Ironically, since the dollar has been floating freely, the dollar-linked yuan has also floated compared to a market basket of currencies. Between 1995 and 2001 the yuan-dollar appreciated by nearly 50 percent and in recent years has fallen by about 30 percent. Both the U.S. and China adjusted internally to deflation and inflation. But the common link between the two has given the yuan global financial confidence while at the same time giving the U.S. enormous leverage over the Chinese economy. What’s wrong with that? We buy their goods and they invest in our country through the purchase of Treasury bonds and more recently through direct investment in large U.S-based corporations (like Maytag and Unocal).

Unlike the sale of defense-related technologies there’s no national security problem here. American firms like Anheuser-Busch, the Bank of America, and numerous tech firms are all investing in China. This is free and open trade for the mutual benefit of both nations. Trade and monetary cooperation also provide the basis for national security cooperation, especially in the areas of stopping nuclear proliferation in North Korea and protecting a free Taiwan.

Clearly China is not perfect, though it has reduced government ownership of the economy from 90 percent twenty years ago to about 30 percent today, according to Laffer. Yes, the communist government in Beijing prevents free elections and free speech, continues to persecute religious groups, and has a record of pirating music and software as well as other intellectual property. But according to a recent study by the Council on Foreign Relations, China has also changed 2,600 legal statutes to comply with World Trade Organization rules.

The freedom to trade and the freedom to choose are central to the economic freedom that’s necessary for nations to grow and prosper. Centuries of economic history confirm this, and yet some people seem to want to repeat the worst mistakes of the past. Open trade and currency stability enormously benefit both the U.S. and China and may well lead to improved international relations. Why do senators Smoot Schumer and Hawley Graham want to disrupt the 21st century march to peace and prosperity?

Cutting off your nose to spite your face makes no sense for individuals, nor for nations. Hasn’t history taught us that free trade is part of the solution -- not the problem?