Monday, June 08, 2009

Marketplace Commentary: End Buy American Rules

"Buy American" provisions might make sense politically, because they create huge political payoffs for elected officials who protect jobs in domestic industries. But, economically, "Buy American" rules, like all forms of trade protectionism, make no sense at all because they will ultimately destroy more American jobs than they save. If we want the U.S. and world economies to recover from the recession as quickly as possible, we should end the "Buy American" rules.

Check it out here.

14 Comments:

At 6/08/2009 9:09 PM, Blogger Fred said...

I assume based on other posts that you're generally a Republican, as a liberal I agree "Buy American" needs to go.

The NY Times, FT, The Economist, Fareed Zakaria all have warned about these horrible rules.

My friends and family routinely agree with buy American nonsense. Many times it's like talking to a brick wall. I'm afraid with the downturn these rules will stay.
These measures will only make the downturn last longer and other countries will reciprocate.

I like your blog; always nice to hear other voices.

 
At 6/08/2009 10:55 PM, Blogger destilando cafe said...

. . .just traded the Subaru for an AWD Ford Taurus. . designed in Dearborn, built in Chicago, it's SO MUCH BETTER : ). GO USA!

 
At 6/09/2009 3:24 AM, Anonymous Fixed Index Annuity said...

Great attempt!!! Very nice blog providing good entertainment stuff as well as various facilities.

 
At 6/09/2009 4:40 AM, Blogger bob wright said...

Certainly, no enlightened politician owns a foreign car.

The first law passed should make it illegal for anyone on a government payroll [national, state, city, county, etc.] to buy a car with a foreign nameplate.

Anyone owning a car with a foreign [non-U.S.] nameplate should lose their government job.

When I see a law like this, I will know politicians are serious about their buy American rhetoric.

 
At 6/09/2009 6:53 AM, Anonymous Anonymous said...

The United States trade deficit is around 50 billion dollars per year. I am currently fighting a US Military contract awarded to a firm who is producing the manufactured goods in Canada. We are capable and competitive and the outsourcing of this work caused me and my employees our jobs. Whoever buys into the idea that the current manifestation of 'free trade' is good for Americans is fooling themselves. Great blog BTW

 
At 6/09/2009 9:14 AM, Anonymous Anonymous said...

As for the government officials only owning American cars comment, My Toyota Rav 4 was manufactured in the United States.

 
At 6/09/2009 9:22 AM, Blogger bix1951 said...

THOUGHT EXPERIMENT
I can actually imagine putting a big dome over a country so nothing gets in or out and making that place into a utopia where everything is good.

They might not be as "rich"
but they might be happier and healthier

 
At 6/09/2009 9:37 AM, Anonymous gettingrational said...

Why were the students at Beida (Peking U.) laughing at Timorthy Geithner's serious remarks? Because they know that the U.S. has no answer for their country's mercantilist trading regime.

The student's know that Western economists will use the tariffs caused the Great Depression argument. The students must feel comfortable that their mentors have established a superior system .

What could make their system superior? The web of non-tariff barriers are endless and very difficult adjudicate within the WTO rules. Very few Western economists mention non-tariff barriers because they are classically learned. Classic economics seems to need numbers and graphs. Non-tariff barriers are completely different and much more effective.

 
At 6/09/2009 4:23 PM, Blogger sethstorm said...


Why were the students at Beida (Peking U.) laughing

They were expressing the official Party position. No originality, just precise memorization. They wouldnt want to fall foul of their Constitution's article that permits the state to preempt other rights in the interests of their government.

It's why I buy(and would buy) GM and Ford as they do not make golfcarts(Japan) or cheap copies(Korea and China). Further, I buy models of those two that are verified to be Detroit design, and not captive imports or maquiladora cars. I'll take my lumps with GM - they build cars that put muscle within the reach of the people.

 
At 6/09/2009 9:13 PM, Blogger OBloodyHell said...

> I assume based on other posts that you're generally a Republican

Fred, my own perception is that he's more of a libertarian than a Republican, which means fiscal conservative, which aligns more with Republicanism's historical principles (not that they've been paying attention to them lately).

Mark, if I'm wrong there, I apologize.

Dr. Perry went to George Mason, which is, I believe, an Austrian school (as opposed to Monetarism/Chicago/Friedman, or NeoKeynesian). I've always assumed that's where his economic philosophies lie, and that's the impression I get from what I read here, too.

In regards to your friends and family, I'll give you a link which might prove useful:

The Nation That Lost Its Jobs, But Got Them Back.

That article is more aimed at the "shipping jobs overseas" nonsense, but both that and your problem are tied to the failure of people to understand the principle of Comparative Advantage.

Simply put, while it's not universally true, for the most part, it's better for nations to specialize in things they do best, and let other nations do the same, and trade for what you each do better than the other -- this is even true, rather unobviously, when you are better than the other nation at all the things they do (see the link, it explains it well).

It makes sense on an individual level -- you hardly grow your own food, slaughter your own beef, repair your own car, and build your own house (i.e., even if you happen to do some of those things, there are still things you hire out) -- but somehow people cannot grasp the notion that it's true for nations, too.

 
At 6/09/2009 9:17 PM, Blogger OBloodyHell said...

P.S. you might also enjoy the regular columns by

Walter Williams,

and

Thomas Sowell.

Williams was a professor and later the Chairman, of the same George Mason economics department that Dr. Perry went to.

 
At 6/09/2009 9:26 PM, Blogger OBloodyHell said...

.

.

As far as a lot of the other comments, here, I am an American. I'll buy stuff made in America as long as it's better than the stuff made elsewhere.

You don't encourage better process by accepting existing bad process.


"Take back your protection; We are now men, and we can beat the world at the manufacture of steel."
- Andrew Carnegie -

(and yes, I know we don't make steel much any more -- there's a damned good reason for that which relates to the Mises article linked to above. I suggest you read it and contemplate the issue a bit, before responding. If your contrary arguments aren't valid I'll shred them quite mercilessly, especially if they show you didn't read it or understand the implications of it. Hint: "Post-Industrial").

 
At 6/09/2009 9:26 PM, Blogger OBloodyHell said...

This comment has been removed by the author.

 
At 6/10/2009 1:54 AM, Blogger sethstorm said...


As far as a lot of the other comments, here, I am an American. I'll buy stuff made in America as long as it's better than the stuff made elsewhere.

Except that there are third world countries that throw endless volumes of junk at us. That ends up throwing a wrench in the "better than the stuff made elsewhere" bit.

Accepting China and similar as they are now is accepting bad process. They don't seem to improve in quality unless it's for an execution.


"Take back your protection; We are now men, and we can beat the world at the manufacture of steel."

...Or you can make Carnegie spin his grave and sell your company to the guy who colonised the UK, Mittal.

 

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