Short-termism as a concept is emerging in my thinking of late, I'm a slave to it myself, thanks to the shareholders. And it's emerging in the national debate (I recommend googling the term). I'm reminded of the idea by the following article. "The U.S., China, and Jobs: It's Not About the Currency (Forbes â Janet Carmosky) The bill to name China as a currency manipulator is not a jobs bill. Itâs a psychological measure whose effects will leave the root cause of the real problem unexamined. At best, itâs the economic equivalent of calling 1-800-ShakeWeights instead of looking in the snack cabinet. In other words, while the debate and possible signing into law of the bill allows the expression of American frustration relative to China, it wonât do anything for our jobs problem. The sanctions that the bill sets the stage for will almost certainly run afoul of WTO rules, so weâll be cheating at our own game. If it passes, China will take it as an assault and fire back, and we will pay in strategic, trade, investment and other arenas. The question is, will we have a shot at creating enough jobs enough to make that all worth it? Not a chance. The idea that job growth in the USA is limited by an artificially low Yuan, or will be aided by a stronger Yuan, rests on simplistic and wrong assumptions. Bad Argument #1: If the Yuan strengthens relative to the Dollar, China will buy more Made in USA goods. Bad assumption: Chinese demand for Made in USA is price-sensitive. Fact contradicting bad assumption: Chinaâs purchases from the United States are mainly big ticket industrial goods. The competition comes from other industrial nations: Germany, Japan, France, Italy, and less developed nations such as Brazil. American suppliers lose business to suppliers from other nations because, compared to the USA, our competitors have a) more attractive export finance programs and b) less bureaucratic and restrictive export licensing regimes. With big ticket and mission critical purchases, buyers go for a reliable supplier that provides preferential terms. The USA can become that supplier by breaking through short term, reactive politicization of economic issues and focusing instead on a long term policy for creating national wealth and growth. Real reason #1 why China sanctions wonât help the USA create jobs: Chinese demand for Made in USA is politically sensitive. In the past 10 years U.S. exports to China have risen 468%, vastly more than USA exports to any other nation. During this era U.S.-China relations expanded, and trade disputes were handled through established channels of policy (the ITA, the WTO) not political organizations (ex. Congress). During this time the Yuan appreciated slowly against the dollar â about 6% â according to best negotiated and collective wisdom of G-20, G-2, and Chinaâs own monetary authorities. They gave us 468% export growth. Political forcing of the Yuan higher is not going to increase export growth, it will give rise to Chinese sanctions against USA imports. Germany and Japan win! America loses. Bad Argument 2: If the Yuan strengthens relative to the Dollar, Americans will buy fewer Made in China products. Bad assumption: The money that Americans spend on Made in China goods is too high, and will shift to Made in USA goods when the Yuan appreciates. Fact contradicting bad assumption: Of the average $18,000 per capita (2010) that comprises American consumption, about $340 is for products Made in China. That total is made up largely of apparel, footwear, and knock-down furniture. To the extent that manufacture of these products is sensitive to costs of wages, it has already begun moving to places like Bangladesh and Cambodia. The argument would make sense if the USA could be described in these terms: a) Ready supply of unemployed but semi-skilled labor (say, footwear assemblers), and prevailing wage expectations in range with the cost structure of the industry; b) Dormant production lines (for shoes) that could be re-started or quickly re-established; c) American investors and banks that would support (shoe) factories here. That is, finance unglamorous things (huge work in progress inventories of leather); accept a net margin of 3-5% (which is pretty much where shoe factories end up, they just do huge volume) and decide that rather than chasing the dream of stratospheric Silicon-Valley-level Return on Investment, theyâll take 10% over three years, which is what lenders in the footwear industry take now. d) Consumers who are both willing and able to pay more (for shoes) simply because they are Made in USA. Real reason #2 why China sanctions wonât help create USA jobs: Investors, banks, and workers in the USA, let alone the factory landscape, are not set up to recover manufacturing jobs from the sectors now dominated by Made in China. The only way the USA can create national wealth and jobs is by, as above, breaking through short term, reactive politicization of economic issues and focus instead on formulating a long term policy for creating national wealth and growth. Bad argument #3: Chinaâs predatory currency rate has cost America jobs. Bad assumption: America is a passive participant in its own fate; if we lose itâs not because weâre not a good team, itâs because the other guys are cheating. Fact contradicting bad assumption: In this era and previous eras, every nation that succeeds in creating national wealth in strategic arenas does so by investing specifically and consistently in its national capacity and industrial base. The United States has not been doing this. China has. The United States has left investment in the hands of a) the private sector, beholden to stockholders who tend to demand quarter on quarter improvement in financial performance. Major long term industrial initiatives call for patient stewardship over years if not decades; b) elected officials who spend their resources on the short-term goal of getting re-elected. Thereâs no upside to focusing on long term issues unless the voters understand and reward it. Real reason #3 why China sanctions wonât help create USA jobs: Our political system allows open debate and discourse toward a climate of critical thinking about serious issues. First among them, declining national competitiveness. Weâre losing competitiveness not only to China, but to every nation that has a plan. Why donât we have a plan? Because our electoral process and corporate reporting focus on pleasing us, the American voters, customers, citizens and investors. We have bought into the idea that the only time frame that matters is the short term. The jobs crisis? The root cause isnât remotely related to currency valuations. Itâs a lot deeper than that. Itâs about the attention span of the American voter. China is single party rule by the elites. Our political systems calls for an educated voter base â one with tolerance for complexity, stamina in understanding issues, ability to focus on the real game instead of the posturing of the Shake Weight salesmen. We can âhold China to accountâ all we want; letâs just be sure we hold ourselves and â especially since our systems were specifically designed for this purpose â our private and public sector leaders to account as well."