Not All Competition is Productive

With apologies to Mark Perry, here's a letter to the Washington Post:

You report that "Many economists say the value of the currency is being held at an artificially low level as a way for China to help its exporters, whose goods are comparatively less expensive because of the exchange rate.  The issue has been politically volatile in the United States, and this week members of Congress reintroduced legislation, approved by the House last year, that would impose duties to offset the effects of an undervalued currency" ("U.S. files two new trade cases against China with WTO," Feb. 12).

Reality is better revealed with a bit of editing:

'Many economists say the Chinese government taxes its citizens directly and through inflation to suppress the value of the yuan in order that Chinese exporters can offer especially good deals to American consumers.  The issue has been politically volatile in the United States, and this week members of Congress reintroduced legislation, approved by the House last year, that would show the world that Washington is as intent as is Beijing to tax and otherwise pick its citizens' pockets in order to bestow special privileges on politically forceful domestic producers.'

Sincerely,

Donald J. Boudreaux