In his most recent Washington Post column Henry Olsen touches on a subject I’ve been talking about for years, urging conservatives to support a “Buy American” requirement to bid on federal contracts:
Biden’s Buy American plan is a modest attempt to reverse some of these trends. Among its many components, Biden has pledged to use taxpayer dollars to buy goods made in the United States rather than elsewhere. He reiterated that pledge Monday, saying, “No government contracts will be given to companies that don’t make their products in America.†That won’t suddenly bring manufacturing back from overseas, but it will have an effect on the margins. Just as important: It sends a signal to U.S.-based companies that they need to balance political concerns and cost when making decisions about where to locate factories.
This is crucial to rebuilding the implicit social contract Americans have with each other. U.S. firms and workers have traditionally benefited together from economic growth. But the rapid outsourcing of U.S.-based jobs, coupled with the rapid insourcing of foreign workers, have severed that link for too many of our fellow citizens. This in turn leads to justifiable resentment as well as isolationist and extreme nationalist tendencies. It also provides more fuel for socialists who argue that capitalism itself needs to be restructured. It’s simply not politically tenable in a democracy for a growing percentage of Americans to believe that the political and economic systems don’t care about their well-being.
Critics will contend that measures such as these are “protectionist†and will decrease overall economic growth. Let’s grant that for the sake of argument. So what? Modern governments have long sanctioned economic interventions that reduce economic efficiency in the name of social cohesion. That’s precisely what welfare programs such as Social Security and Medicare do: They transfer wealth from the most productive elements of society to less economically productive people to ensure that everyone has some tangible benefit from economic activity and growth.
There is no theoretical difference between “free trade†and “laissez-faire†economics, which perhaps is why those who most fervently believe in the latter more stridently argue for the former. Fortunately for all of us, we have long since left a pure interpretation of free markets behind for the more stable and equitable mixed economy all free nations now enjoy.
That leads pretty naturally to the question I ask in the title of this post. My bet would be that companies will do some of both.
I think that the requirement will need to be worded very carefully and receive close oversight, something we have not been very good at for decades. It should be extended to the entire companies rather than merely the divisions bidding on the contract and it should pertain to the entire supply chain for the goods or services rather than some more narrow definition. It should perhaps be restructured as “Buy North American”.
I got a chuckle out of this passage from the column:
By this point, it should be uncontroversial that U.S. global trade policies in the past two decades have significantly harmed millions of Americans and their communities.
Maybe it should be uncontroversial but that trade has not harmed Americans and their communities has been the consensus view among Republicans and Democrats alike since the Reagan Administration or before regardless of the evidence to the contrary. I would submit that the requirement will face opposition both from conservatives and transnational progressives.
I would also like to remark on this:
Buying American will surely cost taxpayers more for the same goods.
Maybe. Maybe not. The benefits of trade with China in particular have been greatly exaggerated. But I’ll certainly agree that if you overstate the benefits and understate the costs, trade will always pass a cost-benefit analysis. And don’t try to lecture me about comparative advantage. I probably read and understood what David Ricardo wrote about it two hundred years ago before you were born. Regardless of Ricardo’s argument absolute advantage overwhelms comparative advantage in nearly every case.
