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Opening Arguments

Protectionism 101

John Stossel on why "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. ..."

Actually, some people have gotten down to this level, but not with the intent of "tracing out the logic" to show up the nonsense, but because of those mistaken beliefs that they are helping with such protectionism. And some people who should know better have endorsed the idea. That's why we have the Buy Indiana initiative from Gov. Mitch Daniels, who on his first day in office set goals for state agencies on purchasing more goods and services in state.

Sorry to say it, but Indiana doesn't always have the best product at the best price. Sometimes we do, and more power to all those who can sell to the state. But sometimes we don't, and our elected and appointed officials owe taxpayers value for their money, getting the best deal possible, wherever it is.

Comments

William Larsen
Thu, 11/03/2011 - 2:36pm

Dianne Sawers has this thing about buying america. Just 33 cents a day will add 10,000 jobs. Well 33 cents a day is $120.45 per person. My family has 7. So she thinks that by me spending and everyone else in American spend $843.15 that hiring 100,000 people is worthwhile. the problem is unemployment is over 14 million. So for us to buy America, I need to spend 140 x $843. Sorry I do not make enough to do this and I doubt others do as well.

The solution is to realize we live in a global economy. We compete for jobs not just in America, but globally. We elected representatives that spent our wealth instead of letting us invest it. Now we have nearly $15 Trillion in debt, unfunded Social Security liabilities of over $23 Trillion and more than $12 Trillion in Medicare unfunded liabilities. On top of this the State of Indiana is now responsible for the police, fire and teacher pensions prior to 1977 due to the property tax reform.

We are no longer a wealthy country and the sooner people realize this the better off we will be. It is time to set you goals a bit lower and accept the fact that $25 per hour jobs are no longer the norm, but $10 per hour jobs are.

In simple terms we elected politicians who had no concept of economics and let them determine what spending priorities were instead of the people setting their own priorities.

We are hosed.

Harl Delos
Fri, 11/04/2011 - 4:12am

I used to have a Torino with a 351 engine. Every time I bought spark plugs, the guys at the parts store always asked me whether it was 351-Windsor or 351-Cleveland. Apparently, Ford made two engines that were the same size but used different spark plugs.

And I always wondered, while I was driving away, whether it was better for the local economy to buy a Chevrolet made in California, or a Honda built in Ohio.

In the food industry, there's a big push on for "buy fresh, buy local" and I think that's a good idea. Back in the 1950s, we investigated selling truck crops to local supermarkets, but they weren't interested. They thought it better to buy produce shipped in from other states, rather than buy local farmers' production.

Given a choice between local produce, picked ripe a couple of hours before the purchase, or supermarket produce, picked green so it would ship well, a lot of people bought from us at roadside.

Food isn't cheap; we spend more on food than anything else, except perhaps our housing. Still, not only is good eating highly pleasurable, but you are what you eat, and the trend to local produce is a good one. If only farmers would plant local banana plantations and local coffee plantations!

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