Monday, September 13, 2010

What's good for GM could be bad for American workers

Economist Paul Krugman explains why the steelworkers union instead of American businesses sued China for unfair trade practices last week:

...what’s good for multinational companies is often bad for America, especially its workers...

In other words, U.S. multinationals are taking advantage of China's cheap labor and making deals with Chinese companies.

Krugman points out that U.S. businesses don't want to risk retaliation if they go after China for manipulating its currency, subsidizing companies illegally and imposing export controls that violate trade rules.

There are a couple of hearings in Congress this week about China's currency manipulation, which amounts to a subsidy of China's exports and a tax on its imports. Krugman asks:

...Will U.S. policy makers let themselves be spooked by financial phantoms and bullied by business intimidation? Will they continue to do nothing in the face of policies that benefit Chinese special interests at the expense of both Chinese and American workers? Or will they finally, finally act? ...

Stay tuned.