Why Can't Johnny Buy Pants?

We have to save the weakening dollar!

That's the message I got all last week when they weren't telling me about Imus or the massacre. The picture you get is the cartoon with the poor miserable American dollar reclining in a hospital bed sucking on a thermometer while worried doctors shake their heads. I've been trying to figure out what all the alarm is about. It's paper! As usual, I have a theory, which begins with a familiar example.

John used to work for American Fool & Die for $70,000 per year. When one dollar bought 50 rupees, that company decided it was stupid to pay John so much. Pradeep could do the same job for 500K rupees = $10,000, annually. Today, the dollar buys about 41 rupees, so Pradeep still costs only $12,000 per year, which continues to be a great deal for American Fool and Die. So they like things the way they are. But if the dollar lost so much value that one dollar could only buy 7 rupees, then they would do well to lay Pradeep off and rehire John.

So the issue is, which horse do you want to root for? What are you after? Do you want John to get his job back or do you want a "strong dollar" so you live cheaply at your chalet on the Riviera? Do you care about the American worker, or do you want an affordable Winter vacation on a Thai beach?

OK, I cheated. I skipped over some important details. Let's say you need clothes and the country you live in hasn't had a clothing industry since Eisenhower was president. If the local currency drops in value by a factor of 7, won't that mean you'll no longer be able to afford Pakistani pants?

Gosh-areeno, it sure would, and that would put a lot of clothing retailers out of business. So someone had better see to it that the defunct domestic clothing industry gets the support it needs to get restarted, and local people get rehired as quickly as possible to make clothing.

Who might that someone be, who could bail us out, and save us from going naked? It would be the same someone who makes sure we have deodorants we need, and iPods we can't live without, and Nikes and Adidas without end. It would be our friendly neighborhood Capitalist.

I can see no reason why an unrestrained local market can't meet the challenge of a dollar pegged at as little as a tenth its current value if the fall was gradual enough. It could even benefit the lowest classes in America by restoring America's industry.

My theory so far hasn't explained where all the hand-wringing is coming from. I'm just now getting to that.

We don't have a local market. There is no friendly neighborhood Capitalist. This country is already owned by foreign investors, who don't care about your stinking money.

The reason there is homelessness in this country is that years ago the government and the American investor class decided that the part of the economy represented by the poorest Americans was expendable. They didn't want the little bit of earnings the poor could bring them. They decided they weren't worth investing in.

Foreign investors can just as easily write off the American middle-classes. The United States has less than 5% of the world's population. So in a global economy, we're no big deal.

The people who pushed world trade on us and who sold our assets to foreign investors are getting scared that we are about to catch on to the long-term harm they've done to us. There's where my theory says the hand-wringing is coming from.

Questions for further discussion.

1. Do you really need clothes? Make $10,000 a month working in your own home, naked!

2. Foreigners are coming here soon on vacations. What languages will you be learning?

3. If capitalism is the answer, what's the question?