Steve H. Hanke
Cato Institute
March 20, 2012
Is the November Presidential elections approach, the United States is looking more like a populist playground, with each passing day. Among other noxious things, China-bashing has become even more fashionable. When it comes to China, the three top Republican contenders for the nomination to challenge President Obama (Mitt Romney, Rick Santorum and Newt Gingrich) have gotten way out in the protectionist, trade-war and currency-war weeds. Ron Paul has avoided that economic brier patch by embracing free trade principles. President Obama is, of course, right in the middle of the brier patch.
To keep the potential Republican challengers at bay, the President is shooting real bullets. Indeed, he recently stepped before the cameras in the White House Rose Garden and announced that the United States was lodging a formal “request for consultation” with China at the World Trade Organization. The issue is China’s control and alleged hoarding of rare earth minerals. Although these so-called consultations (in which the European Union and Japan will join the U.S.) do not constitute a legal case against China, they are a first, important step. Contrary to recent political polls, which suggest that the President’s approval ratings are sagging, the predictions market Intrade (where participants put their own money at risk and the resulting prices are objective indicators of value) scores the President’s chance of victory in November at 60.7%. This is a rather formidable edge and is up from 59.9%, which I reported in my March column. So, the President’s populist, hard-ball moves vis-á-vis China have “worked,” if that’s the right word.
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