I am not surprised at all that the stimulus package has “buy American” provisions in it. I suppose congressional leaders were reflecting the prevailing mood among the U.S. public, and even among most students in my introductory geography course.
My students’ “buy American” discussion was in the context of an assignment they had completed. I had asked them to pick 20 items at random in their apartments and note the countries where they were manufactured. They then had to identify any patterns they observed in the data.
As one would guess, about 50 percent to 60 percent of the goods they owned were manufactured in China. Barely a fifth of their “stuff” was made in the good ol’ USA. Some students were surprised to note that they owned things made in countries they did not even know existed.
The more we discussed the data, the more they seemed to be concerned about goods flooding this country from somewhere else. It didn’t take long before some of these students in an introductory geography class began wondering if we need to protect and encourage “our” businesses and not rely so much on China or other foreign countries.
The “buy American” provisions in the stimulus package reflect these same concerns. The package requires that only U.S.-made goods, particularly iron and steel, be used in public works and building projects that will be paid for by the stimulus dollars. Financial firms that are on government life support will not be able to hire foreign labor, either.
My typical response to students is to rely upon local examples. I ask them whether other countries might feel that importing planes manufactured by Boeing precludes the growth of an aircraft industry within their borders. I ask whether the import of Hollywood films is wiping out other countries’ native movie industry. I ask whether my students would be OK with those countries not buying our movies and planes.
It becomes clear that trade is a way of life, and imports and exports are basic characteristics of modern and successful economies — even during recessions. On the other hand, if countries implement a variation of autarky — the notion that a country should be self-sufficient and not engage in international trade — then the results are unfavorable.
India, during my formative years, practiced a version of “buy Indian” through an elaborate and regulated system of import-substituting industrialization. In this system, it was nearly impossible to get access to goods manufactured in another country. It didn’t matter whether it was chocolate or cement or cars, importing meant extensive governmental red tape and even bribes.
Had India continued down that path, it would not have undergone the economic and technological revolution that it has. The much joked-about call centers would not have been sited in India. Neither would Thomas Friedman have coined the phrase “the world is flat.”
As I have noted in earlier columns, absolute poverty in India has not been eliminated, and many other problems persist. But I am confident that the situation would be worse had India not switched its economic gears from autarky to policies that actively encouraged greater participation in the global economy.
So much to my students’ disappointment, I am not keen on closing our economy, even if only partially, with “buy American” provisions.
Also, the current economic crisis is not merely American but global. We are at a stage where China’s imports have dropped almost by half, and the economic contraction in Japan makes our recession look tame. So I am equally worried that other countries might start imitating America with their own versions of “buy domestically.” It is no wonder then that other key global players, including China and the European Union, already have warned us that they will keep a close watch on American protectionism.
To a large extent, the way out of this recessionary hole is by adopting a global slogan of “just buy, baby,” similar to Al Davis’ old tagline of “just win, baby” in the Oakland Raiders’ heyday. It’s simply unwise to chant, “just buy American, baby.”
Appeared in print: Sunday, Mar 8, 2009, page G3