In addition to the environmental reasons, there are the realpolitik reasons. No one else on the international stage is a threat to the U.S. geopolitically except for China, and yet we - you and I, American consumers - keep transferring our national wealth there.
It's different than when we buy gas and transfer wealth to oil producing states in the Middle East, or to Nigeria, or to Hugo Chavez's Venezuela. Each of those is problematic, for different reasons, but each is manageable from a national security standpoint.
The Arab states may be odious and our reliance on their natural resources may be morally troubling - unless you think that women shouldn't drive, have the ability to divorce abusive husbands or own property; or think that Israel should be wiped off the map; or think that private sex acts should land one in prison; or think any one of a number of things anathema to liberal Westerners - but the Arab states and their shadowy extra-governmental players are not a threat to Western Democracy or to the United State's standing in the world. They can harry us, and scare us, and cause our more cowardly leaders like former President Bush to cravenly sacrifice the values of centuries, but can you really imagine a multi-polar world in which Arab states are true rivals? Saudi Arabia as a threat to the United State's position as a global leader? It's implausible.
Nigeria cannot feed and educate its own people, and is a state riven by deep political, religious and ethnic divisions. Just this week there was bloody evidence that it is coming apart at the seams via yet another paroxysm of sectarian violence -it is not a threat to anyone but itself.
Venezuela has been somewhat successful in positioning itself as the head of Latin America's drift to the left, but even a coalition of very strong, united Latin American nations - which could perhaps be a counter balance to the United States - would take years to develop, and would not be led by Venezuela, it would be led by Brazil or Argentina. (And since I began this post the drift to the left seems to be slowing - Chile chose a rightist billionaire to succeed the center-left Ms. Bachelet.)
Despite all the billions and billions in national wealth that we are transferring out of this country for imported oil (and in 2005, we imported nearly 14 billion barrels a day at an average of $50/bbl, which is a metric crap-ton), squandering our national treasure for oil will have significant short- and medium-term implications, and it certainly has implications in terms of the environment and the capacity to fund domestic priorities, but it seems unlikely to have long term real-politik implications for the U.S. on the world stage.
When you think about China, can you imagine a realistic counterweight to the United States' role in the world? Do you see a rival? Is a bipolar world with those aligned with China and those aligned with the U.S. that difficult to conceive?
It's hard to believe how quickly this came about. My Aunt and Uncle visited China on some sort of farm exchange in the early 1980's, before visiting China was really done. They came back with pictures and impressions of poverty and crowds and a nation that was in no way in a position to challenge the U.S. (Everyone in the 80's was talking about Japan - remember? High schools couldn't offer Japanese classes quickly enough, and there was a general fear that a nation of 125 million people and no natural resources was going to buy up the United States.)
The trade deficit is the difference between what we sell and what we buy from another nation. According to the Census Bureau (source for all trade deficit figures), in 1989 our trade deficit with China was $6.234 billion. Sound like a lot? In 1999 it had increased to $68.68 billion. Ten times the amount, in ten years. In 2008, it was $71 billion - for one quarter of the year - for the whole year, it was $268 billion ($69.7 billion dollars in exports, $337 billion in imports).
We run a trade deficit with nearly everyone - by way of comparison, for 2008 we also had a trade deficit with Canada ($78 billion); Mexico ($64 billion); even Papua New Guinea ($35 million). (Nearly, but not everyone - Singapore buys nearly $12 billion more from us in bilateral trade. Makes me like Singapore even more.) One difference here is the size of the deficit in relation to the entire exchange. With Canada, our largest trading partner by far, our trade deficit is only 13% of the whole amount of goods exchanged. We sell them $261 billion worth of stuff, and we buy $340 billion worth of stuff. Our trade deficit is big, and growing bigger, but $80 billion on a total exchange of $600 billion - it's still pretty much a two way street. With China, it's a one way street: the trade deficit represents 60% of the total amount exchanged. For every buck of stuff they buy from us, we buy nearly FIVE bucks worth of stuff from them.
"So what?" you may be asking. "So what's the big deal about running a trade deficit?" With Canada, when it's relatively small (compared to the total of the bilateral trade amounts) - there is no big deal. It's a good deal, many would say - the markets are working, and we are buying stuff from them that they produce more cheaply or better, like cars, car parts, paper goods, electricity, aluminum, maple syrup; they buy from us stuff that we make more cheaply or better like cars (number one on both lists), car parts, plastics, computers. Consumers in both countries come out ahead - we save money, we stimulate each other's economy more or less equally, and no one, really, on either side of the border, is going to worry about the other foisting values that we don't share onto the other, or starting a war, or blowing each other's shit up. Win-win.
With China? Well, a couple of things. First, it's not a fair game. China manipulates their currency. The yuan (a/k/a "renminbi" or "RMB") is not traded on international currency markets the way that the Euro, yen, baht, pound, and other currencies are. This allows the Chinese government to keep it undervalued, meaning:
... China’s currency policy has made the RMB significantly undervalued vis-à-vis the U.S. dollar (with estimates ranging from 15% to 40%) and this makes Chinese exports to the United States cheaper, and U.S. exports to China more expensive, than they would be if exchange rates were determined by market forces.
from: China-U.S. Trade Issues by Wayne M. Morrison; Specialist in Asian Trade and Finance (Congressional Research Service, 23 Jun 2009
The result is that some sectors of the US economy are not competing on a level playing field with Chinese manufacturers - that there is, in effect, a 15% to 40% tariff on our own goods made in the US. Try to buy a sock made in the U.S., for example. No, go ahead... I'll wait. I tried, this week, with no luck. Four stores. I finally bought some made in El Salvador (2008 bilateral trade surplus of $234 million, by the way). Try to buy steel made in this country. Or furniture that's not Amish. Or plastics. Or shoes.
So we've lost whole manufacturing sectors because we didn't want to pay more for goods that have been dumped on our market by Chinese manufacturers getting a 15 to 40% discount because the yuan is artificially low. And drive through a textile town in North Carolina or Tennessee or Pennsylvania, and you can see the results of our decision to save a buck.
We lose manufacturing jobs, we lose towns, we lose families. And China gains jobs, and towns, and a surplus. And what does China - one party ruling, free speech fearing, dissident locking, Tibet cleansing, Taiwan scaring, missile firing, jet downing China - do with its surplus? It buys US debt.
So, we buy socks made in China that, because of currency manipulation, are 15-40% cheaper when they are imported to your local Target store. A sock manufacturer in Schuylkill County, PA, can't sell as many socks because the market is flooded with cheap Chinese goods (and NOT because American worker's wages are too high or because of unions, but because we've allowed a trading partner to have a huge built-in competitive advantage over domestically produced stuff. This isn't the market's fictitious "invisible hand" - this is goods dumping). Factory workers are laid off. The U.S. government needs to pay unemployment insurance to the laid off factory workers. To pay for that in a time of economic contraction, we need to go into deficit spending, selling bonds. China, flush with dollars, buys our bonds. They hold our debt. This isn't some benign Fowler State Bank who has no particular agenda with how you spend your money - this is a foreign power.
Rather than hold dollars (which earn no interest), China has sought to invest its dollars in U.S. assets, primarily U.S. government debt securities... [S]ome policymakers have expressed concern that growing Chinese holdings of U.S. debt may increase its leverage over the United States on a number of economic and non-economic issues, and some contend that China’s currency policy was a contributing factor to the current global economic crisis.
The salient point? "China may increase its leverage over the United States on a number of economic and non-economic issues..."
Our everyday decisions in the marketplace - our economic decisions about what we buy and where it's made - result in lost sovereignty, and what's more, lost sovereignty to the nation that looms as a most likely rival and one that doesn't share our values.
That's a steep price to pay for cheap consumer goods. We can't afford it.