Will This Help the American Economy and Serve the Citizens' Interests at The Same Time?
America, just as most other countries
around the globe, was severely affected by the global recession, and everyone,
everywhere, found a more or less effective solution to the problems
experienced, like unemployment, expensive living and not only.
The solution that was embraced with
enthusiast by many officials, personalities and common people alike was to
start buying solely American products. But, while this strategy, applied when
given a choice, could be helpful for the economy and even for people's budget
and well being, rejecting foreign products at all cost will not help anyone.
On one hand, certain foods and items are
not produced in the United States due to the climatic and soil conditions or to
the lack of resources, or are more expensive than imported competitive products
of the same quality, case in which buying them would be detrimental to the
consumers' interests.
On the other hand, importing and
exporting products does have its benefits for the economy and, as proven with
the American Recovery and Reinvestment Act, neglecting these benefits and
ceasing imports could cause more harm than good.
Buying American as a Trend
While the trend of buying only American
products had begun long before, it gained an enormous popularity starting with
January 2009, when the House of Representative passed the American Recovery and
Reinvestment Act.
It was a plan meant to stimulate
national economy, covering no less than 700 pages. One small section of this
plan drew the attention of the entire world, by imposing that the public
projects to be funded use only steel and iron from the country's production.
There was another similar but less
notorious provision referring to the uniforms of the Homeland Security
Department. When it was proven that these provisions would have a negative
impact on the country's foreign policy, trade obligations, jobs and not only
(Hufbauer and Schott), the media and several movements began to urge citizens
to support the country's economy by buying only goods produced locally and
nationally (Martinez, 9).
The environmental movement, for example,
encourages people to choose their food based on geographic considerations, as a
way to oppose transportation on long distances and, implicitly, greenhouse gas
emissions.
The adepts of the food-security movement
assure that buying American will provide access to safer and healthier food,
more appropriate for the American consumers and the culture they were raised in.
There are also international movements
opposing the domination of multinational corporations and mass food production,
like the Slow Food movement, who militate for traditionally grown, produced and
prepared food.
With many principles in common with the
Slow Food movement, the local food movement encourages consumers to support
local farmers and track down the origins of their food (Martinez, 9).
The idea of buying solely American
products as a solution to the problems of the country's economy is most fervently
supported by the "Buy American" movement who, according to Macionis, brings
together workers and manufacturers with the purpose of persuading consumers to buy
products made in America (16).
Why Buying American Products Means Supporting the Country's Economy
According to the adepts of the "Buy
American" movement, imports and the deindustrialization of the country's
economy were the main causes for the decreasing number of jobs, and there are figures
supporting this allegation.
Dudley showed that the number of jobs in
the field of manufacturing decreased by more than 850,000 in 1988 (408). On one
hand, this happened because, with the increasing number of imported products
available at lower prices and preferred by consumers, many local factories and
plants were forced to close their gates.
On the other hand, many American
corporations chose to have their products manufactured in countries like Mexico,
China, India and Vietnam, where work force was and still is much cheaper.
According to Dudley, 1,800 manufacturing plants were started in Mexico (407) by
U.S corporations aiming to increase their profits.
These corporations choose countries like
Mexico for the resources, cheap labor, and wide markets they make available. At
the same time, this strategy allows them to decrease their tax liability and to
move money from one country to the other, taking advantage of currency rate
fluctuations (Mucionis, 276).
Some may argue that these corporations
create jobs, or that Americans should not be selfish and allow other countries
to grow economically. Macionis concluded, based on the research of dependency
theorists like Vaughn (1978), Walterstein (1979), Delcroix and Ragin (1981) or Bergesen
(983), that multinational investments create only few jobs, they inhibit local
industry and they encourage developing countries to export their products
rather than sell them locally (276).
Leaving the low number of jobs available
aside, another consequence of deindustrialization are the poorer working
condition. All manufacturers do their best to reduce their costs, and in order
to succeed, they often neglect their employees' safety, well being and
interests.
They can afford to do so because they
know their employees will have a hard time finding better paid jobs or better
working conditions. Besides, there are more and more immigrants willing to
fulfill vacant positions for lower salaries. Harrison and Bluestone, the
authors of The Great U-Turn, report a
dramatic decline in number of well-paid jobs throughout the last four decades (Dudley,
404).
In The
Falling Rate in Post War U.S. Economy, Moseley discusses a significant
increase of unproductive labor between 1950 and 1980, from 46% to 78%. Already
described above through lower salaries and poorer working conditions,
unproductive labor is considered by Moseley responsible for the decrease of
profits in the American economy (cited by Wolff, 1).
Job instability, poor working conditions
and low salaries hurt the economy, and when this happens, no one benefits. When
plants and factories close and people lose their jobs, buying power decreases,
companies go out of business, which, in turn, causes loss of jobs and decrease
in buying power. The long-term result is a continuous cycle of deprivation that
could end with mass poverty, unless immediate, drastic measures are taken at
all levels.
These measures involve that each citizen
starts buying products manufactured in America. It is important to make the
difference between products manufactured abroad under American brands, products
assembled in America from components manufactured abroad, and products
manufactured in America, using American labor and resources. Obviously, buying
products in the latter category is the strategy that would benefit the
country's economy the most.
Roger Simmermaker is maybe one of the
most fervent supporters of this idea, and he has gained some notorious
supporters himself. Former president Bill Clinton for example, considers
Simmermaker's initiative as a way to support
American manufacturers and, implicitly, the creation of valuable products, the
rise of the employment rate and the workers' loyalty towards their employers
and towards the communities they belong to.
In an article
in New York Times, Simmermaker assures that buying American can save the
country's economy. If every citizen makes this commitment, they will help
create more jobs. "More U.S. manufacturing jobs not only
reduce the unemployment rate, but also expand the tax base to pay for benefits". He explains with statistics that every job created
will support other jobs, in fields like food and restaurants, parts
manufacturing, health and beauty, entertainment, etc.
According to
him, in the last decade, the country had a cumulative trade deficit of $2
trillion only with China. If that money had been spent or the products had been
manufactured in America, starting from a conservative tax rate of 30 %,
millions of jobs would have been created and the national revenue would have
reached $600. He urges readers to buy American in order to reduce trade
deficit, increase the tax base and stimulate economic growth.
Buying American, in his vision and that
of many others, means hating, ignoring, avoiding import products. Books and
websites were created to teach people how to read the labels of the products
they buy in order to make sure they only by American, what brands to look for
and where to buy from.
Buy American: The Untold Story of Economic Nationalism, by
Dana Frank, How Americans Can Buy
American: The Power of Consumer Patriotism, by Roger Simmermaker and Buying America Back by
Alan Uke are just a few examples.
But, most of the above presented ideas and books overlook the
interdependency of imports and exports, the positive ramifications of imports
and exports on the American economy and the immediate consequences of buying
solely American products on the consumers.
Local Markets, Imports and Exports, and Why Buying Solely American Will Not Work
In the first half of the 20th
century, nearly half of the Americans population lived on farms, but their
number had already decreased to 1% by 2000. Most of the food consumed was grown
locally, saw no processing besides canning, salting, dehydration and smoking,
was rarely packaged and was bought directly from farmers, who rarely traveled more than a day to take their products to the market.
After WW II, national and global food
sources began to prevail over local ones, supported by regional and global
specialization, the decrease in transportation costs and the improvements in
refrigerated trucking. This made it possible that perishable foods be shipped
over longer distances faster, in better conditions and at lower prices.
Land and climate, coupled with
technology, helped create global and regional specialization patterns. Fruits
and nuts began to be produced in California, Florida and several other states
that provided adequate climate and soil conditions.
Other aspects this geographic
concentration took into account were the feasible alternatives available for
commodities that could no longer be produced competitively by local farmers.
When the cotton industry crashed in the South, for example, the broiler
industry took its place and expanded based on production contracts.
Slowly but surely, food imports began to
grow, favored by consumer demand, the increasing number of immigrants, the progresses
made in goods shipping and storage and the free-trade agreements implemented.
Some of the imported foods competed with
those produced locally and nationally, while others complemented them (seasonal
fruits and vegetables began to be available year round. Tropical fruits and derived
products that cannot be profitably produced in the United States, like
pineapples, bananas, papayas and mangos received a greater demand from
consumers, causing a significant growth of the country's imports (Martinez, 8).
At the same time, many U.S. farmers
began to export their products, thus succeeding to obtain higher prices and
maintain their economical stability despite the demand changes registered on
the local market. For example, the consumption of grapefruit and derived
products diminished significantly throughout the last 2 decades, but the
producers survived by exporting. If one third of the country's fresh grapefruit
production was exported in the 1980s, more than half of it was being exported
around 2005.
In the USDA report prepared by Steve
Martinez and his team, it is shown that consumers manifest a growing interest
in foods produced locally, considering them safer, healthier, cheaper and of
higher quality. The same tendency has been noticed in other fields as well, so
it is safe to say that, when given a choice, consumers do support the economy
and buy American products. However, import products are necessary as well,
especially those for which there is no local alternative, so buying solely
American products would not be feasible.
Both imports and exports are beneficial
for the country's economy, because both importers and exporters pay taxes and
create jobs, the former category in transportation, packaging and selling, the
latter in production and manufacturing. America lacks some of the resources
necessary to meet consumer demand, but has other resources in excess, and
imports and exports help create a balance between the two and meet both
consumers' demands and producers' needs.
Besides, as shown by Hufbauer and Schott,
in their analysis of the Buy American Act, imports and exports go hand in hand.
Provisions like Buy American would not only violate the country's trade
obligations and damage its reputation, but even cost jobs, if other countries
responded in the same way. Of course, some may say that this would only happen
if official measures are taken, but nothing bad can happen when common people
join forces to inhibit imports.
However, Ahmed Shawki argues that such protectionist initiatives will not
work, and inhibiting imports will not create more jobs. According to him, all
the "Buy American" craze is a mere attempt of diverting
responsibility from the government and the authorities, and it should be
opposed by trade unions and socialists.
He explains that the claims according to
which recession is caused by imports have no factual support and that the
increase in imports is just a natural consequence of the global capitalist
economy's integration and interdependence. He argues that exports depend on
imports, and uses a study of the Economic Development and Cooperation
Organization according to which 20% of the jobs depend on exports to justify
his position. Cutting imports from Western Europe countries or Japan would only
cause those countries to react in the same way and thousands of jobs would be
lost.
Countries depend on exports, so throwing
up quotas and tariffs would only increase unemployment and deepen the
recession. Besides, it is every day more difficult to tell which products are
imported and which are American. As Shawki shows, a great part of the Japanese
automotive industry is owned by Americans, considering that 34.2 % of Isuzu and
5.2% of Suzuki is owned by General Motors, 25 % of Toyo Kogya (Mazda) is owned
by Ford, and 15% of Mitsubishi is owned by Chrysler.
Not even the cars in the U.S. are genuine
American products, as, while the assembly takes part in the country, most of
the parts are imported. The engines, ball joints, transaxles and transmissions
come from plants owned by American companies in Mexico. Even the vice-president
of Ford declared on one occasion: "We don't consider ourselves basically
an American company. We carry a lot of flags". Before creating new jobs in
the auto industry, preventing imports would raise the price of the American
cars and, thus, lower the already low living standards of the U.S. workers
(Shawki).
Diminishing steel import would have
similar negative consequences. Shawki shows that while the country's steel
imports dropped from 21.1 million tons in 1978 to 19.9 million tons in 1981, 75,580
people working in the steel industry lost their jobs, representing 16.5 % of
the overall workforce.
Buying only American products from a
certain category may temporarily maintain or even raise the number of jobs in the
respective sector, but it will raise the unemployment rate in a different
sector, negatively affecting the economy and, indirectly, the very sector those
products belong to.
The most relevant example is found,
again, in the steel industry, whose two decades of protectionism only increased
the profits of the major players. Not only that no jobs were created, but, due
to the high price of the American steel, the car prices increased, and so did
the auto industry slump.
Of course, these are large scale effects,
what would only appear if everyone stopped buying import products, which is
unlikely to happen, but the basic idea is the same: the economy crisis is not
caused by imports, and boycotting imports will not end it.
And the list
of arguments against buying only American products does not end here. In an
article titled The
Stupidity of "Buy American", John Stossel, notorious author
and television host, citing reputable economists, sustains that people should
buy the cheapest products rather than agreeing to pay more only to buy American
products.
This way, they can use the price
difference to buy products they would otherwise not afford. Inherently, some of
those products will be American and will create jobs. Using less labor and
fewer resources to produce or buy one thing leaves more for other things. If
buying import products helps people save money, they should continue to do so,
because this way, they will be able to produce more locally and spend more on
other American products.
Stossel agrees with Henry Hazlitt that
Americans should look beyond immediate beneficiaries and effects, otherwise,
they risk accomplishing the exact opposite of what they intended.
As for those who complain about poor
working conditions and low salaries, they exist because there are people
willing to accept them. Those people accept them because, for them, what others
consider abuse and exploitation, is a Godsend, the only chance they have to
support themselves and their families. They would not be better off without
those jobs, and the little money they make, they invest it in the same American
economy everyone wants to see prosper.
Should Americans Support the Economy by Buying Solely American Products?
As shown above, and as concluded by
Steve Martinez in the above-cited USDA report, buying American products could
be beneficial for the economy. However, as shown by Stossel, people would have
to afford to buy only American and to be able to find all the products they
need.
The problem is more complex than buying
or not buying solely American products. Some of the import products people buy
are simply not produced in the country, and it would be unfair and useless to
ask or expect people to stop drinking coffee, tequila, using spices, eating
Chinese food or wearing diamonds in order to prove their support for their
country's economy.
Some simply cannot start their day
without their cup of coffee, others rely on spices for their diet, and there
are people for whom Chinese food is a treat, a way to relax, to escape routine
and reward themselves after a day's hard work.
Buying solely American products would
mean depriving themselves of certain pleasures, and it is not like their effort
will save the country. On the contrary, it could negatively affect their
productivity, their health and their mood.
Then, the decision of buying a product
should be the result of analyzing several criteria, like quality, cost and
satisfaction degree. It is a great idea to buy American products when they
deliver the same quality as import products, at the same price, but not when
the price is the same and the quality of the American products is lower or when
the quality is the same, but the American products are more expensive.
In the end, people would be much better
off buying import products and stimulating the foods and restaurants industry
by taking their loved ones out to dinner or buying a cake on their way home, to
give just two examples.
To conclude, buying solely American
products does not necessarily support the country's economy, but it could diminish
buying power and consumer satisfaction. The best thing people can do is to
weigh their options carefully when buying, and to choose those American
products that deliver at least the same quality at the same price with import
products.
If they want more buyers, manufacturers
should make available better and cheaper products, rather than waiting to be
supported and paid more for the sole reason that they are doing business in
America.
Works Cited
Hufbauer,
Gary Clyde, and Jeffrey J. Schott. 'Buy American: Bad For Jobs, Worse For
Reputation'.Policy Brief P B 0 9 – 2. Peterson Institute for International Economy: 2009. Web. 15
Jan. 2015.
Macionis, John J. Society, the Basics. 3rd ed. New Jersey: Prentince-Hall, 1996.
Martinez, Steve, et al. Local Food
Systems: Concepts, Impacts, and Issues, ERR 97, U.S. Department of
Agriculture, Economic Research Service, May 2010.
Shawki,
Ahmed Shawki. 'Don't Buy "Buy American"'. Socialist Worker 2011.
Web. 15 Jan. 2015.
Simmermaker,
Roger. 'How Americans Can Buy American'. Howtobuyamerican.com.
N.p., 2013. Web. 16 Jan. 2015.
Simmermaker,
Roger. 'Why Buying American Can Save The U.S. Economy'. New York Times 2011.
Web. 16 Jan. 2015.
Stossel,
John. 'The Stupidity Of "Buy American"'. Reason 2011.
Web. 15 Jan. 2015.
Wolff, Edward N. "Is a Discussion
of Unproductive Labor Still Productive?" Science & Society. 58 (1994):
204-210.
