The "Buy American" Issue

[Semisane]

This business of where a product is made has come up on numerous threads over the last year. Frankly, I seek the best deal I can get.

It's MY money dammit, and I want the best bang for my buck. If a foreign made product is cheaper than an American made product of equal quality I'll go with cheaper every time.

Just compare the MSRP of a Lyman GPR and TC Hawken. If the local gun shop wants $50 for a product I can buy on-line for $35 with $8 shipping, I'm buying on-line. That $7 I saved will likely be spent at a local restaurant anyway. I'll have both the product I wanted and part of a meal. The locally employed UPS driver will deliver my purchase and the employees of a local resturant will benefit also.

A recent column by John Stossel (quoted below) makes a lot of sense to me.


OK guys, FLAME AWAY!

John Stossel

The Stupidity of "Buy American"

One sign of economic ignorance is the faith that "Buy American" is the path to prosperity. My former employer, ABC News, did a week's worth of stories claiming that "buying American" would put Americans back to work. I'm glad I don't work there anymore.

"Buy American" is a dumb idea. It would not only not create prosperity, it would cost jobs and make us all poorer. 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.

"A huge part of the history of mankind is an increase in the division of labor. And that division of labor goes across national boundaries." Which creates wealth — and jobs. In a similar vein, consider "fair trade" coffee. It costs much more money, but we're told that if we buy it, we should have a warm feeling inside because somebody in a poor country will supposedly get paid more.

"But a huge part of that premium is taken by the bureaucracy that organizes this. Most of it doesn't go to the farmer. And a better way to help those farmers is just buy what you would have bought anyway, take the premium you would have spent and give it to those people."

And here's something else: If you pay more for coffee, you'll have to buy less, or less of something else. That hurts other workers.

We all should heed Henry Hazlitt's famous economics lesson: Look beyond the immediate effects and beneficiaries. You may be accomplishing the opposite of what you intend.

The same applies to so-called sweatshop-free products. I'm for free trade, but trade means you get the lowest price, and that might mean you buy something from what some people call a sweatshop. The name itself conveys abuse. Henderson says that's wrong. The workers aren't abused. "In fact, they're better off taking those jobs. ... The mistake Americans make is they think they would never work in a sweatshop and therefore they say these people shouldn't. Well, no one's offering those people green cards. Those people are stuck in those countries. They're choosing their best of a bunch of bad options. And when you take away someone's best of a bad option, they're worse off."

That happened after Sen. Tom Harkin of Iowa complained about sweatshops in Bangladesh. Some shops closed. Then Oxfam discovered that kids who were laid off often turned to prostitution to support themselves.

"The person who tries to get you fired is not your friend," Henderson said. The conglomerates that hire people in poor countries usually pay more than local employers do. In Honduras, many sweatshops pay $3.10 per hour. That's low to us, but most Hondurans earn less than two dollars an hour. Since Third World countries do not pursue free-market policies, worker opportunities are often foreclosed by self-serving politicians. So multinational sweatshops are usually people's best alternative. Humanitarians should target the politicians, not the factories that provide some hope.

Interfering with peaceful exchange is never a good idea. The great 19th-century liberal Richard Cobden was right when he praised free trade for "drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace."

[onetohunt]

Semi you may have opened a new can?? But I also like saving as much money as I can on purchases because I too, like you, will spend it at a local restaurant!! I drive Toyota pickups and I take grief off of it, but you know the funny thing is, my Toyota's, both of them,a Tundra and a Tacoma, where both made in Indiana!!

[Semisane]

[Palehorse]

I draw the line at Martian pottery though!!!

[nchawkeye]

When Bill Clinton signed NAFTA he sent much of our manufactoring overseas...It's dang hard to buy American anymore...

[builder459]

Semi,you can spend your dollars on whatever you like, after all there yours.IMHO Mr Stossel has his head where the sun never shines.history teaches us what happens when any one group of people try and control what happens around the world and my friend it never ends up good.when 15% of your people are on food stamps and the chinese pay a 2% tariff for products shipped here,and we pay a 22% tariff for products we ship to them.we were promised cheap products with all these horrible trade agreements that have been made over the last 25 years, well we got them and now people can't even afford to purchase the staples, let alone cheap imported products.FREE and fair trade is a positive thing for everyone concerned.there isn't anything fair about the trade policies made by this country. were stuck with service jobs,while the chinese have all the manufacturing jobs,which are what have made there country prosper,while ours declines.i would gladly pay $7 dollars for say a ball cap VS $3, if it meant more jobs here..look around watch the news and you can see first hand what happens, when banks,corporations and politicians set the master plan in motion.

[dirt1008]

Originally Posted by builder459

Semi,you can spend your dollars on whatever you like, after all there yours.IMHO Mr Stossel has his head where the sun never shines.history teaches us what happens when any one group of people try and control what happens around the world and my friend it never ends up good.when 15% of your people are on food stamps and the chinese pay a 2% tariff for products shipped here,and we pay a 22% tariff for products we ship to them.we were promised cheap products with all these horrible trade agreements that have been made over the last 25 years, well we got them and now people can't even afford to purchase the staples, let alone cheap imported products.FREE and fair trade is a positive thing for everyone concerned.there isn't anything fair about the trade policies made by this country. were stuck with service jobs,while the chinese have all the manufacturing jobs,which are what have made there country prosper,while ours declines.i would gladly pay $7 dollars for say a ball cap VS $3, if it meant more jobs here..look around watch the news and you can see first hand what happens, when banks,corporations and politicians set the master plan in motion.

+1! Totally agree

[Semisane]

I agree with much of what you say builder. But those trade agreements are a whole different issue and the only thing we can do about stupid politicians is to try to get them out of there.

Now I'm going to really step in it - but there's not a lot of difference between a bad trade agreement and some of the deals American unions have in place because of political influence. Same thing with agricultural subsidies, not the mention all of those other subsidies (like the "green jobs" stupidity).

As for paying $7 for a ball cap that I can get for $3 - that's not something I would do. After all, I don't want to put the purchasing agents, shippers, longshoremen and truckers that handled that $3 hat out of work. I'll take the $3 hat and put the other $4 toward a pound of (made in the U.S.) GOEX. Or spend the $4 on one of those "donation" chocolate bars my granddaughters sell for their school.

[dirt1008]

What types of deals do American Unions have in place because of political influence?

[cayugad]

you're right.. this is a can of worms. Worms grown in Mexico.

I believe... I will just be quiet.