Given the pace with which the Chinese economy has been growing, it should come as no surprise that Chinese workers are now seeing substantial wage increases while the multinationals who’ve learned to love cheap Chinese labor are fretting about its demise.

It also serves to highlight the fact that the PRC has ample reasons of self-interest to give in to American demands and stop undervaluing its currency. The idea of using currency manipulation to give your producers a cost advantage can work, but as a strategy, it has a natural time limit. Artificially low Chinese currency has created artificially high demand for Chinese-made goods which has created artificially high demand for Chinese manufacturing labor which is creating pressure for wages and eroding China’s cost advantage. At the end of the day, they wind up in the same place they would have been with a floating currency — higher wages and reduced cost advantage—but a boatload of extra geopolitical animosity.

By Matthew Cameron

Last week, House Transportation Committee Chairman John Mica (R-FL) announced that he will initiate legislation within the next two weeks that would put part of Amtrak on the auctioning block for private investors to claim. The motivation behind this proposal is to save taxpayers money by getting Amtrak’s red ink off of the government’s books. Mica’s idea is hardly new, and details about the effects of privatization can be found in a 1998 Federal Railroad Administration report (pdf) that was produced at the request of a previous Republican Congress. The report’s conclusions reveal something important that is rarely acknowledged about plans such as Mica’s: They do not so much call for Amtrak privatization as they do for Amtrak elimination.

Amtrak’s fundamental mission is to “operate a national rail passenger transportation system which ties together existing and emergent regional rail passenger service and other intermodal passenger service,” according to the 1971 Rail Passenger Service Act. The rationale behind this objective is that intercity rail transit offers profound social benefits to the American public. It reduces air pollution and carbon emissions; relieves highway congestion; and potentially cuts down on suburban dwellers’ work commutes, thus increasing the amount of time they can spend engaged in more worthwhile activities such as exercising or enjoying the company of their families.

Yet Mica’s plan effectively would eliminate the national system of rail transit that presently exists. His plan involves soliciting bids from private companies to purchase Amtrak’s infrastructure in the Northeast corridor and operate intercity passenger rail service within the region. As for the rest of the country, one of two things would happen. If operations were put up to bid as in the Northeast, then the private companies who assumed control likely would cut back on schedule and destination choices in an attempt to turn a profit. In other areas, rail might cease entirely due to a lack of bidders. For travelers, particularly those moving across multiple regions, this would result in “inconsistent reservation services, uncoordinated service times, and unnecessary gaps in service,” according to the FRA report. Alternatively, the government could maintain control of passenger rail operations outside the Northeast corridor. That would require the continuation of federal rail subsidies, which is exactly what Republicans are trying to avoid.

Of course, Mica has not been bold enough to talk about what would happen to transit in the rest of the country, saying merely, “I believe that we have great potential in the Northeast corridor.” But if Mica wants to invest in improved service on the profitable Northeast Corridor by cutting subsidies to the rest of the system, there are simpler and more transparent ways to achieve that than selling it.