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Time to End the Inquisition against Buy America Advocates
To hear the critics of Buy America, you would think those misguided souls advocating it, like 84% of the American public, are either out to start a global trade war, responsible for the creation of a second Great Depression, ignorant of economics, or guaranteeing pink slips for even more workers.
Commentators like Clive Crook, who holds no Nobel Prize in economics by the way, has slapped down Nobel Prize Laureate Paul Krugman for even suggesting that there might be some theoretical rationale for Buy America (though Krugman made it clear he did not personally favor such an approach). Other economists, like former Labor Secretary Robert Reichand BusinessWeek's Michael Mandel, do support the rationale for Buy America.
Crook's intolerance reminds me of the Spanish Inquisition, not in its violence or scope of course, but rather in its complete and total prejudice and vindictiveness against points of view that differ with the orthodoxy-- as if free trade was the founding basis for a theocracy. Perhaps Crook is so defensive because there is a growing consensus that while writing about free trade may be lucrative, the workers who actually produce tradeable goods do not seem to be sharing in its benefits. There's also a real concern that the gargantuan U.S. trade deficit -- $677 billion last year alone -- helped to create a trade bubble that has a direct relation to the housing bubble and our current economic crisis. And then there's our trade policy, which closely resembles a Madoff scheme. We buy far more from China than we sell thanks to China's misaligned currency, massive industrial subsidies, and barriers to U.S. exports. China uses that surplus to buy the debt we've accumulated through our trade, credit, and public deficits. What do we get? Cheaper goods, some laced with lead. We also have a shrinking manufacturing base, with nearly one in four manufacturing jobs shed since 2000 (when trade with China started to grow), and more piles of debt. But we've preserved the idea of free trade, which seems to be the most important goal in Crook's mind.
Here's a quick primer on Buy America for Clive Crook, since he gets nearly everything wrong in his criticism:
-Buy America is nothing new. The Buy American Act of 1933 established domestic sourcing requirements; these rules have been enforced ever since.
-The Trade Agreements Act of 1979 ensures that Buy America laws are applied in a manner consistent with our international trade obligations. The Senate clarified that language.
-President Ronald Reagan signed into law expanded Buy America requirements in 1982 in the midst of a recession. It neither extended the recession nor sparked a trade war.
-Buy America rules have never been successfully challenged at the World Trade Organization (WTO). There will be no retaliation if the stimulus package emerges with Buy America because there is no basis for retaliation.
-Foreign leaders doth protest too much. Major industrialized countries like Russia, China, and India do not currently grant reciprocal access to U.S. materials for government procurement. The EU and Canada have far more restrictive procurement regimes than the U.S. They want to the U.S. to give up its rights while they preserve their own protections. Only a sucker would take that deal.
-Buy America means more jobs, not less. A PERI-UMass/Amherst study estimates that 33% more manufacturing jobs will be created with exclusively domestic sourcing of manufactured materials.
Crook is right about one thing: Trade is shrinking now. But collapsing economies, not new trade barriers, are the reason. Eliminating Buy America requirements won't make a dent in trade flows, while jumpstarting the U.S. economy certainly will.
It's time to end the intolerant theocracy of free trade and usher in a responsible dialogue about what works and what doesn't work, which is the responsible thing to do in a democracy. Treating critics of flawed policies, who advocate reasonable approaches, as ignorant or dangerous, especially when you don't even understand the underlying issue, will only dig your hole deeper.
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Actually, this is a national security issue, from several perspectives. We cannot allow our defense procurement chain to rely on any goods manufactured overseas. Things as simple as uniforms, berets, etc, should only be made in the US. Such reliance means that the flow of goods may be interrupted, if not delayed, at critical times. (There do, however, need to be strong and independent offices of Inspector General and Auditing totally removed from the departments they oversee and audit).
The lack of domestic manufacturing capacity (particularly industrial) created by the current situation further weakens the domestic economy, leading to the second major point.
The second major component is the trade imbalance created by reliance on cheap overseas goods. This results (as we now see) in severe economic dislocation which threatens the economic and political stability of the country itself.
A (usually unconsidered) third critical issue is the likelihood that certain goods or components manufactured overseas will contain “Trojan horses” of various types (depending on the item in question) which allow foreign monitoring of or interference with US national security, defense, or economic capabilities.
I am not arguing that these factors alone created the current situation, they are only components thereof. We have allowed the concentration of wealth to devolve into too few hands, and hands that are not subject to legal or political oversight, at that.
-continued -
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The gradual repeal of laws and regulations imposed after the last Great Depression, specifically designed to guard against such concentration of wealth and growth of unregulated financial capitalism, was a primary factor. Those laws and regulations were targeted for repeal by specific groups in the financial and business sectors, who were successful in either repealing them or rendering them toothless.
Those who argue for global trade integration without effective methods to secure global cooperation of national governments, and to ensure fair, integrated trade rules and enforcement obviously either have another (unspoken) agenda, or are so blinded by ideology that they cannot objectively evaluate the situation.
Usedtowandewr (below) makes critical points related to global financial-trade structure, as do (with other points), ImmanuelGoldstein, Truby, Givethemhellharry, WilliG56, Gatormouth, marijam and RTIII.
To point to specific events or factors in a given President’s term as determinants misses the larger view that this situation has been developing since US de-industrialization at the end of WWII. Eisenhower warned of the developing trends in his Farewell Address (please get it and read the entire text), which were evident even then http://www.americanrhetoric.com/speeches/dwightdeisenhowerfarewell.htmll).
If we allow this situation to continue unreversed, continue to allow unfair and skewed trade policies, continue to degrade domestic manufacturing capacity, continue to acquiesce to the economic and political domination of the country by small groups of (ridiculously) wealthy groups, the results will be truly catastrophic.
I agree, but I think the security risk is much worse that what you have described here.
I would love to Buy American.
Can someone point me to
1) A hybrid car made in the US that gets 48mpg?
2) A high quality flat screen tv made in the US?
3) An industry standard notebook made in the US that doesn't fail after a year? (Thanks, I had a Dell already. I won't get another one.)
4) A high quality digital SLR and lenses made here?
http://www.stillmadeinusa.com/
The 2010 Ford Fusion Hybrid gets better mileage than the Camry Hybrid or the Prius. While technically it's assembled in Mexico, the majority of parts are made in the USA.
THINK GLOBALLY, BUY LOCALLY. ENERGY CONSUMPTION TO SHIP ASPARAGUS FROM PERU TO SAVE 50 CENTS A BUNCH? NO THANKS.
Two words - Smoot Hawley!!
Maybe you should take a harder look at international trade and the realities of today.
What is buy American?
Let's start with only buying American TV's. Or radios? Or using only American ships?
Using AK steel? American Kawasaki? Or Mital?
Lafarge concrete?
Metals or coal from Rio Tinto, BHP, .....
Tires from Bridgestone, Michelin, ...............
Electronic components from Siemens, Phillips,
Or a Toyota hybrid made in Tennessee? Or a GM made in Canada?
Does it mean made by an American company, like CAT who makes much of their stuff in Mexico?
Or drinking Budwieser made by a Belgium company, Miller by a South African company, or Coors by a Canadian company.
Or my liquor from Diagio, Segrams,
When the final story is told the reason written for the downfall of america will be that politicians were sold the idea by economist that an increase in productivity gained by specializing and trading could be realized without taking into full account the cost of those disruptions to society.
If you really want to put america to work ... let americans make the products americans need.
Fair trade or no trade. Obamas instincts(before the EU trhreatened trade wars) were right on this one.
My instincts say europeans to put europeans to work ... japanese to put japanese to work etc ... is the way this is going to turn out any way. Every one just wants to keep it quiet until the structures to support the economies are in place.
Nobody ... I repeat ... nobody trust americas economic system not to flounder. We almost took whole countries down with us ... and may still. Who in their right mind would chance that again.
I’ll tell you what’s not working and it’s the quality control in China. My rational for buy America is that my feet hurt and my legs itch!
After the first big snowfall I bought boots for my daughter and myself “made in China” After the first day we both developed a large red rash on our feet from the boots. The sheets that they are selling as “soft” are the scratchiest soft sheets I have ever purchased. It’s like sleeping on a burlap bag infested with mites.
I don’t mind helping China come into the 21st century but not at the expense of my body.
Hmmm... so you buy cheap crap (can you afford anything else?) and you expect to get quality for $300 a pair?
Sounds a bit naive to me.
:-)
If I paid $300 a pair, for sure I would expect quality.
We need more than just a buy American program in the already-passed bill, we need an actual trade policy that helps us regain our sovereignty. You see, we lose our sovereignty whenever we permit foreign manufacturing that directly contradicts our environmental and labor values to sell in our markets. The costs saved in such manufacturing is a direct burden to our own manufactured goods. Therefore, we should have tariffs that level that playing field. This will help our businesses compete locally.
If other countries want to raise tariffs based on the same criteria, so much the better - if they raise their environmental and labor standards, the whole world wins.
.
You are the most sovereign nation on this planet. You are, however, not the smartest bunch. While the rest of the world thinks globally and in long terms, you are wasting your time and money on impossible tasks like nation building and real estate bubbles. You permit foreign manufacturing? Hardly. There is nothing you can do about it. Nobody says you have to shop for crap all the time. There is no law that would force you to buy cheap. There is, however, such a thing as being cheap.
"Buy American" is a bad and dangerous idea because, now that the free credit economy has gone bust, we're going to have to depend a lot more on exports rather than consumer spending to fuel our economy. So we can't arbitrarily close our markets, which are still the world's largest.
There may be cases where we need to protect some vulnerable and critical industry, but an across-the-board mandate to buy American goods only will cause retaliation and hurt us severely.
In any case, it isn't feasible. Many, many "American-made" products contain "foreign" parts that can't be easily replaced, if at all, with domestic substitutes. We can't ratchet the clock back to the pre-global era. Forward is the only way open to us.
You are wrong. All one has to do is look at the period between WWI and WWII.
First of all, you haven't made clear what we're supposed to "look at."
Second, the world economy was so different then that any comparisons are bound to be unreliable. It's also worth mentioning that the period after WWI ushered in the Great depression.
More laws are stacking up in a towering mass of babel that only lawyers can deal with, insurance companies are becoming protection rackets, and health insurance are health coverage avoidance companies.
The Military Industrial Complex just keeps pumping out new high tech weapons that are more and more expensive for the rest of the world to copy in a spiral so that we are in an arms race with ourself!
Paranoia stikes deep in the season of the witch and we have been getting more and more paranoid since our use of the atomic bomb on Hiroshima and Nagasaki that we are seeing mushroom clouds in Iraqi that are just sand storms in our own eyes and fear of crop dusters from Iraq attacking us with chemical and biological weapons that we probably gave them and just can't believe they all could have possibly been destroyed.
With friends like us we no longer need enemies!! We are in a battle with ourselves to the death!!!
The Wallmart slogan was ALWAYS BUY AMERICAN and after they got the customer loyalty things changed. The other change was that by the end of the 80's people were forced to go for the low prices anyway because I suppose Buy American lost and so were the jobs.
It's a globalized world and we need trade but all countries also need local food and industry so there y needs to be a balance not an either or solution. We should also eliminate shipping cost and energy usage.
Our economy has become financial and stock market scam driven.
With the ENRON's, the hostile takeovers of the 80's, dot.com and real estate bubbles we have become vulture capitalists suicidally feasting on our own body!
We have added great big fatty deposits of excess wealth at the top with the CEO, CFO, MBA's and our society is being devoured by credit cards that skim of the top of every purchase and then are loan sharks in a feeding frenzy on the poor. Rich getting richer and poor getting poorer.
More laws are stacking up in a towering mass of babel that only lawyers can deal with, insurance companies are becoming protection rackets, and health insurance are health coverage avoidance companies.
nd more
e finaneils scam
"The Wallmart slogan was ALWAYS BUY AMERICAN ...".
**************************************************************
Wal-Mart propped up many small manufacturers in this Country before American trade policies made it necessary for them to fall in line with Government "Free Trade" policies. They were actually faster to respond to Katrina and to provide low cost prescriptions than the fiasco called Government under the Republicans.
Broken Government under the Republicans demonized Wal-Mart because they have been far more effective in doing what the Government is responsible for.
I think "Buy American" is a great idea and should be started immediately. I have always tried to buy American goods and that includes automobiles. I realized we were in trouble when American autoworkers started driving Hondas and Toyotas to work at General Motors and Ford while asking for more in wages so they could afford their higher prices and upkeep.
No.
The big change happened shortly after Sam died.
.
i would proudly buy American products, if i could find them. Clinton started NAFTA and things have went downhill ever since. with our money going one way, how in hell can we recover let's start opening Our factories in the rust belt and put Americans First in everything WE do.
Last time I looked everything in wallmart is from China, NOT AMERICA. The 80's had a big buy American push to usher in the new supply side economics. Here, buy our inferior product we secretly made in china. Get back to real DEMAND side economics and make superior products that don't rely on programmed obsolesence to sustain a profit. Looking at assembly sites is important in the future since we know parts will come from all over the world. Assembled in America is about as good as it gets, right now.
You don't personally shop at Walmart do you? Or if you do, you don't check to see where the product is made.
It's so easy to search the Internet for facts, so why do you post nonsense?
Wal-Mart: The High Cost of Low Price
http://www.walmartmovie.com/
Oh Please Mr. Paul. What a sad commentary. As Americans we all need to start building things again. The banking/financial pie in the sky crap has just exploded in our faces. Make it in America. Make it better in America. Buy it from Americans!
I still hold out a lot of hope for Obama, but the stimulus package suggests that Washington is still broken (both the dems and repugs). The concept, as handed down from Obama, is right on but the body is not well focused nor targeted. Parts are totally misdirected. And gee, those tax rebates are
really going to raise my disposable income substantially. Not!
Absolute "Free Trade" in military terms is unilateral disarmament. Fair trade rules are required for us to have a level playing field. Deliberate de-industrialization since the Carter administration has gone on too long. It was good for business and good for investors, but not good for the country as a whole. Factories were cheaper to build overseas, regulations looser, and labor cheap and easily manipulated. Our politicians were happy to represent those who funded their elections, rather then the voters who supposedly were their constituents. In the Great Depression there were shuttered factories available to absorb labor once the tide turned. No more. Any new tech or industrial jobs created here, any available investment capital produced here, will only evaporate and trickle down overseas until we stop using “protectionism” as a four letter word. Our country is run by rule of law. FDR showed that the “Third Way” of regulated capitalism was superior to either Fascism or Communism. And bringing back the Sherman Anti Trust is a good first step! Super corporations are subverting our government, and companies too big to fail ARE too big. Do you recognize that Japanese Auto plants in our Southern States were able to severely impact our legislation for economic reform? Public finance of election is the next step. As Al Capp pointed out via his character of General Bullmoose in Lil’ Abner, what is good for General Bullmoose is not always good for the country! But we all should know this.
Absolutely!
This nation turned a very bad corner, economically. We became a nation of consumption fueled by easy credit. Other nations we trade with built their economies on feeding the US consumer. Things have become far too critical here in the US to worry about protectionist accusations from other nations. It's hard to create jobs in the US while preserving jobs in China.
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