Ian Fletcher: Obama's Dumb Criticism of Romney on China Currency

Mitt Romney, as I've noted, has been heating up the issue of Obama's failure to stop China's currency manipulation.

This currency manipulation is a big distorter of our trade with China, and therefore a big driver of America's trade deficit, which makes it a big driver of job loss and deindustrialization.

Romney is promising to do something about this problem, though, as I've written, it's not 100 percent clear whether he intends to keep his promises on this issue or not.

He's running an ad attacking the administration.

Which is hitting back with an ad of its own, below, calling Romney a phony on the issue because, in his days at Bain Capital, companies his firm controlled were involved in outsourcing American jobs:

This is, frankly, a dumb criticism.

If America's laws and policy environment are set up so that it is legal to, for example, make furniture in cheap-labor nations overseas and import it to the U.S., then companies in this industry either have to match the cost of the importers or go broke.

Which usually, in an industry where labor is the main cost of production susceptible to change, means moving production offshore themselves.

There may be limited exceptions for special niche products or goods that are beyond the industrial sophistication of such nations, but other than that, individual companies really don't have the option of defying the overall economic environment.

This is not an abstraction. I've worked in industries, like the garment trade, where foreign labor costs set the industry's pricing structure. We may not have liked it, and we might have preferred a different U.S. government policy that would have enabled us to afford to employ American labor and still make a profit. But we were stuck.

Any one-firm heroics on our part would just have resulted in our not being there anymore.

So when Bain Capital was investing in industries open to competition from low-wage nations, they didn't have a whole lot of choice about offshoring. Some, maybe, but not a lot.

Therefore, I don't think Mitt Romney is a "hypocrite" to have rationally responded, as a businessman, to the policy environment of 10 years ago and want, today, to change that environment.

Whether he intends to keep his promises is still an open question, but I don't think anything he's done as a businessman proves, per se, that he doesn't.

Some issues in our economy simply cannot be meaningfully responded to at the level of individual people or individual companies. They are systemic, macro-scale issues where our government is the only entity that can provide a solution.

There are legitimate criticisms of Bain Capital to be made. This isn't one of them.