Greg Mankiw on Protectionism and the Yuan

From the NYT:

Just before his confirmation as Treasury secretary, Timothy F. Geithner turned up the heat on the Chinese regarding the dollar-yuan exchange rate. President Obama, he said, “believes that China is manipulating its currency. Countries like China cannot continue to get a free pass for undermining fair-trade principles.”

Like many economists, I cringe whenever I hear the term “fair trade.” It is not that I am against fairness — who is? — but the word “fair” is so amorphous in this context as to defy definition. Most often, the slogan “fair trade” is little more than a rallying cry for protectionism.

[...] The loss to American producers comes with a gain to the many millions of American consumers who prefer to pay less for the goods they buy.

[...] when the Treasury secretary complains about the undervalued yuan, his message to the Chinese boils down to this: Stop lending us money.

Mankiw makes the obvious point that Geithner's comments are wholly absurd as the US works to 'achieve' the biggest deficit in the world. Read the whole thing.