Currency wars: Scholar acccuses U.S. of hypocrisy on exchange rates

The United States is engaging in the same practice it criticizes others for when it tries to push down the value of the U.S. dollar against the Chinese currency, a renowned U.S. scholar says.

Harry Harding, a top China specialist who is now dean of Frank Batten School of Leadership and Public Policy at the University of Virginia, said in a recent interview with Xinhua that U.S. Treasury Secretary Timothy Geithner at a congressional hearing warned people in the financial and business communities of "a currency war", which he defined as "competitive devaluation".

But the treasury secretary did not realize, "or at least did not acknowledge," that the United States was doing what it criticized others for doing when it pressured China to revalue its currency. Revaluing the Chinese yuan equalled devaluing the U.S. dollar, "and so, my point is simply that we are engaging in the same practice, too," Harding said.

Meanwhile, Harding downplayed the threat of trade wars as a result of economic disputes among nations. Trade wars were far more difficult in today's world because the World Trade Organization (WTO) made it difficult for countries to impose tariffs or non-tariff barriers to protect their industries, he said.

However, as there were no WTO equivalents to govern investment or currency policies, "I think people are right in saying" that economic wars in the 21st century, if there would be any economic wars, would be currency wars, he said.

The U.S. was pushing China to appreciate its currency mainly because of pressure from the business sector to promote U.S. exports against the backdrop of continued recession in the country, Harding said.

There were basically three ways to stimulate the economy: by increasing government spending, by increasing domestic consumption or by promoting exports, he said.

In the U.S. case, "the government cannot buy anymore because of the level of the fiscal debt, and consumers cannot buy anymore, or at least the increase in consumption will be lower than before," and, as U.S. President Barack Obama said, the "way out" is to increase exports, Harding said.

Changing the value of the dollar might be the quickest way to increase exports, but it would not change the U.S. trade imbalance. The main problem of the U.S. economy was over-consumption, he said.
 
The U.S. House of Representatives recently approved a tax bill targeting China over its currency policies, but Harding said there was a fairly low possibility that the bill would become law.

The bill had to go to the Senate for approval and, even if the Senate adopted it, unless it's exactly the same as the House bill, it would be sent back to the House for reconsideration, Harding said.

U.S. lawmakers were running out of time to get the bill passed because this congress was to end soon and every piece of legislation died when congress went out of session. When a new congress came into session in January next year, they would start from the beginning, Harding said.

Even if the bill became law, Harding said, it would have limited impact because it simply instructed the U.S. Commerce Department to take into account the devaluation of currency in deciding on anti-dumping cases.

Harding accepted Xinhua's interview on the sideline of a luncheon meeting with Houston business leaders sponsored by the Asia Society Texas Center.

In a keynote speech on U.S.-China relations delivered at the luncheon, Harding, former Deputy National Security Adviser to the Clinton Administration, used the word "resilient" to describe the current U.S.-China relationship, instead of "fragile" he used in his 1992 book "A Fragile Relationship: the United States and China since 1972".

Common interests between the two countries, including mutual prosperity, anti-terrorism, energy security and climate change, had brought the two together, but because of the limits in their interests and differences in approaching issues of common interests, the relations sometimes could not run smoothly, he said.

The China specialist also used "frenemies", which meant both friends and rivals, to define the complex Sino-U.S. relations.

Elaborating on why he thinks the U.S.-China ties now are "resilient" rather than "fragile", Harding said "resilient" meant that, despite ups and downs, the relations would not break up because they were too valuable for both countries.

Source: Xinhua
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US politicians bash China for gains in elections

WASHINGTON - With crucial midterm elections three weeks away, US politicians at Capitol Hill have suddenly found a common undertaking: China bashing.

For some time, Democrats and Republicans alike have chosen to fire salvos on the Asian country to prove their loyalty to their own country. 

In their eyes, China has suddenly become responsible for almost every economic problem their country is facing, particularly job losses.

The New York Times observed that at least 29 candidates have suggested in their campaign ads that their opponents have been sympathetic to China.

The Wall Street Journal said the National Republican Congressional Committee is up with 10 new ads linking embattled House Democrats to China.

In their recent campaign ads some Democrats accused their Republican opponents of crafting policies that allowed American companies to outsource jobs to China.

The Republicans, in return, blame Democrats for piling up deficits and borrowing too much from China, or even blame them for supporting a bill that allegedly sends wind turbine jobs to China.

The blame game is viewed by many as a campaign tactic to get votes, using China as a scapegoat.

"In an election, it is always useful to accuse an opponent of being disloyal to his nation. Since some Americans believe that China is more powerful than the United States now, they may feel angry or fearful about this. Thus, it becomes very useful to link an opponent with China," Henry Hail, a doctoral candidate majored in social science, told Xinhua.

"In general, I think that many Americans are not confident about the direction the United States is going, so they are more likely to feel insecure and in competition with other nations. Thus, we see more plays to nationalism in this election," he explained.

Kenneth Lieberthal, director of the John L. Thornton China Center at Brookings Institution, also admitted that this is largely a campaign strategy.

"Politicians trying to get votes do not tell people they must make sacrifices or that times will be difficult. They rather seek to blame their opponents for the problems people confront. So China fits into that strategy," Lieberthal said.

However, most of the ordinary American people, let alone experts, do not believe that China is the main cause of the economic distress in the United States right now.

"The long-term lethargic growth pattern that the United States is in right now is mainly due to its own faults, such as the belief in 'market fundamentalism', lax regulation, too low interest rates and the proliferation of extremely dangerous financial instruments," said Christopher McNally, a China expert with the East West Center, a US think tank.

"But nobody is good at finding fault with themselves, so China becomes the scapegoat. Blaming China is easier than trying to restructure the US economy for long-term sustainable growth," McNally told Xinhua.

Ruben Musca, a US white collar who lives in the Washington D.C. area, shared his view.

"Basically, they are looking for someone to blame other than themselves, and China is an obvious target. I personally disagree with this completely. As a student of economics, I believe wholeheartedly in free trade and the ability of globalization to advance all economies, since it's not a zero-sum game," he told Xinhua.

Some also expressed doubts on the effectiveness of China bashing in the campaign.

"I agree there is an increase of uses of China as a 'stick' in this election," said Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace.

"Yet I don't see it having a direct effect on the polls so far. That is, the two parties are having a domestic policy dispute, and the essence of that dispute has not been changed by efforts to draw China in," Paal said.

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The Internet and the death of ethics

By  Dennis O'Reilly

Some people see the Internet as a mirror held up to our culture. If it is, the mirror shows us in an unflattering light.

From newsroom staffers caught off guard on camera in a private moment gone viral on YouTube to dorm room trysts streamed live online, people have no shame about the despicable content they post on the Web. Respect and courtesy are quaint, outdated notions to these Internet citizens.

The people charged with protecting us from such abhorrent behavior not only fail to prevent it, they tacitly or explicitly encourage these breaches in morality because it means more page views, more customers, and more money. For example, YouTube's Community Guidelines state that the company works 24 hours a day, seven days a week to find and remove content that violates its ethical standards. Yet the same poor-taste, non-age-restricted videos appear there week after week, month after month.

Unfortunately, it isn't just misguided college kids or mean-spirited news junkies who propagate these crimes against fairness and human kindness. At a company I worked for, I discovered a senior executive had plagiarized about a dozen different Web sites in a report he had written for a client. He had copied the material directly from the sites and pasted it into his document, changing only a word or two here and there. (In a future post, I'll describe how I inadvertently discovered the plagiarism.)

Nowhere in the document had he mentioned that the material was taken from these sites. When I brought this serious breach of ethics to his attention, he replied, "Don't worry about it."

I told him I was worried about it and insisted he cite in the report the origin of the material. Ultimately, links to the pages from which he "borrowed" were inserted into the document, and a paragraph was added to state that much of the text was taken directly from the sites--though the material appeared without quote marks and without the explicit permission of the sites themselves.

The author of the report is a noted and well-respected scientist. I can only assume that the temptation of stealing the material was too great for him to pass up. If such an esteemed, well-regarded individual succumbed to the Internet's siren song of immorality without a second thought, have we lost the battle to preserve ethics in the online world once and for all?

Internet codes of ethics through the years

In January 1989, the Internet Advisory Board issued a memo entitled Ethics and the Internet (RFC 1087) that focused primarily on the need to protect the U.S. government's "fiduciary responsibility to the public to allocate government resources wisely." These guidelines were intended to protect the government's investment in the Internet infrastructure from disruption or lack of access resulting from "irresponsible use."

The five activities proscribed by this code were seeking unauthorized access, disrupting the intended use of the Internet, wasting resources, corrupting data, and compromising the privacy of users. The Computer Ethics Institute has since devised the Ten Commandments of Computer Ethics (PDF), which take a much broader approach.

The Computer Ethics Institute's Ten Commandments of Computer Ethics entreat computer users to treat each other with "consideration and respect." 

(Credit: Computer Ethics Institute)

 

Along with admonitions not to steal computer resources, use computers to steal or to "bear false witness," or use proprietary software without paying for it is a commandment stating that "thou shalt not appropriate other people's intellectual output." I was delighted to see the last of the ten commandments: "Thou shalt always use a computer in ways that ensure consideration and respect for your fellow humans."

If this last commandment were actually enforced, the YouTube video archive would be considerably smaller.

Pleas for netiquette go unheeded
At the dawning of the Web in 1994, Virginia Shea released the Core Rules of Netiquette, which later became a book and Web site. As Ms. Shea points out, the rules describe good online manners and don't address the legal issues entailed in appropriate use of the Internet. However, she states in rule No. 2, "Adhere to the same standards of behavior online that you follow in real life," that any illegal activity is bad netiquette.

If you're charged with educating students about Internet ethics, the University of Illinois offers Scenarios for Teaching Internet Ethics, which cover such topics as employers reading their employees' e-mail without permission, social-network users posting negative comments about people, and even writers copying material from Web sites and pasting it into their own reports without attribution.

Chris MacDonald maintains the EthicsWeb.ca site, which includes a list of Applied Ethics Resources for businesses, media, health care providers, researchers, government agencies, and computer professionals. Unfortunately, many of the links on the site are no longer active. I hope this doesn't indicate a loss of interest on the part of those sites' developers. It certainly can't be for lack of a need for such resources.

The fight for an ethical Internet may be a lost cause, if only because people's moral compasses appear to be irreparably damaged. Several years ago, a person I worked for instructed me and my co-workers to lie to writers about assignment due dates in an attempt to receive the assignments in a more timely manner.

Another former boss put my name on an e-mail he wrote to the columnists who worked for us, because he knew the columnists would be more willing to accept what the message proposed if they thought it came from me rather than from him. In both cases, I refused to comply.

I'm starting to think there are no ethics in business--my own experience does not refute this assertion. It could be that the lack of negative consequences for immoral, unethical behavior is perceived as tacit approval of such activities. In this regard, I believe the bard may have had it wrong: conscience definitely does not make cowards of us all.

 

Dennis O'Reilly has covered PCs and other technologies in print and online since 1985. Along with more than a decade as editor for Ziff-Davis's Computer Select, Dennis edited PC World's award-winning Here's How section for more than seven years. He is a member of the CNET blog Network, and is not an employee of CNET.

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