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Archive for February, 2011

Washington, Lincoln, and Reagan: Three celebrated American presidents that supported buying American and promoting American-made goods.

This week was President’s Day, which got me thinking, what did some of America’s most popular presidents think about buying American and promoting American products?  After all, that is the whole purpose of the Buy American Challenge – to encourage Americans to buy more of the things made in the U.S.A. so that we can support American businesses and create American jobs.  What I found was that over the last 200 years, there has been an overwhelming amount of support from American presidents for doing exactly what Buy American Challenge aims to do.

America’s first president, George Washington, was a supporter of buying American.  He favored American-made goods over imported products and told others about it as well.  In a letter from Mount Vernon, on 29 January 1789, he wrote to the Marquis de Lafayette: “We have already been too long subject to British prejudices. I use no porter or cheese in my family, but such as is made in America; both these articles may now be purchased of an excellent quality.” I think it is clear that GW would be proud of our buy American efforts.

Abraham Lincoln, who is perhaps America’s most celebrated president, was also a supporter of buying American.  He understood the economic importance of keeping enough of our dollars circulating in our economy and creating jobs here.  Lincoln explained it in the simplest of terms. “When we buy manufactured goods abroad, we get the goods and the foreigner gets the money. When we buy the manufactured goods at home, we get both the goods and the money.”  Lincoln would definitely support our efforts to buy more goods made in the U.S.A.

Finally, I want to highlight a more modern American president – Ronald Reagan.  Reagan knew the importance of promoting American-made goods.  In fact, the issue was so important to Reagan that on December 8, 1986, he declared by proclamation the month of December to be “Made in America Month.”  The proclamation read: “I, Ronald Reagan, President of the United States of America, do hereby proclaim December 1986 as ‘Made in America Month.’ I invite the people of the United States to observe this month with appropriate programs, ceremonies, and activities to celebrate the excellence of American products.”  Clearly, Reagan would have cheered our efforts to talk about the quality of American products and to buy American.

So there you have it.  It turns out buying American and talking about high quality American-made goods is not such a novel concept, it’s just one that many of us have forgotten about.  But we can’t afford to forget about it any longer.  We can start creating jobs again in this country simply by buying American-made goods in our everyday purchases.  I hope you will consider doing it yourself.

Please consider taking the Buy American Challenge.

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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I thought it would be a good time to highlight some expert opinion about the extreme importance of addressing the U.S. trade deficit.  I mean, who cares what Randy has to say?  Not many, believe me!  But how about Warren Buffett, a man generally regarded as one of the world’s most successful investors, and a man genuinely concerned with America’s future?

In 2003, Warren Buffet wrote a piece for Fortune Magazine called “America’s Growing Trade Deficit Is Selling The Nation Out From Under Us. Here’s A Way To Fix The Problem – And We Need to Do It Now.”  In this article, Buffett predicts all kinds of scary things for the future of our nation if we allow our enormous trade deficit to continue to expand (FYI, it has).  

In the article, Buffett describes the U.S. trade deficit this way: “In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce–that’s the trade deficit–we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.”

Better yet, I won’t summarize.  Here is the actual article:

America’s Growing Trade Deficit Is Selling The Nation Out From Under Us. Here’s A Way To Fix The Problem–And We Need To Do It Now.

By Warren E. Buffett

November 10, 2003

(FORTUNE Magazine) – I’m about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits–and, as you know, we’ve not only survived but also thrived. So on the trade front, score at least one “wolf” for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway’s money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in–and today holds–several currencies. I won’t give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.

Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.

But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country’s “net worth,” so to speak, is now being transferred abroad at an alarming rate.

A perpetuation of this transfer will lead to major trouble. To understand why, take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that’s how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.

To read the rest of this article (and I hope you will), click on this link: http://www.berkshirehathaway.com/letters/growing.pdf

Our trade deficit is a serious problem that we need to do something about soon.  We can’t wait around for Washington to fix this problem because if they were going to take bold action to address this, they would have done something by now.  However, every one of us can do our part to address this problem by buying American.  Please consider taking the Buy American Challenge today.

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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This week, Dr. Donald J. Boudreaux, a prominent economist and the former Chairman of the Department of Economics at George Mason University in Fairfax, Virginia, penned an open letter to me in response to my Feb. 12th posting, “Record Crushed: U.S. Trade Deficit with China – $273 Billion in 2010 – Biggest Ever Between Two Countries.” He also posted the letter in the comments section of the posting on this blog.  In the open letter, Boudreaux posed several barbed questions about the Buy American Challenge effort.  Here is my response…

Dr. Boudreaux,

Thank you for visiting my blog.  I appreciate your comments and direct questions.  And I appreciate you thinking so highly of my posting that you penned an open letter to me on your own blog. I truly love a good debate, so this should be fun.  I realize, of course, I am choosing to engage in an economics debate with a renowned economist (or perhaps multiple economists), but hey, I guess eventually you have to play with the big boys. 

So let’s go question by question.  You asked:

– Because “buying American more often” means buying low-priced imports less often, Americans’ spending power will shrink. Americans will then have less money to spend at the movies, at local restaurants, on premium cable-tv packages, and the like. How do you know that the job losses that result from contractions in these industries won’t offset whatever job gains emerge in other industries from “buying American more often”?

I like how you phrase that… How do I know if jobs created from buying American won’t be offset in other areas?  Of course, I don’t pretend to know because these things do not have a direct relationship on each other; job creation and unemployment is caused by a myriad of factors.  So no one could ever know this sort of thing, much less be certain of it ahead of time.  But, since we are currently experiencing a huge jobs crisis in this country, and you are the one who argues for a less intuitive method of creating jobs in this country than I do, I would like to know: How do you know that the job losses that result from $500 billion leaving the country via the trade deficit – which most economists say is stifling job-creation in the U.S. – are fully offset by employment increases in other industries as you claim?  I don’t think you could possibly know that.

Your whole question starts with a faulty assumption.  The assumption you made is that buying American will reduce one’s buying power.  That is an entirely untrue assumption.  I have been on a strict buy American program for a year, and I have more money to buy things I want and need than I ever had.  Try to buy American for a week and you will see why.  When you buy American, you rarely make impulse purchases.  How many sweaters do you have in your closet?  More than you need?  Me too.  Practically every sweater I have in my closet was purchased on impulse.  That stops when you buy American because the majority of the consumable goods you see in malls and at Target are imported.  Buying American makes you think about whether you actually want to buy something because American-made things are a little harder to find.  Buying lots of stuff you don’t need reduces your buying power, not buying American.  Buying American actually helps people live within their means and increases buying power.  Plus, I am not saying everyone should entirely stop buying imports (so please do not pretend that is what I’m saying), what I am saying is that if Americans can cut their consumption of imported goods 25% and replace that with American-made goods, we will have no trade deficit, and many more jobs because of it.

Here is another wrong assumption. You assumed that American-made things are more expensive.  Certainly that is true sometimes, but not always.  There are lots of American-made items that are of equal quality that are less expensive than imported goods.  Are American-made New Balance running shoes more expensive than imported Nike? No.  Is Tito’s Handmade Premium Vodka (made in Texas) more expensive than imported Grey Goose? No.  People pay more for imported items sometimes because there is a higher perceived value simply because the product is imported.  But those misperceptions can be changed, and that is precisely what I am trying to do.  Buying American in these cases will increase one’s buying power.  Using your own logic, you should be a big supporter of buying American when American-made goods are less expensive.  Not only would we create jobs from the goods being made here, but we would also be increasing our buying power through cost savings, which would lead to more jobs created in other areas like restaurants, cable-TV, and the like.  I don’t think you can have it both ways.  If you think it is better to buy less expensive imported goods because of the impact it has on job creation in other areas, then you should be a big supporter of buying American-made in cases when the American-made product is less expensive. Do you support buying American in these cases?

Then there is the issue of quality.  A lot of the cheaper imported products are in fact poorer quality.  How many $5 umbrellas have you broken?  Me too.  They say, “They don’t make ‘em like they used to,” for a reason.  Much of the imported stuff we are buying is cheaper quality.  American-made stuff is more expensive sometimes, but in most cases, products made in the U.S.A. are higher quality and last longer. 

You asked:

– At least half of all U.S. imports are inputs used for production here at home by American firms. So if American firms substitute more costly American-made inputs for lower-priced imported inputs, many American firms’ costs will rise. These firms will lose market share. How do you know that the job losses that will result from these firms’ contractions and bankruptcies will not offset whatever job gains emerge from “buying American more often”?

Again, I object to the phrasing of the question.  My method of job creation and deficit-reduction is straight forward and intuitive.  Buying American-made things puts Americans to work who make those things.  That is plain and simple.  The burden of knowing is on you, since your position (as I understand it) is that American consumers should do nothing to correct the trade imbalance or create jobs for Americans by buying American.

I have never said that I think companies should stop using imported goods in production.  The reason I have not said that is because I advocate a consumer approach to addressing the trade deficit and unemployment problems in this country.  I believe that if we create demand for American-made goods by talking about the superior quality of American products and the positive impact buying American has on our economy – and millions of people start to do it – American firms will be profitable meeting that demand.  I’m not sure how we could make American companies use domestic inputs even if we wanted to.  But if the American people demand it, then companies will find a way to fill that demand profitably.  But we are a long way from that.  Right now you can’t even find the domestic parts content for most goods.  If you think somehow that American consumers buying American-made goods will cause bankruptcies, I think you are wrong. 

You asked:

– Because every dollar of America’s trade deficit is a dollar invested in the U.S. economy – investments that overwhelmingly expand the volume of America’s productive capital assets above what this volume would be without these foreign investments – eliminating America’s trade deficit will likely result in a net reduction of investments in the U.S. economy. How will less investment “secure our long-term economic future”?

Please reword this question and I will be happy to answer it.  I’m not sure what you are asking. 

Please answer this hypothetical:

You are considering purchasing one of two widgets.  One is an American-made product, produced by an American-owned company and made with 100% American parts content.  The other is an imported product, produced by a foreign-owned company and made with 0% American parts content.  They are both the exact same price.  In your opinion, which is better for the American economy?

A) Buying the American-made widget is better for the American economy

B) Buying the imported widget is better for the American economy

C) They are completely equal (neither A, nor B is better for the American economy)

I’d like to hear your other questions, and I would love to hear your answers to mine.

Thank you very much for commenting and starting what is sure to be a lively debate.

Sincerely,
Randy

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U.S. trade deficit balloons to $500 billion behind spike in U.S.-China trade gap.

Big news about the U.S. trade deficit was reported yesterday.  The Department of Commerce revealed that the U.S. trade deficit for goods and services was nearly $500 billion in 2010 – a 33% increase over the trade deficit for all of 2009.  Over half of that was due to a $273 billion trade deficit with China.  The United States has a job-stifling trade deficit that is growing, and growing fast!

The deficit is growing because as Americans are starting to increase their purchasing again after a thrifty 2009, they are buying imported goods more than ever before, often from countries like China.  In fact, the U.S. trade deficit with China in 2010 is by far the biggest trade deficit a country has ever had with another single country in history. 

The U.S. trade deficit is having a significant negative impact on job growth.  Experts estimate that every $1 billion in exports creates an additional 6,000 jobs in the U.S.  Yet, despite $163 billion more in U.S. exports in 2010 (which created almost 1 million new jobs), jobs still are not being created in sufficient numbers to get the economy going or increase employment largely due to offsetting increases in imported goods.  While increasing exports is a worthwhile goal, we cannot look for that to be the sole solution to our trade imbalance problems.  We need Americans to cut back our reliance on imports by buying American.

We can solve our country’s economic problem ourselves by changing our buying habits just slightly and buying American more often.

The average adult consumes $700 per month in imported goods.  If we could reduce that to $517 per person per month, we would have no trade deficit at all. With no trade deficit, we would likely have 3-4% unemployment.  All we need to do is reduce our consumption of imported goods 25% to have jobs again in this country.  That will secure our long-term economic future (a.k.a. our children’s future). 

Can you cut 25% of the imported goods you buy and replace them with American-made goods?  If you will do that, you will have done your part to set our country back on the path to economic security.

That is why I am buying American.  Please join me.  Take the Buy American Challenge today!

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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Tito's Handmade Vodka

If you’ve never heard of Tito’s Vodka, just wait, you’ll be hearing a lot about it soon.  Tito’s has been gobbling up market share left and right because it is quite simply one of the best, if not the best, vodka on the market today.  Wine Enthusiast Magazine rated Tito’s handmade Vodka and awarded it a score of 95, an insanely high score for vodka.  By contrast, other top shelf vodkas, Ketel One, Grey Goose, and Belvedere scored 89, 84, and 84, respectively, when rated by the same publication.  They didn’t hold a candle to Tito’s. 

What does that tell you about the vodka market?  To me, it says don’t be misled by a fancy bottle and lots of marketing.  The best vodka – like many other things – is not necessarily the one with the highest price tag. 

Speaking of price tags, that is absolutely one of the most attractive qualities of this fine vodka.  Unlike some of the brand’s imported rivals that sell for $30 and up, a 750ML bottle of Tito’s can be purchased for $18-$20.  Tito Beveridge, the owner of Tito’s vodka, has said that he decided to keep the profit margin down and sell his vodka for around $20 to reach a potentially bigger audience. That strategy – delivering a superior American-made product at a very reasonable price – is paying off in spades.

What is most impressive about Tito’s is the reviews the product gets from people know the product well. They don’t just like Tito’s, they love it!  Check out this review of Tito’s Vodka from the Beverage Baron, a connoisseur of beer and spirits based out of Alexandria, Virginia.  Even if you don’t care about vodka ratings, I suggest you take a look at the Baron’s blog; it’s funny and informative.  The Baron swears by Tito’s. 

Here is my favorite attribute of the brand.  Tito’s Handmade Vodka, which is a corn-based, gluten-free vodka, is distilled 6 times in old-fashioned pot stills at Fifth Generation distillery in Austin, Texas.  It is as American as apple pie.  In fact, just today, Tito’s vodka became Made in U.S.A. Certified, a certification that guarantees a commitment to American products in the entire production process.  Tito’s is the first spirit to have earned that designation. 

When you are committed to buying American, there are times when you have to pay a premium to get a good made in the U.S.A.  Then there are other times, like right now with Tito’s Vodka, that you don’t have to pay a penny more for the American product.  In fact, the American product is superior and significantly lower cost.  Tito’s beats the imports six-ways-to-Sunday on any factor you might consider.  

If you buy vodka, you owe it to yourself to give Tito’s a try. Tito’s is available in all 50 states, so you should be able to locate some in your neck of the woods.  And, don’t be afraid to ask for it by name at your local bars and restaurants.  It would be great if every establishment in America had Tito’s on the shelf.  Don’t be surprised if that becomes the case in a few years.

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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California Supreme Court Building

On January 27, 2011, the Supreme Court of California issued a ruling that is a huge victory for buy American advocates everywhere.  In the case, Kwikset Corp. had falsely labeled locks that the company manufactured as “Made in U.S.A.”  In her ruling, Justice Kathryn Werdegar wrote what many of us already know and have been saying for years: “To some consumers, processes and places or origin matter…In particular, to some consumers, the ‘Made in U.S.A.’ label matters.”  She is absolutely right.  The Made in U.S.A. label does matter to millions of people.  And if the integrity of that label is ever lost, it could make buying American with any degree of confidence all but impossible. 

Roger Simmermaker, author of How Americans Can Buy American (a great book, which I suggest you purchase immediately if you are interested in the topic of buying American), authored this analysis of the ruling’s impact: 

California’s Kwikset lesson: Don’t lie about “American made”

By Roger Simmermaker

February 6, 2011

Back in October 2009, I wrote a “Buy American Mention of the Week” detailing the potential danger to the integrity of the “Made in U.S.A.” label, which depended heavily on a future California Supreme Court ruling concerning Kwikset Corp.

That future ruling is finally here, and Buy American advocates have won big! As of January 27, 2011, four Southern Californian residents were granted the right from the California Supreme Court to sue Kwikset for falsely labeling locks as “Made in U.S.A.”

Here’s a quick history about how the Kwikset issue became such an important case with national implications. Back in 2000, handyman James Benson claimed Kwikset was selling locksets as “Made in the USA” when they actually contained screws from Taiwan and were assembled partly in Mexico.

Black & Decker-owned Kwikset was found guilty by a trial court, which discovered that 25 of Kiwkset’s products were illegally labeled (Kwikset admitted that two others were illegally labeled). But a court of appeal overturned that judgment on the basis of Proposition 64 (passed in 2004), which says that a consumer or business would have to prove they suffered a “loss of money or property” as a result of false advertising.

Because businesses and consumers could not show (in the eyes of the court) that the lockset products had any less market value due to the false “Made in USA” advertising, the court claimed no injury occurred. Essentially, the Court of Appeal held that the ‘Made in USA’ label has no market value and therefore consumers do not lose anything when they buy products falsely labeled as “Made in U.S.A.”

In my October 2009 “Buy American Mention of the Week” article, I made a call for patriotic consumer activism, urging American consumers and business owners alike to write an amicus brief to be submitted to the California Supreme Court, as the case sat before the supreme court at that time.

Hundreds of responses from concerned American were received, and I passed those comments on to the lawyer handling the case. The issue was important to American consumers who wanted to protect their choice to buy American, American businesses that have to compete with companies that engage in unfair competition by falsely advertising their products as “Made in U.S.A.,” and American workers who would see more of their jobs outsourced if the “Made in U.S.A.” label is stripped of its meaning and unenforced.

Handyman James Benson and three other citizens said they were patriotically motivated back then to buy American-made goods and would not have purchased the Kwikset locks had they been aware that the locks were not actually made in the United States.

The California Supreme Court has now ruled the buyers (Benson and the others) did in fact suffer economic harm since the product’s value – in their eyes – was diminished, and they paid a higher price for the Kwikset locks than they normally would have if the locks had been correctly and accurately labeled.

In her ruling, Justice Kathryn Werdegar wrote what many of us already know and have been saying for years: “To some consumers, processes and places or origin matter…In particular, to some consumers, the ‘Made in U.S.A.’ label matters.”

Thanks to not only those who responded with their versions of an amicus brief to the court back in 2009, but also to all those who take the time and effort to seek out and buy American-made products, awareness of the importance of “Made in U.S.A.” is again on the rise in America.

“Made in America” makes America stronger, and reflects a sound national strategy that transcends the false belief that says cheaper is better.

I’m reminded of the words of Republican President William McKinley, who had a few things to say about the word “cheap.” He said, “I do not prize the word ‘cheap.’ It is not a badge of honor…it is a symbol of despair. Cheap prices make for cheap goods; cheap goods make for cheap men; and cheap men make for a cheap country!”

We clearly do not want a cheap country. We want a country with high standards and values, and high wages for American workers so they can afford to buy the products made in their own country by other fellow Americans. We need our nation to reflect the vision of the founders, who advocated and emphasized self-reliance, self-sufficiency, and independence. These American traditions and values are consistent with what motivates many of us to buy American, so we can create wealth and retain prosperity within our sovereign borders and America can remain forever sovereign and in control of her own destiny.

Thanks Roger!

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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This week, http://www.PickMyDecor.com decided to sell goods made in the U.S.A. only. Go there for a great selection of high quality American-made products for your home.

If this isn’t proof that this buy American movement is catching on, I don’t know what is. 

Just this week ABC World News announced a Buy American Challenge, and challenged Americans to redecorate their homes with goods made in the U.S.A.  Well today, I found out that www.PickMyDecor.com has decided to carry only products made in the U.S.A.  They have updated their website and now everything you will find there is made in America.

If you’re looking for a place to buy American-made goods for your home, www.PickMyDecor.com has a great selection of really beautiful products.  They have bathroom items, bed linens, dining and kitchen supplies, pillows, furnishings, patio items, and much, much more.  It is all quality stuff.  And best of all, it’s all American-made.

This is how we use buying American to create jobs.  The American people demand it, then companies like this one step up and bring all those American-made goods to one place so that consumers can shop as they normally do, while shopping for items that are made in the U.S.A.  Kudos to www.PickMyDecor.com for making the decision make their site 100% made in U.S.A.

I’m convinced that we are going to get our economy humming and creating jobs by millions of Americans choosing to buy American.  I can see that this idea is starting to grow.

Join the movement.  Be a part of the solution.  Invest in your country by buying American.

Until next time, here’s to doing what we can to support our country by buying American.

Randy

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