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GUEST OPINION: Buy local but don't blame China for our problems

Published: Saturday, December 8, 2012 at 7:00 p.m.
Last Modified: Friday, December 7, 2012 at 6:37 p.m.

One cannot fault the desire of Jim Bald to support one's community (“Holiday gifts need not come from China,” Close to Home, Sunday). Local economies, in large part, survive by the involvement and support of their local neighbors. For this, there is little argument against community involvement.

The issue at large is that Bald's desire to support his community is due to a misplaced fear and anger against China's economic growth.

The world we live in is one of global interdependence and exchange. As such, countries are able to specialize in and exploit their competitive advantages — what they can do the best and cheaper than other states. This in turn has been dramatically increased due to advances in transportation and communication.

China has an advantage in cheap labor. Because of this, it is able to be more competitive in manufacturing due to the fact that manufacturing takes no education and little training. At the same time, America has transitioned from a low-cost manufacturing base to a service-oriented economy. This is due to our competitive advantages in large amounts of capital (money) and a relatively well educated populace. This has reduced the incentive for companies in manufacturing to pay higher wages domestically, when the transport costs of producing overseas are cheaper still. This clearly defined logic applies not only to China but to any number of nations — Mexico, Taiwan, Vietnam, and Colombia to name a few.

What makes China so different is the amount of capital that it is investing worldwide. For much of the 1990s and 2000s, China was buying very large amounts of Treasury bills and debt to find a positive return for all its money. Due to limited investment opportunities domestically — the currency and interest rates are determined by the government — China sought to find positive investment returns elsewhere. This search allowed our nation to live far past its means, far longer than any other nation would. The Chinese purchase of Treasury bills kept the dollar strong, because there were fewer in circulation, which in turn strengthened its position as the international reserve currency of choice. In simple terms, the Chinese financed our outlandish debt. China was a large factor in our rising standard of living. It allowed Americans to borrow cheaply and buy all those manufactured goodies that we lament.

The point is not to simply excuse China. There is good reason to bash the Chinese for currency manipulation, human rights etc. However, one cannot bash China, or any other nation, for simply trying to increase its standard of living and providing jobs to its people. Unfortunately, manufacturing has left this country, and it is not coming back in the short term. It would not be economically advantageous anyway. It would merely lead to higher prices and lower standards of living.

We need to support our local communities and businesses. I agree with Bald that maybe instead of buying some material goods — that goes for cars or even the winter Mexico vacation — we support the community that we live in; just don't do it in the name of fighting the Chinese, especially when they are guilty of doing nothing other than living in a globalized economy.

Economics is not a zero-sum proposition, where one countries gain is another's loss.

Andrew Bowen is a masters candidate in global affairs at New York University. He was born and raised in Santa Rosa.

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