Dear Mr. Hartquist - A letter by Dr. William Hickey

3/12/05

Dear Mr. Hartquist-

http://www.chinacurrencycoalition.com/

I have taken the time to read your coalition about the Chinese currency issues. I am myself, a Chinese management scholar and part user of their currency, so I am also hoping they revalue, but for different reasons, and not anytime soon. There are a few things that should be reinforced though, and you can publish my comments if you wish:
1. China does what is in China's interests. Even if it sinks the entire world. It doesn't matter what the U.S. or Asian neighbors want. Despite the platitudes, they won't budge when it comes to self interest, you should study history about this. And why should they budge? Foreigners have a bad record in colonization of China and forcing Chinese into self reliance. If I were China I would subsidize my currency to the hilt also!
2. Never in world history has a country been asked to REVALUE its currency! Where was the U.S. when Mexico, Bolivia, Argentina, and China before 1990 DEVALUED their currency? The entire U.S. position is RIDICULOUS hypocrisy. Lets be honest about it. The U.S. basically sent in the IMF to create "austerity programs" that hurt average people in these countries. The U.S. has a very spotty record that reinforces hypocrisy and self interest.
3. The U.S. has allowed this selfish economic giant to flourish by way of a demand driven economy dependent on foreign exports (or U.S. imports). Wal Mart is the leading offending conduit in this merchandising exchange. The point is the U.S. consumer is equally responsible: They drive the demand, similarly as illegal drug usage is demand driven. If you want to stop the supply, stop the demand. Not vice-versa.
4. The U.S. has only to blame itself for this currency fiasco. It has set itself up for a fall by letting our leaders sell out our manufacturing base and services to cheaper labor abroad, so the saying goes. Under Classical Economics Theory, which is what most of D.C./Greenspan crowd preaches, and thus the US: as skills and wages increase in other countries, they will have to decrease here for the same work to create an equilibrium, additionally as trade imbalances increase or decrease, this will also be reflected in the value of a currency.Of course, the biggest hole in Classical Economics theory is that we don't operate in a perfect world. Perception can also affect markets, ergo, the Chinese keep buying dollars despite all the above. If U.S. leaders don't want to face that reality, and have created these problems with thier ridiculous stands, then as Marie Antoinette said about the masses having no bread: "Then let them eat cake!" As it stands U.S. manufacturing was sold out a long time ago, it won't be coming back.

Dr. William Hickey