China Demands a Revaluation of the 'Inch'

Turnabout

In surprise move, China demands U.S. revalue inch

Fixed Exchange Rate between Inch and Millimeter Called Relic

'It’s not fair that Americans are taller than we are.'

By FRANKLIN RAUD

Staff Reporter of THE WALL STREET CHRONICLE

January 30, 2008; Page A1

BEIJING, China. – Having slowly and grudgingly acceded to American demands that it revalue its currency, the yuan, China today called on the U.S. government to revalue the inch.

“Fixed exchange rates are obsolete,” declared Zhou en-Wang, a spokesman for China’s Central Bank. “We have revalued the yuan, which was fixed against the dollar for only eight years. The American inch has been fixed for 49 years. It is time for a change.”

The surprise Chinese announcement sent a ripple of panic through the U.S. real estate industry. Shares in title insurance companies fell sharply on fears that a revaluation of the inch could affect the ownership of every piece of property in the U.S. “Lot boundaries are specified in terms of feet, and the foot is based upon the inch,” said John Landy, speaking for the American Board of Realtors. “A change in the value of the inch would cause chaos.”

Speaking on background, a senior Bush administration official noted that the source of the conflict was growth rates. “The Chinese economy has been growing much faster than the U.S. economy,” he said. “This is why we have been pushing them to revalue the yuan. On the other hand, in terms of height, Americans have been growing faster than the Chinese. Revaluing the inch would address this imbalance.”

The U.S. inch has been fixed at 25.4 millimeters since 1958. While the Chinese have stated officially that the length of the inch should be determined by “market forces”, high-ranking officials of the Beijing government hinted that China was looking for an immediate 3.4% revaluation, which would increase the length of the inch to 26.3 millimeters.

A Question of Competitiveness

The administration official noted, “What they want is pretty simple. The average American adult male is five feet, nine and one quarter inches tall. The average Chinese adult male is 1700 millimeters tall, which is five feet, seven inches at the current exchange rate. You do the math.” He added that, while “America will not be dictated to,” the government was taking the Chinese demand seriously. “Realistically, there is no other way to equilibrate the height of the people of the two countries,” he said.

Psychologically, the stakes are huge. Height is a major social issue in China, with some Chinese resorting to extreme measures, such as slow, agonizing, thigh-bone-lengthening surgical procedures, to make themselves taller. Revaluation of the inch would make the average Chinese as tall as the average American, thus diminishing height concerns as a source of societal unrest. This is not an insignificant issue for China's Communist government, which is deeply concerned about social stability in the huge, rapidly transforming nation.

Is Revaluation the Answer?

John Kenneth Samuelson, an economics professor at Harvard, agreed that fixed exchange rates are an anachronism. “The U.S. floated the dollar in 1971,” he said. “It’s high time that we floated all of our other units of measure.” While conceding that uncoupling the dollar from its fixed definition in terms of gold led to skyrocketing inflation, sky-high interest rates, escalating unemployment and decades of sub-par economic growth, the professor argued, “Floating exchange rates work better in theory, and this is what counts.” He added, “Merely devaluing the inch to a new fixed exchange rate against the millimeter isn’t enough. We need true floating exchange rates, with the magnitude of all of our units set by the market. What makes the Bureau of Standards think that they know the best length for the inch or weight for the pound?”

Strong opposition to any revaluation of the inch surfaced almost immediately in industries that would be affected. Christine Love, CEO of the publicly-held dating service Realistic Expectations, condemned the idea. “Most of our female clients want a man who is at least six feet tall,” she noted. “Men of this height are in short supply now. Revaluing the inch would only make things worse.”

Health Concerns Loom Large

Americans are growing fatter and excess weight has been linked to many health problems, including diabetes, heart disease, and cancer. A measure called the Body Mass Index (BMI) is the government’s principle tool for tracking the problem. People with a BMI of more than 25 are considered overweight. A BMI of 30 is considered the threshold of obesity, with people with BMIs above 40 designated “morbidly obese”.

“Devaluating the inch by 3.4 percent would increase the BMI of every American by almost seven percent,” said Dr. Marcus Casey, speaking for the American Medical Association. “The impact on the incidence of obesity would be catastrophic.” He added, “If anything, we should be looking at reducing the length of the inch. This is the only way we can reduce Americans’ BMIs quickly and start getting a handle on obesity-related mortality and morbidity.”

Asked to comment on the AMA statement, economics professor John Kenneth Samuelson scoffed. “That is ridiculous,” he said. “All we would have to do is to revalue the pound at the same time we revalued the inch.” He added, “Now, I’m not recommending this. As I said before, I believe that the inch and the pound should float freely against the millimeter and the kilogram in the market.”

What next?

The administration is studying the Chinese demand. “The Chinese only revalued the yuan by 2.1 percent at first,” commented a highly placed source. “What right have they got to demand that we revalue the inch by 3.4 percent overnight?” Still, he conceded that, “It’s a real issue. Some kind of compromise is likely.”

Asked to comment on the “inch crisis”, Billy Bob Couxrouge, a tow-truck driver from Beaumont, Texas, said, “I don’t get it. How can changing the inch change how tall I am?”