On Fri, 21 Nov 2003 06:29:11 GMT, "Ed Huntress" wrote:
I've got to cut this long-winded discussion short, which risks screwing it
up completely, but here's the most important final point. Since the 1970's,
there has been no way for the US, or any other developed economy, to wind up
with inflated values because its workers or industries are "spoiled". Since
currencies were cut free of gold and silver standards, and since they were
allowed to float free on world markets, it has been those currency markets
that determine relative value. If the US economy, overall, was puffed-up by
wishful thinking or greed, the currency markets would cut it down to size in
about 15 minutes. So your set of relative values, which all of us share to
some degree deep inside, and which we might call the "high-school civics
class system of valuation" g, is utterly shot to pieces on the world
currencies markets. They don't care what your idea of value is. They only
care what the market thinks value is. And they think that our wages,
relative to our production, are just about right. We won't know what they
think about China unless and until China cuts its currency loose to float
and to be traded freely on world markets.

Well, economists are saying that the yuan is about 30% overvalued.
So if it were allowed to float free, a Chinese machinist would have to
be paid the equivalent of $1.30 an hour instead of $1.00 an hour to
make the same amount he is now making. That's still far below the
$15 an hour a US machinist demands.

Gary