“Buy American”: Savvy or Sentimental?
A package of bills approved by the New Jersey state Senate, and moving now to the Assembly, would, if approved, “require construction firms, suppliers and other vendors under public contracts to use or supply materials produced in the United States.” Reps want the state to buy American.
“Requiring the purchase of U.S.A.-made goods for public contracts is just a matter of plain economic sense,” Sweeney said in a statement this afternoon. Sweeney, an iron worker and union official, said he began looking into the issue after The Star-Ledger reported in September that imported steel was being used to raise the roadway of the Bayonne Bridge, a $1.3 billion Port Authority project financed largely by toll revenues. The bridge project is one of dozens of Port Authority construction jobs included in a 10-year capital plan worth a total of $27.6 billion.
“Buy American” is a dumb idea.
It would not only not create prosperity, it would cost jobs and make us all poorer. On my Fox Business show last week, David R. Henderson, an economist at the Hoover Institution, explained why. “Almost all economists say it’s nonsense,” he said. “And the reason is: We should buy things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”
This is what people always forget. Anytime we can use fewer resources and less labor to produce one thing, that leaves more for other things we can’t afford. If we save money buying abroad, we can make and buy other products. The nonsense of “Buy American” can be seen if you trace out the logic.
“If it’s good to Buy American,” Henderson said, “why isn’t it good to have Buy Alabaman? And if it’s good to have Buy Alabaman, why isn’t it good to have Buy Montgomery, Ala.? And if it’s good to have Buy Montgomery, Ala. …” You get the idea. You wouldn’t get very good stuff if everything you bought came Montgomery, Ala.
Ah, the old slippery slope argument! Impossible to refute, that one. And yet Forbes makes the same point:
If the scope of “buy local” was tightened to families, we would all be subsistence farmers. We would be self-sufficient, supplying only ourselves. And all of us would be employed. However, this attempt to support family employment would be at the expense of all the benefits of civilization. On a wider scale, this same problem with “buy local” holds true. …
Expanding “buy local” to “buy American” gives us a vast number of excellent products to purchase and enjoy. As a country we have nearly all food, manufactured goods, and services covered. And yet, should we buy only U.S. bananas? We do have a small number of domestic bananas grown in Florida and Hawaii. But national banana independence would be at the expense of Florida orange groves and Hawaiian pineapples. Most people need no convincing that coaxing banana plants to grow in America would be too expensive. In the same way, no national campaign is needed to ensure that Florida grows our citrus fruits, California our grapes, Georgia our peaches or Idaho our potatoes. The markets naturally figured it out, and every consumer is richer as a result.
The MARKETS. So smart! The markets have figured it out, and the answer is that it’s better when people in poorer countries do the menial work that we’re too good for — that even our unemployed, job-desperate types are too good for:
Around the world, workers pick tea by hand, earning a few dollars a day. The process is labor intensive and impossible to do profitably in America. Losing money on tea production, the Bigelow family has transformed the plantation into a delightful tourist destination. … Neither tea plucking nor manufacturing is an area where the United States has a comparative advantage. Even if Americans could pick tea faster, these activities are not worth the time and effort of our skilled workers. Economically we all have better things to do. And this is true even despite our currently high unemployment rate.
Long before Americans would take jobs picking tea or assembling iPads, they would take one of the many alternatives available. Picking citrus in Florida, grapes in California or even unemployment benefits or food stamps are better than working at an Indian tea plantation or a FoxConn assembly station.
The arrogance of this leaves me spluttering, but among other things it doesn’t address products like steel, which Americans produced quite happily and in large quantities, to the point where we dominated the global market until about 1970. Jersey is a pretty wealthy state; if it wants to prioritize using American steel, even if that means paying a bit more, shouldn’t be the answer be, ‘Why not? Go ahead.”
On a micro level, how does this play out in your life? Do you agonize about buying local? Do you check your tags to see where your clothes come from, and/or then swallow hard and shop at Forever 21 anyway, because there aren’t many affordable alternatives? How important is Buying American to you?