Ape Man

A substantial number of leftists, union leaders, American manufacturing CEO’s, and economists, think that that the average American worker should be paid less. And as much as it pains my hillbilly soul to admit it, I agree with them.

But I do have one gripe. Most of the afore-mentioned pressure groups are dishonest. They would deny ever saying that the wages of the average American worker should go down. They would argue that all they ever called for was for the US dollar to become more “competitive.”

For those of you who have lost the secret decoder ring that you got in your last box of breakfast cereal, I shall point out that “competitive” means that the dollar can buy less on the international markets than it used to.

As I am sure you are well awere, the dollar is only worth what it can buy. Since a falling dollar can buy less, the average American worker is effectively getting paid less. Naturally, the fact that American manufacturers can pay their workers less in international terms helps enormously when they try to sell their goods on world markets. If American workers’ real wages are going down, and Chinese real wages are going up, American manufacturing will begin to do better.

But for some reason, people who are all for currency rebalancing rarely spell out the fact that they are for Chinese workers getting paid more and American workers getting paid less in relative terms. This is true even for those people who bend over backwards to be evenhanded, like Brad Setser.

I agree with Mr. Setser that the dollar needs to fall against most emerging market currencies. But just because I think that it is necessary medicine for the US does not mean I have to look forward to taking it.

This entry was posted on Tuesday, October 2nd, 2007 at 6:35 pm and is filed under Economics, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.