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What is China doing that鈥檚 any different than what Tiger Woods is doing? |
A powerful and dangerous force has been unleashed on the global economy. It鈥檚 a new source of skilled labor that has put American workers at a competitive disadvantage 鈥?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鈥檙e 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鈥檚 fiscal profligacy. Why, oh why, won鈥檛 the U.S. government do something to protect us from . . . Tiger Woods? You thought I was talking about China, and I was. But I鈥檓 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鈥檚 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鈥檚 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鈥檛 possibly spend all the money he makes. (He took in $100 million from his Nike deal alone.) And what he doesn鈥檛 spend he either saves or invests, no doubt putting ample resources into U.S. government securities. So what is Tiger Woods doing that鈥檚 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鈥檛 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鈥檛 whining about being beaten by Woods. Rather, they know they must improve their games 鈥?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 鈥?the rest of us who watch it on TV 鈥?insist on it: If there were no competition, sports wouldn鈥檛 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鈥檚 the foundation of sports. That鈥檚 why we have antitrust laws; they鈥檙e 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鈥檚 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 鈥渦nfair鈥? that they expect us to buy from them, but they won鈥檛 buy from us. China, it is said, is cheating us by building up an enormous 鈥渢rade surplus,鈥?which now totals over $1 trillion. But Tiger Woods doesn鈥檛 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鈥檚 a problem. But it鈥檚 no problem when Woods does it, or for that matter when you and I do it. We often hear that the 鈥渢rade deficit鈥?with China means that America has gone into debt to buy Chinese goods. But that鈥檚 no more true than saying we鈥檝e 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鈥檚 money we have earned, fair and square. Just because China sold more to us than it bought from us doesn鈥檛 mean there鈥檚 any debt involved. Say you bought a pair of Nike鈥檚 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鈥檛 a barter economy, so you probably paid money. But that doesn鈥檛 mean you went into debt for those sneakers. The China-bashers also say that China鈥檚 investments in U.S. government securities are 鈥渦nsustainable,鈥?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鈥檛 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鈥檛, because he鈥檚 an American and China is, well, China. But try this thought experiment: If Woods weren鈥檛 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 鈥渘o鈥?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鈥檛 these very same people love buying cheap toasters at Wal-Mart 鈥?toasters made in China? And don鈥檛 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鈥檚 only one sensible approach to trade with China: Go get 鈥檈m, 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~ I'm not reading all of that because I couldn't be bothered. What Surly you didn't write all that to say you like the free trade and free enterprise system? Build a better mouse trap and they flock to your door.? the one thing you don't touch on... China artificially keeps it's currency low... because it's a communist government... that would be like Tiger Woods taking 5 shots off his score every time he stepped onto the green... if you know much about trade and econmics in fact, the U.S. has had several "unfair trade" lawsuits against China due to this... how many lawsuits has tiger had against him for cheating? that was a lot of talk, all the while... not saying a whole lot... impressive... good job on talking about things you don't seem to know much about... oh and the PGA has many regulations on the golfers to make sure they are all on the same level... not so much with U.S./China trade... wow, that's a bit much, ummm. I lived in China and consider my home to be the world. If you think being a golf legend is where its at, then you should play golf. You cannot fight the changing tides, either adapt or get out of the way. You should not kick your competition while he tries to make his put. That's obviously a red flag. |
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