| A powerful and dangerous force has
been unleashed on the global
economy. it’s a new source of
skilled labor that has put american
workers at a competitive
disadvantage — and no one knows
just how many jobs have already
been lost because of it. the u.s.
is running a huge trade deficit
with this force; every year we’re
spending millions more on what it
produces than it spends on american
goods and services. and to top it
all off, this entity has built a
massive currency reserve, investing
large sums of it on u.s. government
securities and thus enabling
america’s fiscal profligacy.
why, oh why, won’t the u.s.
government do something to protect
us from . . . tiger woods?
you thought i was talking about
china, and i was. but i’m also
talking about the modern-day golf
legend. you see, china and tiger
woods are a lot alike.
in seven out of the ten years since
woods burst onto the golf scene
he’s been the top money-earner on
the pga tour. he has forced his
best competitors into second place
while pushing countless players at
the bottom of the heap out of the
pro game entirely. he also has
nudged athletes of all stripes from
the lucrative endorsements market.
he’s the best-paid corporate
mascot ever, lending his name and
likeness to general motors, general
mills, american express, accenture,
nike, and more.
such success both on an off the
course has paid very well. woods
can’t possibly spend all the
money he makes. (he took in $100
million from his nike deal alone.)
and what he doesn’t spend he
either saves or invests, no doubt
putting ample resources into u.s.
government securities.
so what is tiger woods doing
that’s any different than what
china is doing?
both are competing successfully.
both are earning more than they are
spending. and both are saving and
investing their wealth. if you
think of tiger woods as his own
country, he and china are just the
same. yet not a day goes by that we
don’t read of some new political
effort to throttle competition from
china for the sake of the american
worker and the american economy.
where are the initiatives aimed at
protecting us from tiger woods?
think about that the next time a
politician proposes protectionist
legislation aimed at china.
of course, pro golfers aren’t
whining about being beaten by
woods. rather, they know they must
improve their games — or at the
extreme, find new games to play.
competition is the lifeblood of
sports, and the professionals
accept this premise. at the same
time, the consumers of sports —
the rest of us who watch it on tv
— insist on it: if there were no
competition, sports wouldn’t be
very interesting.
so why are american manufacturers
whining about being beaten by
china? and why do our politicians
support these false notes?
competition is the essence of
business just as it’s the
foundation of sports. that’s why
we have antitrust laws; they’re
an attempt to keep competition
alive and well. and just as in
sports, competition is good for
consumers. it forces businesses to
improve their products and keep
prices low.
yet there are people who understand
all this in principle and still
make an exception when it comes to
competition from foreign nations.
why? there’s no fundamental
difference between competing with
someone across town or someone
across the globe. why the different
set of rules for china and tiger
woods, or for foreign and domestic
competition?
one of the usual arguments against
foreign competitors is that they
are “unfair”; that they expect
us to buy from them, but they
won’t buy from us. china, it is
said, is cheating us by building up
an enormous “trade surplus,”
which now totals over $1 trillion.
but tiger woods doesn’t buy as
much from america as america buys
from tiger woods. in fact, woods is
no different than anyone who has
ever succeeded enough in life to
accumulate savings. china does just
that and it’s a problem. but
it’s no problem when woods does
it, or for that matter when you and
i do it. we often hear that the
“trade deficit” with china
means that america has gone into
debt to buy chinese goods. but
that’s no more true than saying
we’ve gone into debt in order to
watch tiger woods play golf.
some of the goods we import from
china are paid for with exports. in
fact, u.s. exports right now are
running at record levels. for the
rest of the goods we import from
china, we pay money. but that’s
money we have earned, fair and
square. just because china sold
more to us than it bought from us
doesn’t mean there’s any debt
involved.
say you bought a pair of nike’s
because you thought that ad with
tiger woods in it was so cool. did
you pay for your sneakers with
money, or did you export something
to nike? last i checked this
isn’t a barter economy, so you
probably paid money. but that
doesn’t mean you went into debt
for those sneakers.
the china-bashers also say that
china’s investments in u.s.
government securities are
“unsustainable,” and they worry
about what will happen to u.s.
interest rates if those investments
are liquidated. well, suppose china
took that money and started buying
u.s. goods with it, instead of
saving it. that means u.s.
producers would have a lot of very
profitable work to do. and that
money wouldn’t disappear. it
would simply change hands, and its
new holders would ultimately have
to invest it.
perhaps china worries so many, and
tiger woods doesn’t, because
he’s an american and china is,
well, china. but try this thought
experiment: if woods weren’t an
american, would you feel
differently toward him? would you
want to slap a targeted tax or
other penalty on him? or would you
restrict americans from doing
business with him? your answer is
likely “no” to each of these.
you love watching him play golf.
and even his competitors know that
if he wins and they lose, that he
has raised the level of the game
and made it a better business for
everyone involved.
so why do so many endorse
protectionist laws against china?
don’t these very same people love
buying cheap toasters at wal-mart
— toasters made in china? and
don’t the american firms which
cannot compete with china
understand that the ascent of this
new economic force has lifted the
entire global economy, ultimately
making it a better game for
everyone?
when you think it through there’s
only one sensible approach to trade
with china: go get ’em, tiger!
You really don't know how to choose a good analogy.
Tiger Woods is a pro athlete who's income is derived mainly from his endorsements from corporate sponsors. He is still taxed. He still obeys the laws. His currency is invested most likely, but invested in the general economy of which government securities are only one part.
Tiger Woods does not produce goods (other than entertainment). Tiger Woods is not in direct competiton with American manufacturers. Tiger Woods does not have his own currency, laws, or authoritarian government.
Also, Tiger Wood's income is a fart in the wind compared to the economies of the US an China.
In other words, you're comparing a golfing pro to a country. You might as well compare a baby to rock.
The reason why people are up in arms over China is that China isn't playing fair.
Put simply, the global market works well IF the playing field is fairly level. This includes money markets (currencies) and trade regulations.
China keeps a death grip on it's currency instead of floating it on the market. This keeps the currency at an artificial level, allowing for imbalanced trade in both goods and labor, not to mention lax labor laws.
If China isn't going to play fair, then neither will the US.
To shoe-horn this into your analogy, Tiger Woods is cheating and the USPGA isn't really stopping him from cheating. Do his competitors let him keep cheating, or take steps to stop him from cheating.
Nobody likes a cheater.
~X~ |
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