World Changing Response 2 Pete

Pete Hall

World Changing Response #2

Understanding Trade Pg. 39

An interesting article, and one which I actually learned! Several things! I did not know that other countries ‘peg’ their own currencies off of the U.S. Dollar, and it was interesting to see how the Chinese yuan being based off of the Dollar, the Yen and the Euro kept their export prices low in our countries. I always knew that China had extremely low labor costs and turned a blind eye to environmental problems caused by their factories, but always wondered why some other country who cared even less about their environment couldn’t try to undercut the Chinese. Well, now I know. No matter what, Chinese imports stay cheap in the States because of this pegging of currencies. It’s an interesting phenomenon.

Also, interesting was that the U.S. is the worlds leading exporter of cotton. Now why the heck would a world power be the leading exporter of cotton? Now, I still don’t quite see the logic, but the U.S. Government (thus the U.S. Taxpayers and the Chinese government loans) pays over 4 billion in subsidies a year to U.S. cotton farmers. Now what I really want to know is why do we do this?