What Morons Where?

In a followup to his post on the Bush administration's new seriousness, Dan Drezner appears to contrast the Bush administration's approach with that of "trade morons like Senator Schumer." New York's senior Senator, you'll recall, wants to slap a "27.5 per cent tariff on all Chinese imports if China does not revalue in the next six months." I'll heartily agree that this is moronic, but I think that any standard under which this is a bad idea, the Bush administration's approach is equally moronic. One big virtue of the Schumer Plan is that you could see it working. A 27.5 percent tariff really might get China to devalue its currency. One big problem with the Schumer Plan is that if China did devalue its currency, the results would like be catastrophic for the United States. But. Insofar as that's what's wrong with the Schumer Plan, the Bush Plan is no better.

What I think's gotten Dan bothered about the Schumer Plan is that it involves a big tarriff and tarriffs are a no-no among the great and the good. And I agree. But by whatever mercantilist logic trying to force China to devalue its currency is a good idea, imposing tarriffs if they don't devalue is an equally good idea. The complaint about the Chinese currency, after all, is that it makes Chinese goods too cheap. If revaluing the Yuan upwards is a good idea, that must be because it would be a good idea to make Chinese goods more expensive. If that's a good idea, then it's an idea that could be easily implemented by slapping a special 27.5 percent tax on Chinese goods. Which is what Schumer is proposing. Now I think this isn't a good idea, but if it isn't a good idea then it's not a good idea to seek revaluation either. Thus the Bush Plan is equally moronic. But. The Bush Plan has the virtue of being exceedingly unlikely to work. If the Bushies are smart, this is the plan -- head off political pressure for bad China policy by implementing equally bad, but almost certain to fail, China policy. If that's right, though, the danger is that trying this instead of confronting the Seate directly starts a bipartisan bidding war to adopt the dumbest possible China policy.