I wanted to highlight a really good debate about buying American that occurred on the last post titled: Buying American on a Budget. The content was so substantive that I thought it would be better to make this its own posting on the main page instead of being hidden on comments of a random posting. So here is how the debate unfolded…
On October 14th, a fellow blogger had this to say in response to the Buying American on a Budget story:
Your blog is an excellent template for budgeting and personal financial responsibility. The overall premise, however, is a bit skewed. I will keep my response concise, as I could discuss this topic at length.
The “buy American” movement only destabilizes our economy. The free market is not dependent on the lines of a map. And free trade creates employment, is does not destroy it. Economic xenophobia leads to a decrease in GDP. The United States needs foreign goods. We have shifted from a nation that produces goods to a nation that produces services. The “buy American” notion is also anti-capitalist, as it restricts free-trade. Even the Ayn Rand Institute calls the practice “Marxist”. The prosperity of others (even foreigners) is beneficial to our economic welfare.
Here was my response:
Thank you very much for your post. I really applaud your courage to post your thoughts about buying American on this blog. Truly, a discussion without differing opinions is no discussion at all. So thank you!
As you might expect, I respectfully disagree with much of your opinion.
Let me make a few things clear. This is not a blog about whether or not expanding free trade is good for the American economy. I do not advocate any change one way or another with relation to trade policy on this blog. That is a worthwhile debate to have, but we will not have it here. This blog is based strictly on changing consumer behavior to get more Americans buying goods made in the U.S.A. This is a new approach to buying American.
A consumer-only approach to buying American (which this blog is) is without question a departure from the traditional “buy American movement” to which you refer, which has emphasized the importance of both buying American (not a policy issue) and not expanding free trade as it has been done the last few decades (clearly, a policy issue), as well as other policy objectives.
You make some good arguments. But I firmly believe they rely on anti-trade policy to hold water. If you take the trade policy stance out of the equation (as Buy American Challenge does), the arguments you make just don’t hold up.
Here are a few key principles of the Buy American Challenge’s and its new approach to buying American:
- No politics – That’s not what this effort is about. It’s not a partisan issue. We don’t ask anything of policy-makers because what the American people are doing with their dollars is far more important than what Congress is doing. The American people need to solve this trade deficit problem, not Congress. The Buy American Challenge will bring people of all different political persuasions together.
- No policy – It has to be the American people who make the change. We can’t wait for government to fix our trade deficit problem. It’s been growing worse and worse for decades, and now it’s really killing us. It’s clearly time to do something about it ourselves.
- No villains – We don’t blame anyone for the trade deficit predicament we are in (not China, not Mexico, not CEOs, not Wal-Mart, etc.). Some people will place the blame on them (or others), but we won’t. We just want to do everything we can as individuals to improve the trade deficit situation because our country is serious economic trouble, and something needs to be done about it.
- Work within the free market, not against it – If we can create demand for American products, American companies will start to produce them again. That will create American jobs and reduce the trade deficit. It’s that simple. Working against capitalism is pointless. We will work with it.
- Work with American businesses not against them – We can’t significantly close the trade deficit through consumer behavior without the help of American businesses increasing the number of goods they make in America. It’s that simple. We’d be foolish not to work with them, because we can’t be successful without them.
So let’s go point by point:
You say: The “buy American” movement only destabilizes our economy.
I say: This buy American movement is about Americans choosing to buy American more often whenever it is possible to do so, and that is indisputably good for the American economy. Because when we buy American-made things we create American jobs and we keep our dollars circulating in this country, not somewhere else. On this blog, we’re not saying anything about trade. We’re not saying don’t buy any imported goods at all, because some things just aren’t made in America anymore, that’s not a good policy, and it is never going to happen anyway. However, to say that more people buying Budweiser over imported beer or Fords over cars manufactured overseas would destabilize our economy is simply incorrect. If enough people do it, it will significantly improve and stabilize our currently unstable economy.
You say: The free market is not dependent on the lines of a map.
I say: I completely agree.
You say: Free trade creates employment, it does not destroy it.
I say: This blog is not about trade laws. We aren’t advocating one way or another on trade. So please, let it go. We’re talking about what you and I do every day when we buy things, and the factors we consider when we do so. Bringing trade into this discussion will only lead everyone down a rabbit-hole where nobody can agree on anything. In fairness to everyone who has an opinion on that topic, there are legitimate points on both sides of the trade debate. But there are not strong economic arguments to be made against more Americans choosing to buy American-made goods. Let me compare Buy American Challenge to another movement you are probably familiar with. Some people like to “buy local,” which reduces the carbon footprint of the things they consume. It’s a personal choice they make. It’s not anti-free trade to prefer items that are grown or produced nearby, and it certainly doesn’t hurt the economy for people to buy more of those goods based on that being their personal preference. The same applies to buying American. It’s just another factor that goes into a purchasing decision. More people having it be a factor in their choices will only create new markets for American products, new businesses to capitalize on those markets, and more American jobs as a result.
You say: Economic xenophobia leads to a decrease in GDP. (Xenophobia is an irrational, deep-rooted fear of or antipathy towards foreigners.)
I say: There is nothing irrational about recognizing the enormous negative impact of a $500 billion per year trade deficit (that’s a conservative estimate), and deciding to do your part to fix the problem by buying more things that are American-made. Our country is supposed to be in an economic recovery, but the best economists are telling us that increased job creation we have seen in some sectors (like manufacturing) are being offset because of our reliance on imports (the average American adult is responsible for $700 in imported goods per month). Read this article called Rising Imports Offset U.S. Sales Abroad that originally appeared in the Washington Post for more info on this point. We can’t recover with so much wealth leaving our shores because of all the imported goods we buy. Recognizing this and doing something about it isn’t irrational, it makes perfect sense, and it’s a very patriotic thing that every American can do. Also, this Buy American Challenge is not a deep-rooted fear or antipathy of imported goods. We understand that globalization has made it necessary for practically everyone to consume some imported goods. Trade with other nations isn’t going away, nor would we want it to, because trade is indisputably good for the economy. We’re just talking about exercising some restraint and not relying entirely on imported goods when American-made versions of many things we buy are available and just as good as imports. If we could reduce the average adult’s reliance on imports from $700 per month to just $517 per month, our trade deficit would be gone, and millions of good American jobs would be created in the process. There is nothing xenophobic about saying America would be better off if we could trim our reliance on imported goods to a mere $517 per adult per month. And finally, doing so will not decrease our GDP. It will increase it, because more Americans will be working and the dollars we spend will circulate more in our economy, not elsewhere.
You say: The United States needs foreign goods.
I say: I couldn’t agree more.
You say: We have shifted from a nation that produces goods to a nation that produces services.
I say: That is true, but that doesn’t mean we should completely give up on making things in this country. Just because that has been a general trend, doesn’t mean it has to stay that way. I, for one, refuse to buy in to that sort of apathy about American manufacturing and American workers. Another thing is that those service jobs do not tend to be nearly as high-paying as manufacturing jobs. We can’t expect our economy to flourish if those without college degrees (and only 28% of Americans have a 4-year degree) can’t find work that pays enough to live on. My opinion is, we’ve got the workforce, we need to be doing services and manufacturing for the economy to thrive.
You say: The “buy American” notion is also anti-capitalist, as it restricts free-trade.
I say: As I said before, we’re not advocating anything one way or another about trade. Please have that discussion somewhere else. In fact, we’re not advocating any public policy of any kind, so any notion of this Buy American Challenge being anti-capitalist is outlandish. Also, I’ve just explained how correcting our trade deficit problem through consumer behavior will be done entirely within the free market system, and dependant on the collaboration American businesses. That’s as capitalist as it gets. In fact, I’ve got small businesses that offer American-made goods lined up to talk about the jobs they are creating by selling American-made goods. So stay tuned in the coming months about that.
You say: Even the Ayn Rand Institute calls the practice [of buying American] “Marxist.”
I say: The Ayn Rand Institute has written a piece called: “Buy American” is UN-American written by Harry Binswanger, Ph.D. It makes many of the same points as Jackson (the person who posted on this blog), but since it was a criticism of a general buy American movement and not necessarily the Buy American Challenge’s approach, I will leave that discussion for another day. Needless to say, I disagree with Binswanger’s general assessment. Buying American is without question one of the most patriotic things you can do. I’d be curious what he has to say about Buy American Challenge’s unique approach to buying American. (Dr. Binswanger, are you out there?)
You say: The prosperity of others (even foreigners) is beneficial to our economic welfare.
I say: I agree entirely.
So that’s the debate. I would love to hear what others have to say now that we actually have a real debate going. If I’m wrong, please let me know. I appreciate Jackson’s arguments, but now having been challenged, I am more convinced than ever that Buy American Challenge is on the right path.
Until next time, here’s to doing what we can to support our country by buying American.
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