturday March 24, 2012 @11:11AM (#39460665) Homepage

    They should've done this before Solyndra went bankrupt and took $500M of tax payer money with them.

  • Re:well... (Score:5, Insightful)

    by drsmithy (35869) <drsmithy.gmail@com> on Saturday March 24, 2012 @11:13AM (#39460669)

    I can't see why we'd mind if the Chinese government pissed away a few billion dollars of their money.

    From the Chinese perspective, a few billion to destroy local American industry and establish future dependence probably seems pretty cheap.

  • by goombah99 (560566) on Saturday March 24, 2012 @11:13AM (#39460673)

    And what's wrong with China subsidizing panels? WE subsidize our products (hybrid cars, corn, sugar, banks, mortgage companies, solar companies like Solyndra, etc) . So it's wrong when China does it, but okay when the EU/US do it? Hypocrites.

    Nothing is WRONG with a govt subsidizing an industry per se. But the appropriate response is to apply tarrifs.

    If you subsidize an industry this may make sense inside the country where the subsidies reside. There it is a level playing field because all companies have access. It may be good for the country because they want to build up that industry and overcome an economic hump, meet a national strategy like oil security, create employment, or just to satisty internal political harmony.

      But when you sell the products internationally it hurts companies outside. The remedy is tarrifs.

    Other countries should fee free to (and do) apply tarrifs to goods from outside that harm domestic industry.

    There's no Hypocrisy at all. It's exactly the right thing to do. However 5% is too low.

    The only reason this does not happen more is that tarrifs can launch a cycle of retribution when thought punitive. It's easier to let it slide usually. The places you care about dumping are in rapidly growing industries. There the early mover advantage can be too big to ignore.

  • Re:well... (Score:5, Insightful)

    by ericloewe (2129490) on Saturday March 24, 2012 @11:32AM (#39460743)
    If they dump their cheap stuff on us at a loss, they'll drive their competitors out of business. When that happens, they have a monopoly. Too bad nobody decided to tax everything made in China. There's plenty of reasons for doing so, and since they don't play fair, why should we?
  • It doesn't work that way in real life - both inertia and the ability to outlast newcomers (and resume dumping with more state-funded backing) mean that either you impose tariffs or you permanently cede the industry.

    Look at the electronics industry - no need to dump, because now there's simply too much of a concentration of manufacturing in China.

  • Re:well... (Score:3, Insightful)

    by tsotha (720379) on Saturday March 24, 2012 @11:45AM (#39460785)

    Because you don't own stock in, or work for, a domestic solar cell manufacturer. This industry could end up being enormous, and that means a lot of money and jobs are at stake.

    There's another problem, too. If the US government doesn't do anything when the Chinese government prices US manufacturers out of business, it sends a signal to potential solar cell investors and manufacturers, and that is there isn't any way to make money manufacturing solar cells in the US. I'm not going to get funding to bring a clever new design to market because investors know the Chinese government will ultimately put me out of business.

  • by TheGratefulNet (143330) on Saturday March 24, 2012 @11:49AM (#39460811)

    a few years ago, I turned down a job offer (sf bay area) that generally looked ok to me, except for one showstopper: they demanded *mandatory* (their word, not mine) saturdays.

    not sprinting, not 'on late milestones' but regularly, like, we expect you here at least half to 3/4 of a day every single saturday. period.

    I tried to convince them that this was a stopper and they would either be burning out their existing people or they'd be running thru a lot of in/out workers over their product cycles. they did not care and would not budge.

    I walked away. good money but I refuse to work for a slave operation.

    when I interviewed with most of the folks there, I could TELL that they were beaten down, tired, worn out and hanging on by a thread. I could see myself hating that very quickly.

    given the economic times, they felt they COULD push this shit on an employee.

    and unless we return to our union era and start busting heads of companies (not literally, of course) who abuse their workers, nothing will change. companies think they can dictate things that are absurd and yet, they often get away with it.

    not that it even matters much, but this was a company that had a spotlight on slash. they had a 'tech write-up' on them and how cool they were on this or that energy front (yes, it had a 'green side' to it and they also received a huge grant from the DOE on their 'green computing' bullshit).

    I wonder how many of those guys still work there? how many are hating their lives and can't wait to find something else?

    I'm fairly sure that none of them got any stock that is worth the effort they put in. it was a salary and that's about it; unless you are on the board or a VC, your stock is bullshit, these days, and we all know it. its not the stock that keeps you there anymore, its fear of being sent to the poorhouse.

    'mandatory saturdays' is not the same as 'chinese hours', so to speak; but we're inching our way there, aren't we!

  • Re:well... (Score:4, Insightful)

    by couchslug (175151) on Saturday March 24, 2012 @11:53AM (#39460833)

    "Brilliance" would be INTELLIGENT government support for our domestic industries, but our government and people are incompetent to do that, so "tariffs" it is.

  • Re:well... (Score:4, Insightful)

    by tmosley (996283) on Saturday March 24, 2012 @11:58AM (#39460863)
    You are very short sighted. Governments shouldn't be in the business of picking winners and losers. That is how you end up with zombie banks sucking the life force out of the economy dragging us down into an unending depression.

    Chinese intervention in their own markets will either give us manufactured goods for cheaper than we could make them, or give our industry the incentive to make the shit ourselves. But when OUR government starts intervening (and continues its current intervention), then we suffer just the same as the Chinese, and everyone except for the governments of both nations lose.
  • Re:well... (Score:5, Insightful)

    by Anonymous Coward on Saturday March 24, 2012 @12:09PM (#39460917)

    Don't forget about the numerous successful security breaches and attempts by the Chinese to get solar cell secrets before China opened the floodgates on solar cells made cheaper than material cost.

    Pure and simple -- this was an aggressive act to put a US industry six feet under, and because there was partisan politics involved, Congress sat on their hands until the US industry got turfed.

    Will these measures be too little too late, time will tell. However, do we want another industry that is permanently tied to China, like steel making, consumer devices, chip making, and many others. If we have no solar industry, China gains a strategic advantage of being able to not be as dependent on oil while Western interests go into the black hole called the Middle East. We already reached peak oil and peak coal; it is only going to get more expensive from here.

  • Re:well... (Score:4, Insightful)

    by Ihmhi (1206036) <i_have_mental_health_issues@yahoo.com> on Saturday March 24, 2012 @12:21PM (#39460975)

    Damn, that's pretty much Embrace, Extend, Extinguish but with entire global markets. It's like Microsoft is running a country. *shudder*

  • Re:well... (Score:5, Insightful)

    by Shavano (2541114) on Saturday March 24, 2012 @12:25PM (#39460993)

    The idea that unions and government regulations are pushing jobs overseas presupposes that it's both possible and desirable to have the most abused workforce and environment in the world.

  • Re:well... (Score:4, Insightful)

    by nedlohs (1335013) on Saturday March 24, 2012 @12:28PM (#39461007)

    NEVER is too strong a word. Government intervention can be beneficial in some cases - though it requires a government being smart enough to make the right choices which is extremely unlikely in a world of billions being spent on lobbying each year.

    The Pacific Railroad would be one example of a government subsidy that was most likely a net benefit (of course it's impossible to actually measure since you can't run a control world without it).

    And of course there are non-economic factors as well. Sometimes you might want to subsidise a local industry at economic cost in order to have something of strategic importance.

  • Re:well... (Score:2, Insightful)

    by cpu6502 (1960974) on Saturday March 24, 2012 @12:29PM (#39461011)

    P.S.

    This is just a distraction. "Solyndra and other solar projects failed under the Democrat's stimulus bill. That's the sad truth. But it wasn't our fault! Those damn Chinese are giving free money to their solar companies! We must punish them with tariffs." -- It's typical politics. When a program fails, rather than admit you screwed up as a Congressman or president, you deflect the blame to somebody else (and dupe the voters to reelect you).

  • Re:well... (Score:5, Insightful)

    by Anthony Mouse (1927662) on Saturday March 24, 2012 @12:31PM (#39461025)

    Five years from now, they will have a lot less money, and when they try to jack up the prices, we will be competitive again. Actually moreso, because we are doing most of the cutting edge research, and we won't have wasted capital resources on now outdated cell production processes. In the meantime, we can invest our capital in industries where they DON'T subsidize, and take over that market.

    Government intervention in markets is NEVER productive. When you give +100 in subsidies to a particular industry, you must take a total of -120, -140, or even -200 from other industries. This does NOTHING except make their economy weaker.

    That's...totally wrong.

    Your argument only works if the subsidized and non-subsidized industries are roughly equal in economic size, so that the amount of benefit the subsidized industries get is offset by the amount of loss the unsubsidized industries pay in taxes to fund the subsidies. But that isn't what happens: What they're doing is divide and conquer. You pick some minority of industries, especially the ones that are expected to grow in the future, and you subsidize them heavily to drive competitors in other countries out of business. Once you own the market, you can cancel the subsidies and your country will still own the market because it now has all the know-how, infrastructure and already-amortized fixed costs that competitors lack. Then you can transfer the subsidy to the next growth industry. At the same time, the subsidy is a small portion of the overall existing economy and comes from a broad tax base, so the drag it creates on non-subsidized businesses is extremely minor and doesn't create a major competitive disadvantage.

    In addition to that, it is easy for them to impose the tax tax on industries where they already have a competitive advantage (e.g. cheap labor costs), such that the amount of the tax doesn't even erode their entire advantage in those industries, meaning that they still out-compete other countries in those fields even after paying a small, broad-based tax to fund a large, narrowly targeted subsidy.

  • Re:well... (Score:5, Insightful)

    by Anthony Mouse (1927662) on Saturday March 24, 2012 @12:38PM (#39461071)

    I don't see how the Chinese government's money is somehow our money. Even if it was our money before we paid it to them, it's their money now.

    I think what this is really doing is clarifying why we subsidize solar panels -- they're making clear that it's a jobs program, not an environmental program. If it was an environmental program then we would be happy. China is adding to our subsidy and making solar panels even more attractive: Now they will be even less expensive and even more people will use them.

    But if it's a jobs program then it's a disaster. The point of the demand-side subsidy is then to increase demand and create more jobs making solar panels. And subsidizing supply in China means that the increased demand gets met by supply from China instead of supply from domestic industry. Worse yet (for jobs), the dual subsidy makes foreign solar panels extraordinarily competitive and displaces demand for non-solar domestic competitors like oil and gas.

    Or to put it more simply: It makes it very attractive to replace domestic fossil fuel energy with foreign made solar panels. If you like solar panels, that's good. If you like domestic jobs, that's bad.

  • Tail wags dog (Score:2, Insightful)

    by anwaya (574190) on Saturday March 24, 2012 @12:41PM (#39461083)

    You are very short sighted. Governments shouldn't be in the business of picking winners and losers. That is how you end up with zombie banks sucking the life force out of the economy dragging us down into an unending depression.

    Thank you so much for pointing out that it's the tail that wags the dog. Seriously, I thought it was the other way round, that the banks first lobbied for deregulation and then, when their irresponsible betting threatened to collapse the entire system, they effectively held the fate of the financial system to ransom until the government agreed to bail them out. And no, you can't nationalize the banks: that would interfere with the sacred operation of the Free Market!

    Now I know I got it completely wrong. How naive of me. How short sighted. Thank you, thank you, thank you.

  • by TheGratefulNet (143330) on Saturday March 24, 2012 @01:17PM (#39461251)

    simple: look at life in the US before unions.

    the fact that ANYONE has saturdays off or sundays off is pretty much entirely due to unions and a small bit of balance of power.

    your grandfather likely would be quite angry with your 'why do we need unions anymore?' attitude.

    and quite frankly, I'm angry at your attitude, too.

    It's my choice what company I work for, not some unions.

    oh yeah? keep thinking that, buddy. you will eventually find out how totally wrong you are! but by then, it will be kind of late...

  • by TheGratefulNet (143330) on Saturday March 24, 2012 @01:23PM (#39461275)

    those that were there, seemed like they had no other choice. they had families, mortgages and were wage-slaves like you and I are.

    it can take months to find a job in today's market. or longer.

    ask a parent to take a few months of non-pay and see how happy they'd be.

    they are mostly forced to work there. the invisible hand forces them, just like that invisible hand 'guides' the economy (rolls eyes).

    "just go elsewhere!". yeah, right. and when its a game that more and more companies are playing? what happens when there are essentially no choices left and the collusion forces you to accept slavish working conditions?

    we are fully headed down that path. every company I see is downsizing, adding more work for their employees, adding more hours and actually CUTTING wages. they think they can get blood from a stone.

    what progress we've had for employee rights, over the last 50 years, has been withered away. I expect to find sweat shops not unlike the turn of the century as time marches on. and people will just say 'well, let them eat cake!' and not even realize they are saying this.

    unless you are very rich, YOUR time will come and you'll feel this problem, directly. it took me about 20 years of really 'nice' employment before I started seeing the evil in modern big (and even medium sized) companies.

    you'll see it, too. sooner or later. but at least we warned you!

  • Re:well... (Score:5, Insightful)

    by ShanghaiBill (739463) on Saturday March 24, 2012 @01:24PM (#39461277)

    How would YOU feel if you just went to bed at 9 or 10, and then suddenly your bosses wake you up at midnight to work another 12 hour shift?

    If I was a typical Foxconn employee, I would probably feel happy about it. When Foxconn employees were asked what they would like to see changed in their workplace, their number one request was LONGER shifts. Most rural Chinese marry young, have their only child, and then one parent often heads off to the city to earn extra money while the grandparents help raise the baby. Since the father can do heavier labor, he is more useful on the farm, so it is the mother who leaves for the factory job. These women are not interested in more leisure time. They want to go home to their families. So the more extra hours they can work, the faster that day will come.

    The typical Foxconn employee is not you, and does not share your lifestyle and motivations. So stop trying to project your values onto them.

    No wonder these people are jumping off roofs.

    Foxconn's suicide rate is lower than the average rate in China.

  • Re:well... (Score:5, Insightful)

    by hackwrench (573697) <hackwrench@hotmail.com> on Saturday March 24, 2012 @01:26PM (#39461289) Homepage Journal
    You forget about the technological development issue. The Chinese government subsidizing their panels, means that Chinese research into solar panel technology will increase. If the US and EU do nothing, then interest in the US and EU developing solar panel technology will decrease, and we will be at the mercy of China for suitable panels and China can then raise prices. See what's happening with rare earth minerals. That's bad enough and there isn't as much technology involved.
  • by Anonymous Coward on Saturday March 24, 2012 @01:48PM (#39461385)

    Violation of OSHA

    Violation of osha hell that is straight up violation of DOT regs. No driver shall... There are explicit rules for how much you can work. By federal law. 70 is the max btw... And that is only if you have a 36 hour break.

    Companies like this need to be turned in and put out of business. One DOT audit and that place would be shut down. Those rules were made to not only protect the workers but to create less accidents.

    Please *PLEASE* turn them in.
    http://www.fmcsa.dot.gov/about/outreach/consumers/safthotline.htm [dot.gov]

    1-888-DOT-SAFT call it now please. This is for the safety of not only those people but everyone who drives near them. There is a shortage of good drivers. They would have no trouble getting work elsewhere. Probably at higher pay too.

    I have seen too many rolled over trucks and the like to have any sympathy for that business. Most of the time it is guys like your old boss who care nothing for the welfare of anyone else but himself.

    There are gov regs to control this. They were invented just because of idiots like your old boss. You dont even need a union involved with this.

    It will basically go down like this. They will show up tear him a new one. Give him warnings to clean up his mess (about 6months to a year). Then show up and give him hefty fines if he hasnt cleaned up. Give him another 6 months to clean up. After that they will pull all of his vehicles permits. In effect putting him out of business.

  • I'll add (Score:5, Insightful)

    by transporter_ii (986545) on Saturday March 24, 2012 @02:04PM (#39461491) Homepage

    Everyone can't work for minimum wage and America survive. This is not to knock minimum wage jobs, but everyone can't work at Wal-Mart and McDonalds. When you make minimum wage, you spend it all on housing/rent, gas, and food. There is no money left over for anything else. If you have a consumer-based economy, and nobody has any money to spend, what is going to happen to your economy.

    We can't send all the real jobs overseas and expect everyone here to work at a shop in the mall. Who are you going to sell stuff to?

    If we don't bring real, productive jobs back to America, we have had it. We can't rely on IP, intangibles, copyright lawsuits, and royalties to keep us afloat. It's real jobs, producing real products, or we have had it.

  • Re:well... (Score:4, Insightful)

    by ShanghaiBill (739463) on Saturday March 24, 2012 @02:32PM (#39461651)

    Foxconn employees are free to quit and go home anytime they want. They are working for Foxconn because they, not you, have decided it is their best opportunity.

    Calling them "slaves" is absurd.

  • Re:well... (Score:5, Insightful)

    by pixelpusher220 (529617) on Saturday March 24, 2012 @02:55PM (#39461799)

    Government intervention in markets is NEVER productive.

    You mean like in the 1940's when the government literally told private manufacturers what to make? And subsequently lifted us out of the depression? oh right...defense spending isn't intervention in the markets...it's just 'good'.

    Government intervention in the markets is absolutely necessary...to a point. The lack of government intervention led to the great Depression and our most recent Recession. Completely unregulated markets will crash - regularly and routinely. Laws and regulations exist for a reason...

  • Re:well... (Score:2, Insightful)

    by Dahamma (304068) on Saturday March 24, 2012 @03:13PM (#39461921)

    Compared to the taxpayer expense of the mortgage fiasco, the Iraq and Afghanistan wars, and and the many costs due to the recession caused by the Bush administration, a failed loan to a solar energy company is a drop in a bucket in a swimming pool on a cruise ship in the Pacific Ocean...

  • Re:well... (Score:5, Insightful)

    by artor3 (1344997) on Saturday March 24, 2012 @03:50PM (#39462113)

    Foxconn's suicide rate is lower than the average rate in China.

    Great soundbite, but very misleading. Foxconn workers are young, healthy, employed, and lack mental illness. All of those factors reduce their probability of committing suicide as compared to the general population. You need to compare their suicide rate to members of a similar demographic.

    Furthermore, Foxconn is by all accounts one of the best employers. There are a lot of other manufacturers in China that are much worse. People just focus on Foxconn because it's the biggest, but the problem is pervasive throughout the industry.

    When Foxconn employees were asked what they would like to see changed in their workplace, their number one request was LONGER shifts....The typical Foxconn employee is not you, and does not share your lifestyle and motivations. So stop trying to project your values onto them.

    This attitude is exactly what lets corporations abuse people on such a horrifying scale. People are desperate to work, because they must work to survive, and so they say "I'll take the abuse, just please let me earn enough to live!" And the company abuses them, uses them up, until they can't take it anymore, and then grabs the next desperate person out of line.

    Pressure from the western world has caused Foxconn and other Chinese manufacturers to raise wages for their employees. That's a good thing. The fact that rural Chinese villagers are in such dire straits that they'd take the job even without the raise doesn't mean we should just let them suffer. Either we can enrich the robber barons by racing to the bottom, or we can try to raise average quality of life around the globe. Most people would prefer the latter.

  • Re:Tail wags dog (Score:4, Insightful)

    by smaddox (928261) on Saturday March 24, 2012 @05:11PM (#39462521)

    Subsidies are usually a bad idea, too. In this case, however, two wrongs (Chinese subsidies & US tariffs) might make a right.

  • Re:well... (Score:5, Insightful)

    by poemofatic (322501) on Saturday March 24, 2012 @06:21PM (#39462789)

    Stop thinking in terms of money.

    First, China is not "wasting" our money, as USD is not legal tender there. In order to provide subsidies to local manufacturers, they do it with their own money, of which they have an unlimited amount, just as the USG has an unlimited amount of its own scrip. We do not live in a gold standard world in which china can obtain a gold coin from the U.S., ship that coin across the ocean, and then pay that coin to a local firm in exchange for domestically made goods. All net trade income received by China must be immediately re-invested in the purchase of U.S. assets (bonds), and the forex rates adjust to ensure that this always happens. It is not a choice, but a mathematical fact that the current account plus the capital account sum to zero. There is no "extra" trade income that can be used to purchase chinese goods.

    More importantly, the real wealth of a nation is not measured by how much scrip a government is able to tax away. That would be silly, as government first issues the scrip and then passes laws to tax it back. That's not a measure of wealth. Real wealth is a nation's productivity. That means both quantity and quality of output that can be produced per unit of effort. The Chinese recognize this and are trying to improve their own capital stock.They are trying to build real wealth. If a byproduct is the erosion of productive capacity in the U.S., then this means the U.S. becomes poorer. But not by design, and not as a requirement, it's a just a by-product due to the interplay between financial profits and real wealth. Note that we are not talking about money -- I'm sure U.S. firms can earn large profits if they are given very cheap inputs, at least in financial terms. But if our real productivity capacity is diminished as a result, then we as a nation *do* become poorer.

    In a for-profit world, investors invest in those things that earn a return, independently of whether this investment is beneficial to the nation as a whole or succeeds in increasing productivity. See, for example, our wonderful financial system. So the Chinese government, if it believes that it needs to acquire capital in some industry, waves its hands and makes investing in that industry more profitable (in terms of money) for its own people. It's able to do this because, as has already been mentioned, the Chinese government has an unlimited supply of its own scrip to spend, as do all governments that use fiat currencies.

    Whether this move actually pays off for China or not is questionable. If you are a market-zealot, then you believe that any government interference will cause misallocation of resources and China would be even more productive without it. But China seems to have a track record of achieving rapid economic growth by intervening in industries and subsidizing the ones it believes will lead to the highest productivity gains. And not only China, but many nations follow this model. Nations with "hands off" governments tend not to have clean drinking water, universities, or a developed economy. Of course, that doesn't mean that every intervention is good. Sometimes it works and sometimes it doesn't. The real world track record doesn't cleanly support one political philosophy over another.

    In either case, whether or not the Chinese succeed in making themselves more productive by printing up their own money and giving it to politically favored entrepreneurs, this is an experiment that is not happening with "our" money, but with their money and their own economy. The problem arises when it spills over to the U.S. (or EU) economy. In that case, there is nothing wrong with the U.S. government raising the costs of doing business for the same Chinese entrepreneurs who had their own costs lowered by their own government. And with a billion people, you would think that China would be able to develop domestic industries without selling into the U.S. market. After all, there is also some need for energy in China. So ask yourself why do they need to sell to America? It is not because "w

  • Re:well... (Score:4, Insightful)

    by mspohr (589790) on Saturday March 24, 2012 @06:42PM (#39462883)

    It is interesting that these same arguments (Chinese workers at Foxcon are better off) were used to justify slavery in the US for many years before the Civil War.
    Abuse of rights is abuse of rights.

  • Re:well... (Score:5, Insightful)

    by hairyfeet (841228) <bassbeast1968&gmail,com> on Saturday March 24, 2012 @08:38PM (#39463495) Journal
    You are forgetting about the pollution friend. We can already detect the pollution from China on the US west coast and by moving production to a country where you can just burn or toss the industrial waste into a river makes things worse for EVERYBODY. It really doesn't help to lower usage of fossil fuels if the way they are being made is environmentally unsustainable, all we are doing is buying a little time at the expense of land that will be uninhabitable. Considering the size of the Chinese military making more of their land unusable is probably be a BAD idea.

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