As I anticipated, the fear-mongering awakened by the economic resurgence of the Peoples' Republic of China and exacerbated by that country's performance at the Olympics, is spreading. Robert Samuelson's column in yesterday's Washington Post ("The Real China Threat," Washington Post, 08/20/08, A15), while making a number of valid points, ignores the real source of the problem: flaws in the American economy that allow other countries to exploit the badly-structured system to their advantage and to our disadvantage. Terming the situation a "threat" is as much an injustice to the Chinese opportunists as it is an insult to Americans presumably too stupid to take action to correct the flaws in our institutions.
In the mid- to long-term the solution is to implement a Capital Homesteading program in the United States at the earliest possible date. This will quickly wean the U.S. off the wage system and halt the flight of jobs overseas to lower-wage economies by shifting people's primary income source from selling their labor, to owning capital. It will also restore an asset-backed currency and (eventually) eliminate the outstanding federal debt now edging toward the $10 trillion mark.
In the short-term, one possible solution that will buy time during the changeover to an ownership culture from the debilitating and enslaving wage system is to call a new Bretton Woods Conference. While reorganizing the world's central banks for the switch by implementing new regulations designed to facilitate widespread direct ownership of the means of production, the Conference could also explore the possibility of basing the world's currency exchange rates on some new, yet objective standard of value. One possibility that might have the potential to halt "wage arbitrage" (i.e., searching for the lowest wage rates in terms of your own currency) would be to peg the value of each country's currency to that of the hourly subsistence wage rate of the lowest-paid individuals in a particular economy.
What about the gold standard? (Or, more ancient and widespread, the silver standard?) Fine. Define an hour's basic labor in terms of gold or silver — it doesn't make any difference. A fixed price for any two commodities will make straightening out the situation more difficult (bimetallism is a nightmare to regulate), but if people require that kind of security blanket, then so be it. If the currencies of the world become backed by the productive assets that the currency was printed to finance, they will be backed by assets valued in terms of gold or silver, not the actual precious metals.
In any event, it's time to stop spreading fear about China, and get busy repairing and restructuring our own economy in accordance with the principles of binary economics.