Tuesday, June 24, 2008

The Cato Institute on China and "Economic Nationalism"

This is an interesting article by James Dorn, China specialist at the libertarian Cato Institute, also appearing in the Beijing Review today. I am impressed that a Cato researcher would be so cautious about foreign investment in the U.S. - I'm encouraged by that. But predictably, he also rails against the potential for "economic nationalism" and is an apologist for a lot of aggressive economic policy on the part of the Chinese government with respect to exchange rates, labor laws, and exports.

He does make good points; that the real changes China needs to make right now are primarily institutional (i.e. - property rights), and that we should not be afraid of trading with China, and that we should embrace China's entrance into the community of developed nations.

Unfortunately, Dorn belittles concerns about the trade deficit with the PRC and the exchange rate manipulation that's been going on as "economic nationalism". I'm not sure what's wrong with being an "economic nationalist" or even what he means by that exactly, but it's clear that Dorn intends it to be an insult. We can embrace economic openness and the rise of China and still be concerned about our trade deficit with them, and the effect of the trade deficit on the domestic economy.

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