Free Market Capitalism Works!

Question: The United States is totally, and correctly, committed to free market capitalism. Protectionism can be considered the opposite of free market capitalism, so why should the U.S. put a tariff on Chinese imports?

Answer: China takes advantage of our free markets to sell us goods, but the flip side of every import is the currency transaction where there is not a free market....or any market!

The United States rightly promotes free market capitalism, but we allow China to set the value of their own currency unilaterally with no influence from any markets. China could set the value high, low, or anywhere in between.

China chooses to grossly undervalue their currency so they can export to us, but we cannot export to them in a meaningful amount. The Chinese populace is then paid in this undervalued currency in a very controlled, totalitarian regime with strict laws on currency movements and exchanges with other currencies.

The world's other currencies such as the euro, dollar, and Japanese yen are traded in open markets. Why is an economic powerhouse like China allowed to participate in the world's economy if they do not have the same rules? Free market capitalism works; we should insist on it.

 

Question: Is the US policy to actively seek trade liberalization with other countries always wise?

Answer: Trade agreements can be good, but they have to be in our economic interests. The US has already sacrificed many industries to other countries in the blind faith of the power of the words "free trade". Trade agreements with countries that do not have free markets that control the currency valuations does not make sense. What is the point of lowering other country's trade barriers to American goods and then allow our new trading "partner" to unilaterally undervalue their currency, which is the biggest barrier possible. Trade agreements often turn into "import agreements" that worsen the bleeding of our trade deficit.

Trade agreements should be judged like any other financial deal; does it make money or lose money? If an agreement increases our trade deficit, then we should cancel the agreement because it is a money loser..

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