Thursday, September 17, 2009

Buy American, lose jobs

Like I said a few days ago, the "Buy American" stuff might make people happy, but it's still not a good trade policy. For instance, the current administration's stimulus package specifies that money will only go to purchase American materials for building projects. This makes some people very happy; after all, their tax money 'aint going to a bunch of damn foreigners and their steel. They believe that this is how you "save jobs"... by cutting back on who you do business with. Sort of like a store that greets its potential customers with the middle finger.

But, if you live here on the border, it's like telling the businesses in Virginia not to sell to Maryland; it makes absolutely no sense. Canadians are pissed off about it, too. They didn't make stupid choices that nearly tanked their economy, so why should their largest trading partner punish them? In response, a few Canadian cities are boycotting American goods, which means the US businesses that usually sell to them are in trouble. Other countries are retaliating with tariffs. Also, the new US building, and hence the recovery, is stalled because they can't find all this stuff in the states.

The punchline:
"The U.S. Chamber of Commerce released a report this week that says 176,800 jobs could be lost in that country because of the policy, mainly because other nations could implement local procurement rules of their own that would erase any gains for U.S. firms.

If retaliation escalates, losses could be even deeper, the report said...

The way to get other countries to buy American products “is through an open trading system where consumers – not the government – decide what they are going to buy,” he said."
That would be smart, if perhaps a bit unpopular. But, in tough times, I think it's better to have a smart leader than a popular one.

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