For all of those people who criticize empire and for those out there who correctly worry about the unequal distribution of economic power, come close and absorb another truth: the obsession around keeping the dollar high is not healthy. In fact, a lower dollar would be better for most of us–and for the environment…

I’ve written about this for several years (here is one example). I raise this again because of a piece I caught in The Wall Street Journal:

The U.S. dollar’s downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency.

With no relief in sight for the dollar on any of those fronts, the downward pressure on the dollar is widely expected to continue.

The dollar fell nearly 1% against a broad basket of currencies this week, following a drop of similar size last week. The ICE U.S. Dollar Index closed at its lowest level since August 2008, before the financial crisis intensified.

   When the dollar is high, then, whatever is made here is more expensive abroad. Things made abroad–like in China–are cheaper to export to the U.S. when the dollar is high. In my view, there are only two constituencies that benefit from a high dollar. First, Wal-Mart and its corporate siblings who do business in low-wage companies so they can take advantage of cheap labor to make things that then get shipped to the U.S.

   Second, American tourists. As an avid traveler myself, I am quite sympathetic to the American people who want to travel to other countries who have to pay higher prices for hotels, food and the like. A lower dollar means you pay higher prices when you travel abroad.

   But, we need to ask the question whether the high dollar is a good thing for the broader population.

   For example, the high dollar basically subsidizes Japanese imported cars to the tune of as much as $6,000. So, you’d have to wonder: if the dollar was 30 percent lower, what would the car sales look like here?

   Paul Krugman had this to say in October 2009: [more below the fold]

Consider first the current uproar over the declining international value of the dollar.

    The truth is that the falling dollar is good news. For one thing, it’s mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it’s falling again now that the fear is subsiding. And a lower dollar is good for U.S. exporters, helping us make the transition away from huge trade deficits to a more sustainable international position.

    But if you get your opinions from, say, The Wall Street Journal’s editorial page, you’re told that the falling dollar is a terrible thing, a sign that the world is losing faith in America (and especially, of course, in President Obama). Something, you believe, must be done to stop the dollar’s slide. And in practice the dollar’s decline has become a stick with which conservative members of Congress beat the Federal Reserve, pressuring the Fed to scale back its efforts to support the economy. [emphasis added]

    Bottom line: The misguided notion that a high-valued dollar is a good thing has to do with it being wrapped up in patriotism–a strong dollar is like a strong military and a strong America. We need to be clear to people–a strong dollar makes America weak in many respects and is not good for most Americans.

   Take the on-going struggle with China over the value of its currency. Sure, if you want to have a diplomatic dust-up every month over China’s artificial support for its currency, be my guest. But, guess what? As I wrote five years ago, we could have, and still can, solve a lot of the currency imbalances between China and the U.S. by letting the dollar decline–except Wal-Mart won’t like that…

    Here’s another aspect: the environment. Without a doubt, if the dollar falls, gasoline will be more expensive–because imported oil will cost more (for the moment, let’s put aside for a moment the oil companies’ price gouging and rampant speculation that pushes oil prices up). And it is a horrible time for gas prices to go up for so many Americans who are out of work.

    But, the longer we try to live with cheap oil, the longer we are not going to get serious about significant vehicle efficiency standards and a concerted drive to move from a carbon-based economy.