Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars -- fight to win.)
Everybody loses a trade war. And the ensuing impoverishment and desperation can trigger a shooting war.
In 1930, the Republican controlled House of Rep, in an effort to alleviate the effects of the… Anyone? Anyone?… the Great Depression, passed the…Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act which, anyone? anyone? Raised or lowered?… Raised tariffs, in an effort to collect more revenue for the federal gov’t. Did it work? Anyone? Anyone know the effects? It did not work, and the US sank deeper into the Great Depression.
Further details are available at http://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act
The conventional argument goes like this: A trade war causes prices to rise because of the increased tariffs. That price rise flows thoughout the economy as the increased costs are passed on.
The increased cost of living forces a great proportion of household wealth to be non-discretionary spending, which in turn causes the economy to contract.
That contraction in turn causes companies to stop hiring, which increases unemployment.
The increased unemployment reduces demand, and the cycle continues.
I'm not for tariffs actually, but neither do I think 'common knowledge', especially if it's 80yrs old, has earned any right to go unexamined. Globalization and free trade are not without their problems, especially not if Grove is correct (I think he is) in asserting they've cannibalized a significant portion of our economy that both creates jobs and enables innovation.
Looking like a duck and quacking like a duck doesn't depend on your silly definition of "war." What China is effectively doing is waging war on the US. Whether we wake up to this fact or not will determine whether the US becomes a nation of the rich in fortified castles sitting amongst the poor and desperate, or whether we return to the American Dream.
From the trade, we in the USA get cheaper products and low-cost loans/investment.
We then enact counter-productive feel-good policies that make us less competitive:
- employment-depressing labor rules (ranging from minimum wages to complex and expensive mandates)
- corporate welfare (including bailouts)
- subsidies for politically-popular activities (like home ownership and acquisition of often-superfluous academic credentials)
These choices are not the fault of the Chinese. At worst, because our trade with the Chinese makes us wealthier, we can then afford to make bigger mistakes elsewhere before correcting course. We spend the surpluses from trade on our anti-competitive policy luxuries.
"Winning" won't require getting tough on the Chinese, but getting tough on ourselves.
Basically we traded owning our own production for renting production from overseas. Renting often has lower immediate costs but higher long-term costs (and less freedom).
The market for American goods increases as the Chinese middle class grows. Chinese consumers don't prefer cheap knockoffs, they buy them because they can't afford the most expensive genuine article. Look at the Chinese market for luxury cars as an example of what will happen with increasing speed: http://magazine.wsj.com/features/the-state-of-luxury/cars/
Granted, US car makers aren't in great shape right now, but other industries can take advantage of the Chinese appetite for luxury consumer goods (electronics, cosmetics etc). The elecronics may be manufactured in China, but the profit margins are mainly with the US companies who designed and developed them.
Savvy US companies can sell their goods in increasing volume due to the larger overall global market. Many US multinationals make large chunks of their profit overseas, yet you don't hear people saying the US should enter into trade wars with South America, Europe or Australia.