Chris Murphy’s Phony Economic Patriotism

January 14, 2010

It sounds like a no-brainer: Buy American!

The slogan is not merely a rallying cry for the union-funded and politically powerful anti-trade lobby. It’s federal law. The Buy American Act (BAA), passed in the economically illiterate 1930s, requires acquisition officials to grant preferences to U.S.-made goods.

Few economists believe the BAA is wise. Washington shouldn’t pay more for equal -- or inferior -- products simply because they are produced domestically, any more than the State of Connecticut should be banned from purchasing inexpensive goods from New York or South Carolina or Idaho.

But bad policy frequently makes for great politics. That’s why U.S. Rep. Christopher Murphy, from Connecticut’s 5th District, claims the BAA doesn’t go far enough. He’s crowing about a bill he has co-sponsored that raises “the percentage of a completed good that must have been made in America in order to qualify as ‘Made in America.’”

“American taxpayer dollars should go to create American jobs,” Murphy growled during a December 30 press conference. “Unfortunately, our existing ‘Buy American’ laws are suffering a slow death by a thousand loopholes. Part of the strategy for getting our economy back on track needs to be tightening our ‘Buy American’ laws so our tax dollars can create jobs here and not overseas.”

The persistence of such hokum is downright depressing for the pro-trade community. As hard as it tries, it cannot convince a majority of citizens that globalization is a good thing.

Murphy’s spin notwithstanding, the planet is now so economically interconnected that “American jobs” is nearly meaningless.

A 2005 analysis by Wired is instructive. The magazine found that the Saturn Vue, “from quintessential American manufacturer General Motors,” was “about as homegrown as those Toyota Camrys built in Kentucky.” Thirty percent of the car’s components came from 11 countries, including Sweden, Russia, Germany, Poland, and Malaysia.

More recently, the Obama administration’s “stimulus” package exposed the hollowness of procurement protectionism. “Buy American” was enshrined in the legislation, of course, and many Canadian businesses quickly found that their goods -- which often feature U.S.-made parts and materials -- weren’t welcome in projects funded by the “American Recovery and Reinvestment Act.” Quite predictably, Canucks have proposed new trade restrictions of their own.

The myth that drives “Made in the U.S.A.” mandates is the “deindustrialization of America.” It’s a fable that has some superficial plausibility. The stuff we regularly buy -- clothing, toys, office supplies -- are mostly made in developing nations.

The goods The Land of the Free excels at manufacturing are far less visible. The typical suburbanite’s shopping list doesn’t include telecom equipment, long-haul trucks, hospital devices, oil-drilling rigs, aircraft engines, submarines, or industrial gasses. Foreign companies and governments, however, are very much in those markets. Prior to the Great Recession, the export sector was thriving. (As lousy as the state’s economic policies are, Connecticut remains ground zero for exports, which rose by almost 11 percent in 2008.)

The anecdotes are countless. In 1984, Caterpillar was losing a million dollars a day -- two decades later, it was booming, thanks in large part to sales abroad. Mexicans flood into Wal-Marts, while the U.S. imports 15 times as much beer from Mexico as it sends south of the border. In Kazakhstan last year, an American-Norwegian-Russian-Ukrainian company launched an American-built satellite for Malaysia. KFC is flourishing in China. In 2007, a Korean conglomerate purchased North Dakota-based Bobcat. Midwestern farmers buy John Deere tractors assembled in India.

It cannot be denied: Earth, Inc. is one big marketplace. And thus, the push to “Buy American” falls on its mercantilist face. It’s particularly foolish in 2010. “With countries’ economic vitality linked through trade and investment,” argues the Heritage Foundation’s Daniella Markheim, “the need for all nations to protect open markets is crucial to helping the global economic recovery.”

Instead of tightening the BAA, pro-growth pols should work to repeal it. Then it’s on to a long-overdue rooting out of the government policies -- fiscal, regulatory, legal, labor, and environmental -- that hamstring our amazingly resilient and increasingly productive manufacturing industry.

A century ago, libertarian guru Ludwig von Mises wrote: “The slogan ‘Away With Foreign Goods!’ would lead us, if we accepted all its implications, to abolish the division of labor altogether. For the principle that makes ‘international’ division of labor seem advantageous is precisely the principle which recommends division of labor in any case.”

You could try to tell that to Chris Murphy and his fellow protectionist predators. But they’re too busy putting their desire for political power ahead of both economic freedom and Americans’ standard of living.

D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com.

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