Conflicted Over “Buy American” Stimulus

Among the details being debated in the stimulus bill this week is the “Buy American” clause – a clause which would guarantee that only manufactured goods from the United States are used in any new projects funded by the stimulus package. Ideally, purchasing American products would be best for this country. But retaliation from our trade partners and non-competitive sales in our market could have a negative impact on our deepening recession, which can leave one utterly conflicted on the topic.

First of all, I don’t agree with the public works aspect of this spending bill. We don’t need to stimulate government spending and create new government jobs. Our government and their bureaucracies are funded by taxpayers who actually create the wealth that is confiscated. However, if this legislation is going to be passed because of weak-willed congressmen, then the Buy American portion of it needs to be addressed.

American jobs are important and vital to a strong American economy. I don’t believe anyone can be in disagreement with that statement. So sufficed to say, buying American products keeps more wealth in this country and consequently helps create and retain more jobs. All other factors notwithstanding, purchasing American goods and services is crucial for our economic prosperity.

Having acknowledged that, a general conflict arises when dealing with free market capitalism and international trade.

Whether we like it or not, we have become part of a largely global economy with a multitude of international trade agreements. Isolationist legislation or policies, even if the provisions are only temporary and are for benevolent national reasons, would essentially result in slower growth or further recession. Buying American is a noble prospect, but it needs to be a choice we make as consumers, not a federal mandate. The proposed legislation in the stimulus bill would make it mandatory to use only American products for any of the government’s public works projects.

This has already sparked international protest and threats of international lawsuits and other retaliatory measures. While we should not merely respond by capitulating to global threats or pressure, we should consider the consequences if we continue to pursue these new laws and enact them. If the Buy American clause is passed as originally written, retaliation should be expected. It’s easy to say we should just do whatever we want and let other countries deal with it accordingly, but in reality, that would not be the best decision to make with an already struggling economy.

If other nations were to react to our policy by raising prices or tariffs on their exports to the United States, it would impact us significantly. Not only would the prices of imported goods increase, but many of the products we manufacture from those goods would also become more expensive. In addition, there’s a risk that our trading partners will stop exporting certain products altogether. In that scenario, there is no winner. Global economies will continue to falter and international tension will grow.

Aside from direct retaliation from other countries, it is a general lack of competitiveness in the market that will harm us. By denying foreign products in our public works we are disallowing competition, which consequently drives up prices. Without competition there is no incentive to give consumers (in this case, the government) the best price. This means we will not get the best deal for our desired infrastructure. At a time when government waste and debt is destroying our public credit and quickly expanding our money supply, it is imperative that we get the most out of our money. Forced non-competitiveness is not the way to accomplish that goal.

We must ensure that our priorities are to stop a free-falling market and to encourage growth. Buying American products sounds great and I would prefer that every American’s consumption habits involved purchasing goods made in this country.

We must also ensure that every American is getting the best deal for their money and that they have access to those products – even if those products are imports.

As our government is responsible to the People, it should be the government’s priority to use the People’s money in a way that would procure the best products for the best price. If that leads us to foreign goods, then we should not induce artificially inflated prices by implementing bad policies. The goal of our government is to secure the best available deal with our tax dollars. Considering the fact that our economy is in a sharp decline and our debt is increasing exponentially, their main concern ought to be getting the best and the most goods for as little money as possible.

Buying only American goods would be ideal in a perfect world with a perfect market.

Unfortunately, we have neither.