If Mitt Romney is worrying, Paul Ryan is literally scary

Even with a hurricane blowing in from the Gulf of Mexico, the Republican convention in Tampa, Florida looks a lot more fun than any party congress the Chinese communists are ever likely to hold.

Some of the political ideas being expounded from the stage, however, are just as wrong-headed.

First there's presidential candidate Mitt Romney's pledge to "designate China a currency manipulator and impose countervailing duties" on US imports from China.

Romney says China deliberately undervalues its currency to steal an unfair advantage in its trade with America.

At first it looks like he has a point. Over the 12 months to June, the US imported US$414 billion worth of stuff from China, while China only bought US$107 billion of US goods and services.

That imbalance left the US sitting on a record trade deficit with China of US$307 billion.

But the headline deficit is misleading. Much of what China exports to America is made from high-value components manufactured elsewhere and only assembled in Chinese factories.

The domestic value-added content of Chinese exports is low. In contrast, the domestic value-added of US exports to China is high.

Attempting to calculate the true value-added bilateral trade balance is tricky, but the World Trade Organisation reckons the headline number exaggerates the US deficit by almost 75 per cent.

Other researchers go further.

Basing his calculations on methodology developed by the Federal Reserve Bank of San Francisco, Mark Perry, a professor of economics and finance at the University of Michigan, estimates that instead of running a US$133 billion trade deficit with China in the first six months of last year as the official figures show, the US actually recorded a US$32 billion value-added surplus.

In other words, it is the US which enjoys the trading advantage. So if Romney slaps punitive duties on Chinese imports, he will be shooting the US economy in the foot.

Hopefully, Romney is simply talking tough on China to win votes, with no intention of ever actually backing his words.

If Romney's views are potentially worrying, vice-presidential candidate Paul Ryan's are just plain scary.

Ryan proclaims himself a devotee of Russian-American author Ayn Rand. Her books, he says, are "required reading" for his campaign staff.

This is frightening. I was once given a copy of Ayn Rand's The Fountainhead by a former girlfriend. Unaware it was her favourite book, I got no further than halfway down the first page before bursting into great gusts of laughter at the first of Rand's many non-performing similes.

Describing her hero (poised naked on a cliff-top, if you will) she writes: "His face was like a law of nature."

"Which one?" I hooted. "The Law of Gravity?"

Alas, the standard of the writing did not improve. Rand's prose was turgid, her plot feeble, her ideas facile, and to call her characters one dimensional would be an insult to thickness.

Worst of all were Rand's notions of moral philosophy. At one point her hero breaks into the house of another character and rapes her. Rand thoroughly approves. Her message is that her hero is exceptional - a man apart - and entitled to do whatever he wants. The rules that govern ordinary people do not apply to him.

Rand is often described as a proponent of rugged individualism. But her outright rejection of the principles of equality and fraternity espoused by the French Revolution place her beliefs uncomfortably close to Benito Mussolini's definition of Fascism.

Perhaps not surprisingly, the relationship with my former girlfriend didn't prosper. But a few years later I attempted to read Rand's Atlas Shrugged, encouraged by assurances that it was a far better book than The Fountainhead.

It wasn't. It was worse. Reading it was like being forced to wade through 1,000 pages of The Wall Street Journal's editorial page, rewritten for people with a reading age of seven and an IQ of 60.

In short, these are books by someone who can't write, for people who don't read, expounding ideas for people who prefer not to think.

The last major public figure to profess an admiration for Ayn Rand was Alan Greenspan, who as chairman of the Federal Reserve sat back and allowed two enormous asset bubbles to inflate, first in US equities and then in the housing market. It's hardly a ringing endorsement.

But although Ryan likes to bang the drum for fiscal conservatism, like Romney he may not be quite the fire-breather he wants to appear.

As a congressman, Ryan voted in favour of both the US$700 billion TARP bank rescue plan and the US government's bailout of General Motors; hardly the acts of a true fiscal fundamentalist.

So perhaps Ryan's declared devotion to the works of Ayn rand is just more campaign posturing intended to appeal to her tea party admirers.

Let's hope so.

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