Trying to satisfy one’s wants and needs locally without having to rely on a more distant supplier almost borders on isolationism. Consider for a moment North Korea. That country has done a marvelous job of isolating itself from the vicissitudes of living on this planet. According to what we hear on the radio, daily life in that small Asian country isn’t anything close to being a bed of roses. Yet, the United States, relatively much more open to international commerce, hasn’t seen so many roses lately. I say relatively because the U.S. economic stimulus plan originally stipulated that any infrastructure upgrades in the proposal were to use only steel products produced in this country.
When both economists and politicians disagree among themselves about a topic, there probably isn’t a single correct answer. That uncertainty becomes the launching point for this opportunity to root around in the chaos we call the Internet in search of some credible, practical, zero-cost, noncommercial, registration-free resources that can shed some light on open markets and protectionism. Remember, we search the Web so you don’t have to.
Many people argue that it’s the small businesses that hire and employ most of the working population in this country. If that’s true, it’s good to see a small startup make an oversized splash in the economic pool of entities riding the “buy American” bandwagon. After securing their URL (www.myamericanjobs.com) at the end of September 2008, Bryan Aldridge and David Foster issued a press release to tell the world they’re open for business as of Feb. 11, 2009. My American Jobs Inc., Glendale, Ariz., developed a way for manufacturers to notify the marketplace that a product is of domestic origin. Manufacturers that qualify under the certified American-made program are allowed to affix a special label. The rules for certification are accessible from the company’s home page. Maybe your plant could get involved.
With an intense single focus
It’s also pleasant to stumble upon a clean, uncluttered Web site that is up front about its philosophical reason for being, and then walks that talk. An example of such comes to you courtesy of Robert Johnson from North Muskegon, Mich. The name of his Web site, http://madehereinamerica.com, pretty much gives it away. You can look at it as an online catalog of consumer goods, each of which claims between 10% and 100% domestic origin. Of the 43 categories Johnson lists, those that have some rational relationship to the art and science of industrial maintenance include auto parts, computers and electronics, lawn and garden tools, off-road vehicles, shoes and boots, hand tools, power tools and woodworking tools. The individual entries provide contact information for the manufacturers involved. Maybe you want to add your products to the mix.
The three main concerns people have about the idea of buying only American products involve unfair trading practices, foreign products causing a loss of jobs, and worries about the balance of trade deficit and foreign investment. Even Libertarians have something to say about these three issues, and the message is there for all to read on the Web site operated by The Future of Freedom Foundation. In a 1991 article, “Free Trade versus Protectionism,” Richard M. Ebeling addresses each with a logic you won’t find on mainstream media outlets. He argues that regional and tribal protectionism, at any scale, isn’t the smartest thing we ought to be promoting. It’s a longish, fairly unemotional article with lots of statements worth comment. It’s best if you read it yourself at www.fff.org/freedom/0191b.asp.
Don’t miss the fun
Should you happen to be going to China April 10-12, 2009, you might want to drop in at an interestingly named exhibition: America Is for Sale Expo 2009. It’s being hosted by half a dozen Chinese entities, at least one of which is a government ministry. The promotional material for the event claims the U.S. real estate market has bottomed out, leaving great opportunities for those Chinese nationals who have the cash and can get financing. Capitalism is a great motivator as evidenced by what you’ll find at www.aifsexpo.com.
The Golden Depression
In 1930, Herbert Hoover signed the Smoot-Hawley tariff act to protect agricultural products. But, after the typical wrangling that accompanies such events, the bill ultimately jacked up the tariffs on many imported goods. The consequence was to make foreign goods more expensive than domestic goods, a situation that was supposed to put to good use this country’s excess manufacturing capacity that resulted from mechanization and technology. Not being total dummies, other countries replied in kind. The U.S. State Department posted a brief piece about the act and you can read it at http://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html. Conventional wisdom has it that an unintended consequence of Smoot-Hawley was a prolongation and deepening of the Great Depression.
However, Stephanie Flanders, the BBC’s economics editor, takes issue with that view. In her Feb. 4, 2009, blog post titled “Protectionism wasn’t the problem during the Great Depression,” Flanders blames the gold standard for those very hard times I thought we left behind us eight decades ago. Her logic, displayed at www.bbc.co.uk/blogs/thereporters/stephanieflanders seems to make sense. I hope her blog entry is still available when you read this.
Elected market interference
It’s probably safe to assume that rational people prefer to act in their own best interest. Given a choice, they’d prefer to exercise their sense of free will instead of having some entity forcing them to abandon what they consider to be to their advantage. Those outside interferences can be cloaked in many political and emotional colors, and they should be resisted, says Walter Williams in his article, “Free Trade versus Protectionism” that appears on the Web site for Capitalism Magazine. Read the piece at www.capmag.com/article.asp?ID=5361, and you might be persuaded to follow the links to a string of similar articles.
Your tax money at work
Our Federal Reserve Bank has more than a passing interest in which direction the cash flows across our borders. In an effort to teach the assembled masses something useful, the Fed posts educational articles on its Web site. One of these — “Free Trade vs. Protectionism” — is right on target for this piece. The tone is objective, presenting ideas and avoiding taking a stand either way. It presents the arguments and methods for protection, the arguments for free trade, measures of trade and how statistics can have different interpretations. It gets a bit meaty and numerical for the last third, but it’s not incomprehensible to those of our ilk. It might be a good idea to visit www.ny.frb.org/education/fx/free.html before your next cocktail party. You’ll sound like a sage.
A political slant
As you’ve no doubt heard already, getting President Obama’s bailout plan through the legislature for a signature wasn’t the bipartisan cakewalk he had hoped it would be. According to a clip on Yahoo News, Sen. Mitch McConnell says that having the buyout provide only for the use of domestic products is a bad idea. The details are at http://news.yahoo.com and accessed by inserting the term “uspoliticseconomytrademcconnell” in the search box. Look for the article titled “Top Republican: Scrap ‘buy American’ stimulus clause.”
The Democrats, on the other hand, are on the other hand. Sen. Byron Dorgan says the final package must have a provision that mandates using only products of American manufacture. Get these details at http://latimesblogs.latimes.com, where you should enter “protectionism-d” in the search box to read the piece titled “Sen. Byron Dorgan wants ‘Buy American’ clause in stimulus bill.”
Even in 2003, House Republicans wanted to see the military use more components of U.S. manufacture. That info comes from an article in Manufacturing News that was titled “Buy American Provision Stirs Up Heated Debate About Health Of Manufacturing Sector,” which can be found at www.manufacturingnews.com/news/03/0718/art1.html. Such support for the idea continued in 2005, as shown by “‘Buy American’ provisions return for more congressional debate,” a posting by Fox News, which you can read at www.foxnews.com/story/0,2933,158462,00.html. But, in 2009, something changed because another prominent Republican argued against the “buy American” concept, as posted at www.manufacturingnews.com/news/09/0204/buyamerican.html. I don’t understand politics.
Graphs for everyone
So, the bottom line is that any purchases your family or your employer make will have some effect on our economy. All you need do is choose foreign or domestic. Standard economic behind-the-scenes operations result in hundreds of rear-view time-series datasets that are rendered in graphical format to present visual patterns that the eye can digest more easily than a column of numbers. This fact provides opportunities for an army of spreadsheet geeks to do what they do best. Sometimes they find that overlapping two or more graphs reveals even more intricate and arcane patterns. Whether that complexity facilitates accurate predictive power is an open question. My point is that AmericanEconomicAlert.org, a Web site run by The U.S. Business and Industry Council Educational Foundation, Washington, D.C., has 23 of its glorious graphs that presumably show where we’ve been. The charts focus on wages, industrial capacity, industrial production and the good ol’ money supply. Shift your desk rodent’s Cartesian coordinates to www.americaneconomicalert.org and access the charts by clicking on the image just below the phrase “Charting the Economy” on the right side, below the fold. As an aside, it would be nice to be able to confirm the accuracy using raw data from independent sources.
E-mail Executive Editor Russ Kratowicz, P.E., CMRP, at [email protected].