Why Buy America Is Bad Law
niskanencenter.org
niskanencenter.org
The only way I see is to avoid consumerism, being conscious about it and voting on politicians with that kind of ideal and then, only then, someday, there should be a little bit of a chance for change.
The average person doesn't have the time or expertise to track the supply chain of ~anything they buy. At point-of-sale you're presented with, at best, a price and a brand name. And in many cases nowadays, like on Amazon, the brand name is just throwaway semi-English gibberish that rotates out every 4-8 weeks and has 5000+ fake reviews and is just some generic garbage that's being resold off Alibaba.
I think it's really fair to say this is something that needs to be done by government regulation, not individual people.
Even businesses will struggle with this unless they're in the top % of companies (both $-wise and market capture wise) and can afford to force their supply chain to capitulate to their audits/compliance demands.
This is why we try to ensure everything they can buy there is unlikely to kill them if used properly. We can likewise that nothing there was made in circumstances or conditions we would find morally unacceptable.
The supply chain is now firmly planted in Asia.
We've papered this disaster over with debt and asset bubbles.
And still these people act as if we are going to fall for the same old wine & wool just-so story from 18th century England again.
It’s not even purely a question of economics. In a crisis like COVID you can easily prevent exports to meet local demand. Trying to force imports on the other hand doesn’t work.
“Someone’s gotta make stuff” as Elon puts it. Manufacturing of stupid trivial things like buttons and pins is still important to keep high volume manufacturing knowledge and knowhow.
There were countless examples of how quickly manufacturing of A was converted to manufacturing of B. Ken Burns documentary goes much deeper into this and I find it totally fascinating.
Chinese populace has an insane level of "jerry-rigging" capability because of how they bring costs down. This is a huge advantage in war manufacturing theater. This is now questionable as Americans (and Europeans alike) are constantly in consumption mode.
If markets are moving away from that particular niche, the government should not be artificially preserving the conditions under which generations can do the same thing and expect the same result. What happened to personal responsibility?
I just wanted to make it clear it was greedy wealthy manufacturers whom abandoned their country in order to make a bigger wad.
Whether or not those models are accurate is matter for debate.
Comparative advantage is a fine model in a one-shot static analysis. But when modeling in reflexivity, and adjacency, from my perspective as a business operator is comparative advantage is a terrible analytical model.
There are all sorts of industrial activities that supply soft power projection into an adjacent industry. As long as I'm not bleeding money on them, I don't care they don't fit some economists' vision of "highest, best use of capital". That approach to capital-efficiency-über-alles has for a long time now struck me like working physics problems with zero friction.
An example I give is IBM selling its x86 laptop and server division to Lenovo. They weren't consistently hemorrhaging red ink. And given hardware refresh cycles and new projects, those affiliated IBM sales teams were invited in behind the curtains to talk new orders at least once every other quarter with the customers. You cannot buy that kind of access for blood or money these days, and my personal take is as long as it doesn't net you a negative balance sheet at the end of the day, I've seen way worse use of capital on "marketing expenses".
For example, IBM definitely has the sophisticated financing/leasing/etc. structures to have set up sales incentives that enabled customers to start on their x86 hardware, and then seamlessly p2v into their cloud as the initial onboarding of customers' cloud initiatives, and helping them re-design and re-factor for the cloud.
This pattern plays out over and over in many businesses. When leveraged, it constructs a moat out of an ecosystem of inter-related economic activities.
We are at record high real output levels in manufacturing [1]. China and the EU are bigger, and employment in the sector is down, but it’s false to say our industrial capacity has been decimated.
[1] https://en.m.wikipedia.org/wiki/Manufacturing_in_the_United_...
You need to look deeper into what US is producing. Most of which is Oil, Petroleum Products, Cars, Aeroplanes and Defense equipment based on the article you’ve linked.
There has been a massive decline in many other sectors, would be interesting to find a source of industry breakdown. I’ll look for it.
Where do people get this myth from?
It's just flat out untruthful.
https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St...
> The United States is the world's third largest manufacturer (after China and the EU) with a record high real output in Q1 2018 of $2.00 trillion (i.e., adjusted for inflation in 2009 Dollars) well above the 2007 peak before the Great Recession of $1.95 trillion.
US manufacturing capacity keeps going up and up and up.
Maybe you're thinking of employment in manufacturing? Yes that's going down. It's also reducing as a proportion of GDP, but that's not 'capacity', and it's because other sectors have grown even faster.
While statistically, it may be true, literally 99% items in my house are made in China. Paint on the walls is probably still made in US.
Small business and manufacturing industry statistics would be interesting to evaluate here without the rhetoric “Where do people get this myth from?” - daily experience of millions of people does not align with reality of 30 years ago. That’s why.
Even the most “America First” of Americans will readily agree that manufacturing in the 1970s was horrible compared to present times.
If you actually click on the provided link and scroll down to where it talks about those train cars, you’ll see that the first problem came from running an extended-distance speed test where the average speed over the entire distance exceeded the maximum speed in the design of the train cars. You can’t seriously say that burning out the electric motors as a result of this is a manufacturing deficiency.
Then there is this quote: > When the R-44s initially entered service, failure rates increased tremendously because of a combination of new technology and inadequate training.
You can probably attribute some of the “new technology” part to manufacturing problems. How much? Who knows? But if your subway system is poorly run and has inadequate training, the best subway cars built in the best factory in the world isn’t going to save you.
Of course, a big part of the reason for that was presumably lack of external competition in the 70s. If you say to Manufacturing Company X "don't worry about the European and Japanese manufacturers, they're not allowed bid on this" you are unlikely to get the same sort of quality than you'd get if they were.
British car manufacturing is a nice example; in effect, the government forced consumers to buy the British manufacturers' output via protectionism. The result was _legendarily_ awful quality. And by the time the protectionism waned (when the UK joined the EU), it was too late; the industry was so used to not really having to compete that it just couldn't adapt to having to produce a good product, and largely collapsed.
Yes! (And no). In the US, by 1970, foreign auto manufacturers had achieved a 10% market share, and it had been growing steadily since the mid 1960s. The Detroit manufacturers were fully aware of this, they just weren’t making changes. That was a time of great societal unrest and huge labor strife. It’s not hard to imagine the elites not wanting to save American manufacturing jobs or at least making them competitive.
Also, it's probably far easier to justify inaction on cars because some of the things they're judged on are pretty subjective. A GM exec could plausibly have said something like "we don't need to increase reliability to match Japanese cars, because people don't want that sort of car here; they're too small/whatever". They'd have been wrong, as it turns out, but it wouldn't have been obvious nonsense. Whereas a train manufacturer exec wouldn't have had the same sort of arguments; they'd have _had_ to compete on the things railways care about, which are mostly just reliability.
Globalization and such have been very good at lowering prices and general increased productivity for most people, but I think its clear that its leaving behind a bunch of people who do not want to be forced into this global market, and get angry about it.
It isn’t so much protectionism as government mandated graft.
In terms of transportation infrastructure the USA is behind countries like Kazakhstan and Morocco. We need all the help we can get from other countries. Indeed, the law we need is that we're forbidden to buy from ourselves, and nobody who has ever planned an American transportation system is permitted to do it again without at least 20 years of remedial experience abroad. We need Buy Not American.
I admit I haven’t visited Morocco in 20 years, but based on what I witnessed traveling through the country, this seems incredibly unlikely.
A few major, shiny, “prestige” infrastructure projects don’t represent the average state of their infrastructure.
Which Morocco is absolutely not.
You seem to be viewing things through an extremely western urban viewpoint.
About what other topics would you care to be mistaken?
You think Morocco hitting an estimated 73.7% by 2050 actually supports your position?
It fascinating just how emotionally motivated your reasoning is, to the point that you’re absolutely certain of your position despite it arising from a place of gross ignorance.
If something can't be profitably made in the US then the only production for it will be explicitly for the government. And it will be a de facto monopoly and priced accordingly.
Maybe that's a tradeoff you're willing to make to make sure that there is always someone in the US who can make toilet seats. I would rather it be a more nuanced decision than a blanket mandate.
That said, I would also tax all imports to the point that the only imports worth buying are ones that are of a significantly higher quality than their domestic counterpart.
I would also ban trade with any countries that have awful labor and environmental practices. This one would be the most difficult, because how do you define awful? And how long do you keep the ban after they fix things? If you go back far enough the whole world gets banned.
Similarly todays Chinese laborers have no problems affording stuff they produce. Industrial production is very efficient, the products aren't super expensive even if you pay the laborers decent wages.
They are saying that there will be situations where the government has to buy some product domestically, but every private business and citizen imports that same product. The law would cause a domestic manufacturer to exist with the sole purpose of providing that product to the government. Since they won't have any other customers, or any competition, the price will be high.
Obviously the US can't/hasn't/won't out compete the entire world in all areas but it should be at least competitive.
Competition should extend beyond pure price. National values should be more than politicians talking points. If widget A is made by Uighur forced labor and widget B is made by a middle class labor in a free market, are you willing to spend more for B? How much more?
FWIW - I don't want a blanket mandate either but I don't think you have a convincing argument against it.
Here is an experience I had with the "Fly America Act" (a law saying that government funded travel must be done on American airlines, except in the most extreme circumstances):
I was traveling to a city in a foreign country. That country's flag carrier had a 5 hour flight for $600. The best option from a US airline (Delta) was an indirect flight (around 9 hours each way) for $800. Between the ticket cost, overtime I got for the additional layovers, and extra per diem spent during the layovers, flying on a US airline probably cost the government an extra $1000.
It would've been a win-win-win-win if the government had let me fly the foreign flight and just given Delta a gift of $200
* The foreign airline gets another customer
* Delta gets $200 without having the costs of another passenger, and they'd still be able to sell the seat I ended up sitting in
* The government would've saved hundreds of dollars by not having to pay me overtime
* I would've gotten home sooner
This is likely to result in growing unrest among the people who are both impacted and increasingly done with that kind of leadership.
(for the record, no, I don't like the guy, but I think his campaigns and his platform, such as it was, are fascinating and that over-simplifying the story of how he got elected & why people voted for him is a dangerous trap)
Honestly, Trump bumbled around and made a lot more obvious to more people. In addition to just being Trump.
I can tell you a lot of people went for Trump, 70 million total this last time, precisely because they saw Trump as not being part of that order. Fascinating indeed!
When we advise other countries how to bootstrap their economies economies will tell them to build up their local economy and import knowledge where needed.
This was the playbook for the “Asian tigers” but also post war Japan (or back to Meiji Japan) and China and we see it in India too...
Hey but when the US wants to do a little of this, then these profiteer advocates get all tied up in knots.
They could not care less about US workers and job losses and skills losses. They only care that the status quo of making money for the interests they represent is uninterrupted.
This article would have been far more convincing pre-covid when few worried about supply chains. Today? Forget it.
We're talking the USA's final few manufacturers in essential industry, here. If we give them up, and then get in a war, that means we would almost automatically lose the war. War is still a real thing that happens on Planet Earth.
Even if the equipment our protected domestic manufacturers make is expensive and low quality, there is a world of difference between expensive and shoddy vs 'nothing at all'
That argument has been pretty much made obsolete since the invention of the atom bomb...
If trains are the only problem, it sounds like the Buy America legislation isn't bad and we should deal with buying trains separately?
Still waiting but not holding my breath for ESG to include "short supply chain".
Picking one very specific, small manufacturing area and claiming in represents the whole is a bit hard to swallow and a really poor argument.
My TLDR is that you have to use american-made ships when transporting product from 1 US port to another.
The US government regularly suspends the act, like it did during the recent oil issue on the east coast: https://www.bloomberg.com/news/articles/2021-05-13/biden-lif...
The CATO institute (right leaning group) pushed to drop it 2.5 years ago: https://www.cato.org/publications/policy-analysis/jones-act-...
[edit] and cruise ships
Politicians have over fetishized manufacturing. They need to stop promoting and protecting jobs that don’t need an education.
Left-wing parties in Europe have a term for imports in this circumstance: parallel imports. According to this view, protectionism is justified on labor or ecological grounds, but imports from countries with strong unions and environmental regulations trigger neither justification.