A qualitative analysis of why it matters that it's an election year goes something like this: While the Democrats have been in power the US unemployment rate is hovering around historic highs for a historically long time. Democratic policies have either failed or appeared to have failed to fix the unemployment situation. In a bid to deflect blame for the poor state of unemployment from themselves, the Democrats have chosen an external target: China. Simplified, they claim that unemployment is due to the trade imbalance which is due to an under-valued renminbi.
Pundits have been demanding that Mr Geithner pressure China to allow its currency to appreciate against the dollar, and Mr Geithner (reluctantly, one imagines) is rising to heed the call.
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It was American pressure that led the Chinese to de-peg their currency in the first place; recall that they wanted to avoid heated confrontations at the June G20 summit. And American pressure has likely contributed to the recent sharp rise in the yuan (which has appreciated by 1.25% in just the last fortnight), though signs that the Chinese economy is achieving a smoother landing than previously believed have obviously helped.
Persuasion, in other words, is working.
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My view is that China recognises the need to let its currency rise, and when economic conditions permit it is willing to move toward gradual appreciation.
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Actual trade confrontation, on the other hand, would be very messy. Chinese leaders are explicitly warning that sanctions would be counterproductive. Some American leaders and pundits seem to assume that if persuasion is working, an aggressive policy confrontation would work better.
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But there's an election on, and populism is ascendent, and the trade warriors in Congress will have their day. I just hope the legislature holds to its recent pattern of behaviour—all talk and no action.
Supposing that trade tends to be good for the economy and that data shows that manufacturing jobs in the US have been in steady decline since the '50s, one should only be able to make the above argument if they are intellectually dishonest because they arguing for what they should argue for politically even if it is not a real solution. If this is the case, then one would expect that Democrats who sponsored the Anti-China Bill are disproportionately in congressional districts where they are not considered safe in the mid-term elections in November. So I took a look at the congress people who endorsed the Anti-China Bill, and whether or not they are considered to be safe in the November elections according to Real Clear Politics polling.
Of the 146 sponsors of the bill, 103 are Democrats and 43 are Republicans. Of the 43 Republicans, 40 are considered safe, and 3 are in districts that are likely or leaning Republican. Of the 103 Democrats, 47 are in districts considered safe, 23 are in likely/leaning Democrat, 18 are in tossup districts, and 15 are in likely/leaning Republican. The 18 Democratic congressmen in elections that are considered tossups represent half of the total 36 Democratic congressmen in tossup elections, and the 15 Democrats in elections likely/leaning Republican represent half of the 30 total Democrats in those elections.
I think that's some pretty good evidence that quite a few of our elected representatives are being intellectually dishonest with themselves and their constituency. plus ça change, plus c'est la même chose...