Buy American?

John Stossel has some words here to say about the idea that buying American made products will improve the economy.

One sign of economic ignorance is the faith that “Buy American” is the path to prosperity. My former employer, ABC News, did a week’s worth of stories claiming that “buying American” would put Americans back to work.

I’m glad I don’t work there anymore.

“Buy American” is a dumb idea. It would not only not create prosperity, it would cost jobs and make us all poorer. David R. Henderson, an economist at the Hoover Institution, explained why.

“Almost all economists say it’s nonsense,” he said. “And the reason is: We should buy things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”

He goes on with the usual arguments in favor of free trade and his piece is worth reading. One thing I wonder is, how can you determine what is American? Is a Toyota made in an American factory with components from Japan American? How about my iPod made in China for an American company and with some components from America? What about a shirt made in India from cotton grown in Egypt but sold in Wal Mart, and the workers eating American corn?

It seems to me that the world’s economy has become so integrated that it must now be very difficult, if not impossible to say that any product is produced in any one country. Any thing you find in any store is made from components from many places.

Another thing occurs to me. If the US erected trade barriers and we insisted on only buying American, what is to stop the Chinese from deciding to only buy Chinese, or the Germans only buying German, etc.

Stossel is right. Trying to interfere with free trade is only a way to shoot ourselves in the foot.

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