Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Maybe.
Last Thursday, the Senate voted 79-19 in favor of considering the Currency Exchange Rate Oversight Reform Act of 2011. The bill still needs to go through the debate and amendment process and survive final passage, but it appears that it will pass the Senate. Things are less certain in the House, but 200 House members have already become co-sponsors.
In this video Sen. Lindsay Graham explains why he favors the bill. Meanwhile, Pres. Obama seems to be undecided, perhaps even willing to veto it. "I'm concerned about this legislation," he said, according to Sen. Graham.
John Lott presents an excellent argument why the conservative position is to oppose the bill.
In my book and on my web site, I list the "political quotients," or PQs, of several politicians. Pres. Obama's PQ is 88, which although liberal, is not quite as liberal as Ted Kennedy (PQ=89), Robert Kennedy (PQ=96), Nancy Pelosi (PQ=101), or Barney Frank (PQ=104).
His PQ is based on his Senate roll call votes cast in 2005 and 2006. (Due to his presidential campaign, he missed several votes in 2007 and 2008. As a consequence, I omitted those two years from my calculations.) The roll calls were chosen by the Americans for Democratic Action, a liberal interest group. Of the 40 roll calls that it chose, Obama voted only once on the conservative side. This was on June 29, 2006, where he voted in favor of a free trade agreement with Oman.
I agree with conservatives that Obama is very very liberal. However, on free trade it seems he may be moderate, perhaps even right-leaning.
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Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
As Glenn Reynolds likes to say, "Smoot, meet Hawley".
Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
They keep saying that China is "undervaluing" its currency. Can someone please tell me what the correct exchange rate is? Where can I look that up?
But even if it was true, then it simply means that the Chinese government is making Yuan holders worse off and making our dollars worth more. Sounds like a good deal for us.
Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Which would put Mitt Romney to the left of Obama on free trade - at least when it comes to China. Romney not only wants to declare China a currency manipulator and make Chinese goods more expensive to American consumers, he wants to exclude Chinese companies from government procurement programs (until American companies get access to Chinese procurement programs) and make government more expensive for American taxpayers. Finally, he wants to block access by American consumers to inexpensive Chinese goods until China sufficiently recognises intellectual 'property' laws protecting... well, it's not clear to me, but presumably the lobbyists know where the bread is buttered on that one.
Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
For a recent clear (and short) explanation of the economic approach to protectionism see Do Subsidies Justify Retaliatory Protectionism? by Don Boudreaux (pdf).
Edited on Oct 10, 2011 at 12:47pmOct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Agreed. Romney is a not a conservative. And his business background has nothing to do with his understanding of economics. He just knows how businesses make profits, which is good, except when the profits are the result of policies that hurt consumers.
I am fairly optimistic about the economy in the medium term, but when when I hear politicians on our side advocating policies that have the potential to stifle trade, I get very nervous.
Edited on Oct 10, 2011 at 1:05pmMay '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Obama talks up free trade but won't send the agreements with South Korea and other countries to congress because the unions won't let the Democrats vote on them. He blames this on Repblicans of course. Also being to the right of Lindsay Graham is not that difficult.
Jun '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
This is a great example of government overreach and posturing prior to elections.
How many of those elected to Congress are knowledgeable and experienced enough to determine appropriate exchange rates? Even if there were a few quantitative geniuses among them, do they have the right to do so?
Do they understand the size and nature of the traded currency markets?
The only remedy is to sort it out in a relatively free marketplace. Don't alienate the Chinese. Work with them. Call it Sino-Capitalism or whatever you want - they are modernizing their economy and the more they do that, the more they become like us.
And the more the world participates in Western style economics, the better off we all are.
Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Exactly, no one knows what the "right" rate is, but if they are really keeping their currency artificially low, then they are basically picking the pockets of their own people and sending it to us. And Romney thinks that that is bad for us.
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
What a time we live in -- when demagoguery is more common in the Senate than in the House!
Dec '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Perhaps, or maybe his "concerns" are different in nature than those of conservatives. I recall there being a couple of questions on the PQ test where I came down on the "liberal side" for different reasons than might be obvious. These types of questions can be misleading. For example, take a question like: "Mitt Romney and Rick Perry have promised to undo Obamacare by issuing waivers to all 50 states. Do you support this action?" If I say no, do you conclude that I lean left and support Obamacare? Or do you conclude, correctly, that, though I favor repeal, I think it's unconstitutional to do so by executive order?
I think we need to know the nature of Obama's concerns about the bill before we draw any conclusions.
Feb '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Todd
Exactly, no one knows what the "right" rate is, but if they are really keeping their currency artificially low, then they are basically picking the pockets of their own people and sending it to us. And Romney thinks that that is bad for us. ·
Actually what they are doing is making it economic for industry to migrate to China and give Chinese citizens employment at vastly higher wages than they otherwise would achieve. Yes, if China let their currency float holders of their currency would be richer- but that wouldn't draw the industry into China.
And yes that is bad for us. Otherwise viable industry here is bankrupted, and this is one reason why the US is the brokest nation in history.
China, by the way, is not.
Feb '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
michael kelley:
How many of those elected to Congress are knowledgeable and experienced enough to determine appropriate exchange rates? Even if there were a few quantitative geniuses among them, do they have the right to do so?
Do they understand the size and nature of the traded currency markets?
How is this an argument to let the Chinese government set the exchange rate, which is what happens now?
No, actually vast numbers of Americans are worse off. They vote. That's why this bill passed 79-19.
Bluntly, free traders have lost the argument.
May '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
I am not an historian but that has seemed to be true thoughout my entire lifetime. Not having to answer to local constituents makes demogoguery easy and painless for Senators who answer primarily to fundraisers.
Edited on Oct 10, 2011 at 5:16pmMay '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Xennady
michael kelley:
How many of those elected to Congress are knowledgeable and experienced enough to determine appropriate exchange rates? Even if there were a few quantitative geniuses among them, do they have the right to do so?
Do they understand the size and nature of the traded currency markets?
How is this an argument to let the Chinese government set the exchange rate, which is what happens now?
No, actually vast numbers of Americans are worse off. They vote. That's why this bill passed 79-19.
Bluntly, free traders have lost the argument. · Oct 10 at 4:05pm
The trade protectionists may have won 79 to 19 but people ultimately vote with their pocketbook and I am still buying Wallmart stock and that of any company that sells goods for less than their competitors.
Jun '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Todd
Exactly, no one knows what the "right" rate is, but if they are really keeping their currency artificially low, then they are basically picking the pockets of their own people and sending it to us. And Romney thinks that that is bad for us. · Oct 10 at 2:27pm
How so? They are picking their own pockets and Romney thinks that is bad for us?
On that point, I'd request some clarity so I can understand what you're saying.
From another perspective, they are growing their economy and the old Maoist 5 year plans are being revealed for the tragedies they were. The more a middle class can develop in China (or India, etc.), the more potential allies we have over the next hundred years.
We have an aging population with a low birthrate - do we really want to be the the ones making cheap plastic weed whackers?
More rational administration is not the answer. Competing successfully is the answer.
Jun '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Xennady
michael kelley:
How many of those elected to Congress are knowledgeable and experienced enough to determine appropriate exchange rates? Even if there were a few quantitative geniuses among them, do they have the right to do so?
Do they understand the size and nature of the traded currency markets?
How is this an argument to let the Chinese government set the exchange rate, which is what happens now?
The same way it is an argument that politicians and bureaucrats should not be given control over healthcare. I'm not saying it's the correct move for the Chinese.
Sep '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Todd: They keep saying that China is "undervaluing" its currency. Can someone please tell me what the correct exchange rate is? Where can I look that up?
But even if it was true, then it simply means that the Chinese government is making Yuan holders worse off and making our dollars worth more. Sounds like a good deal for us. · Oct 10 at 12:42pm
Milton Friedman would agree with you.
Jun '11
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Xennady
No, actually vast numbers of Americans are worse off. They vote. That's why this bill passed 79-19.
Bluntly, free traders have lost the argument. · Oct 10 at 4:05pm
There are a lot of reasons why we have a 9.1% unemployment rate (actually more like 16-17% if you don't doctor the numbers). Some of them are structural, some are part of the short term cycle. Blaming the Chinese doesn't go very far.
More people around the world buying and selling and making money by more or less imitating the Western style of doing business, more people feeding and educating their families, more generations growing up and demanding both political and economic freedom as their eyes blink open and they leave centuries of slavery - I'd bet on that scenario and in that scenario, the world becomes a better place.
Sep '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
The reasons for jobs leaving the country are numerous. China’s exchange rate is one, but one of the least important. It is impossible to assign blame for this situation, but I would say at least 50% of the blame should go to our elected officials. The Senate is playing a game CYA by trying to distract voters from the role they have played. Purly political theater that may blow up in their face.
Oct '10
Re: Is Pres. Obama to the Right of Sen. Lindsay Graham on Free Trade?
Xennady
Actually what they are doing is making it economic for industry to migrate to China and give Chinese citizens employment at vastly higher wages than they otherwise would achieve. Yes, if China let their currency float holders of their currency would be richer- but that wouldn't draw the industry into China.
And yes that is bad for us. Otherwise viable industry here is bankrupted, and this is one reason why the US is the brokest nation in history.
According to your theory, then the path to prosperity for a nation is to debase its own currency at a faster rate than other nations. Good luck with that.
As for attracting industry, remember that an investor in China has to convert his dollars to Yuan, and then convert the Yuan back to dollars. But if China had been devaluing its currency, then those Yuan buy a lot fewer dollars. So how does that attract investment?