Monday, February 02, 2009

Buy American=Declaration of War on Rest of World

The odious U.S. House of Representatives has tagged a Buy American clause onto the Obama administration’s $819 billion (or more) fiscal stimulus bill. If this were to become law, U.S. federal spending would, wherever possible, be restricted to goods and services produced by U.S. companies. The main promoter of this act of global economic vandalism was the U.S. steel industry, but other import-competing industries have lobbied also. It is quite likely that the Buy American net will be cast even more widely when the Senate gets its turn at the fiscal stimulus act.

There is little doubt that if the Buy American provisions of the Economic Stimulus Package were to become law, this would amount to an economic declaration of war on the rest of the world. The response of the assembled non-U.S. finance ministers in Davos made this clear. Retaliation from the EU countries and the rest of the world would follow swiftly. Because this disastrous U.S. Congressional action follows so closely on Treasury Secretary Geithner’s declaration that China is manipulating its currency, it is essential that the Obama administration draw a clear line in the sand.


If anything like the Buy American clause inserted by the House survives in the bill president Obama gets on his desk, he must veto it. The questionable value of the fiscal stimulus is overwhelmed by the unquestionable domestic and global harm caused by the Buy American clause. If president Obama fails to veto a protectionism-laced bill, it will be clear that we have a wuss in the White House. If such is the case, God help us all.

~Willem Buiter in the Financial Times, "YES WE CAN!! Have a Global Depression If We Really Continue to Work At It…"


5 Comments:

At 2/03/2009 2:59 AM, Blogger @sethstorm said...


Buy American=Declaration of War on Rest of World

I have no problem that statement.

Plenty of those countries have been free-riding by taking our jobs and giving us junk.

Maybe those who were in a hurry to send everything to the Third World should have been aware this would happen. Payback's nasty when it takes about 30 years to complete.

Remember that next time you try to put the country on sale, we're watching.

 
At 2/03/2009 7:00 AM, Blogger Walt G. said...

I'm not a proponent of protectionism because I think the consumer is the loser. However, using the definition of protectionism as "Buy American = Declaration of War on the Rest of the World" would seem to indicate that many countries have declared war on us through their protectionism, which would make them our enemy whether we wished it to be so or not. In that case, wouldn’t buying their products be supporting our enemy?

 
At 2/03/2009 8:01 PM, Anonymous Dr. T said...

Both previous commenters are mistaken. Sethstorm's comments are economically ignorant. He mistakenly believes that buying something made inexpensively overseas is hurting Americans. It's not. It's saving Americans money so that they can buy other goods and services, many of which are provided by fellow Americans. Plus, the workers overseas can now afford to buy more than just food and clothes, and some of what they buy is made in the USA.

Walt G misunderstands the Declaration of War phrase. What it means is that our refusal to buy goods and materials from overseas will start a trade war with the rest of the world. We will be breaking treaties and trade agreements. Other countries will retaliate by refusing to buy American-made goods. Since our export volume is massive, decreased exports will sink our already damaged economy. Go Congress!

 
At 2/04/2009 5:08 AM, Blogger @sethstorm said...

Dr T:
When there is no real path upward, it doesn't matter how much *might* be exported.

Re-develop the displaced in a means that allows them to take advantage of the opportunities that do exist. Then encourage a heavily citizen-first hiring of those people.


He mistakenly believes that buying something made inexpensively overseas is hurting Americans

It is hard to argue with countries that we trade with despite them ignoring our laws, putting hazardous chemicals in to their exports(never mind what they do at home), and having some indignation when we call them on it.

 
At 2/04/2009 6:58 AM, Blogger Walt G. said...

Dr.T:

I think when you have to resort to trick phrases using buzz words like “war” to invoke emotions you have lost your logical argument.

 

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