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Thursday, August 31, 2017

You Don’t Have to Buy American to Buy The “American Way”

Using patriotism to rationalize protectionist policies fails completely.

President Trump may have uttered more protectionist rhetoric since he began running for office than any of the past US presidents, promising huge payoffs that fly in the face of both logic and history. One big part has been his support for “Buy American” policies, such as those on his renegotiating-NAFTA shopping list.

Unfortunately, using patriotism to rationalize such policies fails completely. Protectionism represents the collusion between domestic producers and the government. This unholy alliance denies domestic consumers the ability to get a better deal from superior foreign offerings, patriotism cannot justify helping American producers harm American consumers.

We would do better to learn from Leonard Read, founder of the Foundation for Economic Education, from his chapter, “Buy American,” in Having My Way:

The admonition to “Buy American” has two diametrically opposed meanings. The first is its popular and mischievous meaning – shun goods produced in foreign countries. The second, and loftier meaning embodied in these words, is rarely mentioned or thought of – shun principles and practices alien to the American dream of limited government and personal freedom.

Producers who plead…“Buy American” are appealing to blind patriotism. Buy my product because it is made here; heed not its price or quality. This is sheer chauvinism. Suppose I were to urge your acceptance of my ideas, rather than those of Marx or Machiavelli, merely because of our differing nationalities. The absurdity of such an appeal is obvious: neither goods nor ideas are properly judged in this fashion; geographical origin has nothing to do with the matter.”

Read’s alternative version of what we should not buy does not address goods, but principles: to advance Americans’ general welfare, don’t buy (i.e., accept and use) actions that violate the American principle of freedom to choose your own productive associations as long as you don’t violate the common, inalienable rights of others. He also offers an excellent test of whether “patriotic protectionism” is defensible: change “Buy USA” to “Buy Chinese” or “Buy Mexican” and ask if Americans would accept the proposition as true based on their patriotism.
We would not. It is just special pleading by and for political favorites at citizens’ expense.

Enough of this mischievous notion…”buy” the American ideal of freedom.

Consider the Constitution of the United States. Regardless of its several flaws, no other nation’s charter has equaled it in an economic sense.

In what respect is this distinctively American?…“No state shall without the consent of the Congress, lay any posts on imports and exports.”

In a nutshell, no tariffs, quotas, embargoes between the several states…the world has never known a free trade area as large as the U.S.A. when measured in value of goods and services produced and exchanged. Never perfectly free, but the nearest approximation to freedom!”

In other words, the freedom to associate for productive purposes, however and with whomever one chooses — because people were protected from many government violations of that principle — was the essence of the American miracle. And at its heart was “the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it,” as Thomas Jefferson puts it.

Jefferson Continued:

Competition, combined with free exchange…is the password to economic opportunity and well-being – an American idea well worth buying. Name one who does not favor competition among those from whom he buys. Name one who would not welcome an order…from another country.

Leonard Read realized that the logic of protectionism is riddled with errors while its practice is theft. It impoverishes every citizen except those protected from the need to attract buyers from better offers. It is a violation of both liberty and justice for all.

What then is meant by “Buy American” in its proper sense? Let willing exchange prevail among all people, locally and worldwide. Let each buyer or seller be guided by his own scale of values. Sell the American way and buy the American way – not as presently practiced, but as once prevailed and ought to be reinstituted. Keep ours the land of opportunity for everyone.”

  • Gary M. Galles is a Professor of Economics at Pepperdine University and a member of the Foundation for Economic Education faculty network.

    In addition to his new book, Pathways to Policy Failures (2020), his books include Lines of Liberty (2016), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).