'Buy American' Is Un-American
President Donald Trump loves to encourage people to buy products "made in America." It makes for a good slogan, but it's bad and incoherent policy. And it will do little or nothing to help Americans who have been put out of work by a straggling economy or by technological change.
For starters, it's hard even to get a clean definition of what it means for a product to be made in the United States. Dozens of items that carry a "made in America" tag were largely assembled or sourced elsewhere, with only a little bit of labor added within our borders. The Jeep Patriot pushes nationalism in its very name, but the model's transmissions are made in Japan, Germany, and Mexico.
Rightly so. The U.S. often has much higher labor costs than foreign countries, which means the same thing created solely in America would have an astronomical price tag. According to one estimate, iPads would be $967 apiece, about three times what a basic one goes for now. The resulting fall in sales would mean the loss of about 67,000 manufacturing jobs.
To hype his "made in America" policy, Trump invited 50 companies to the White House for a photo op. It turns out that 21 of them received federal, state, and local subsidies worth about $600 million. If you're taxing Peter to subsidize Paul, chances are you're not creating much real economic benefit.
Virtually all economists agree that protectionism dampens economic activity and growth by increasing prices and keeping workers and resources in sunset industries that will need more and more help to stay afloat. A Federal Reserve Bank of St. Louis study that looked at industry-specific protectionist policies in the 1980s found that trying to make people "buy American" led to consumer losses of over half a million dollars per job "saved."
There's no question that many Americans are having trouble finding rewarding work in a global economy that demands that people be constantly improving. But the best way to help them is to pursue policies that produce the sort of economic growth that creates new jobs, new opportunities, and new wealth for all of us: lower government spending, flatter taxes, and less regulation.
"Buy American" is a cheap slogan best left on cheap baseball caps produced overseas.