The mental state held by planners of state-run economies is a comprehensive view in which all economic actions coordinate with the state. All transactions originate, terminate and are regulated by the state. One sees evidence of this approach in China in that everything built by man for domestic use or consumption, regardless of where you find it, looks the same. From houses to factories to buildings to roads and conveyances, including everything that goes into all of those things, the parts pretty much look the same. The newer houses all face the same direction. The newer roads all run the same grid. The hand of central government planning and control is visible everywhere you look. With so much inertia built up in such a system, only a fool would expect them to change.
This government-centric mentality permeates the current discussion on Yuan revaluation with respect to the dollar. Interestingly, views from both the China state press and the U.S. press seem to assume the rules of a state-run economy. Now, you would expect that view in China, but in the U.S. too? The thinking goes something like, if the Yuan revalues higher against the dollar, Chinese goods will be more expensive to the U.S., the U.S. will as a consequence buy fewer of them, and will instead increase production of those same goods at home.
I doubt things are that cut and dried. On the U.S. side of the Pacific, market pricing still operates in many areas of the non-health care economy. The market will seek a lowest price for a given product and if the Yuan exchange rate forces China to raise prices, other low-cost manufacturers from other places will gladly jump in to provide those products at competitive prices. The reason? They know a market exists for those products at a historically known price.
So, the czarist Obama administration will quickly discover that Yuan revaluation will not have the stimulative effect on U.S. manufacturing they seek. And, as believers in state-run economics, they will subsequently propose wage and price controls for the rest of the U.S. economy because, they will reason, keeping prices high will mean there’s more money at the margin for manufacturers, and this will induce domestic manufacturers to make those products. Wage and price controls will, of course, have the opposite effect and further depress the U.S. economy, however, the czars will simply find something else to blame before moving on to their next foreseeable failure–which will probably involve severe curtailment of private free-market constitutional choices people will be making by then to avoid expensive state-controlled products.
At the rate they’re going, the czarist Obama administration will probably drop the wage and price control turd in the punchbowl sometime around next Christmas. Full totalitarian economic controls? Maybe another couple years.
You know, the propaganda campaigns for this sort of thing have all been done before, so the signposts really stick out if you’re at all looking for them. But, in addition to the injustice, murder and mayhem that leftward totalitarian fascist shifts generally entail, you’d think that being so damn unoriginal would bother these great progressive thinkers. The corruption of power is indeed a powerful drug.