Buy American----Really?
It seems such a simple policy. It's our tax money and we should spend it here with all American products. Popular Delusions has a pretty thorough piece reminding us of the now infamous Smoot-Hawley Tariff Act of 1930 and its horrific consequences as the entire world slid into The Great Depression. Here's just one example, from the NYT.
In rebuilding the San Francisco-Oakland Bay Bridge in the 1990s, the California transit authority complied with state rules mandating the use of domestic steel unless it was at least 25% more expensive than imported steel. A domestic bid came in at 23 percent above the foreign bid, and so the more expensive American steel had to be used. Because of the large amount of steel used in the project, California taxpayers had to pay a whopping $400 million more for the bridge. While this is a windfall for a lucky steel company, steel production is capital intensive, and the rule makes less money available for other construction projects that can employ many more workers." (emphasis is mine)The unions insist on shooting themselves in the head (what else is new?) by demanding this action and already there are wildcat strikes throughout England as their unions demand Brit products in Brit building. To quote Delusions again: "As The protectionist genie is out of the bottle and having to depend on the ignorant, corrupt, power-hungry and self-serving loathsome-idiot-slugs, or politicians as they're more usually called, to do the right thing is very depressing indeed." He is rather surprisingly optimistic that we will do the right thing and pull through this.
There is a ton of evidence that the high tariffs DID NOT play much of a role in the economic collapse of the 30s. Europe had been on a buy England or Buy France trip since the end of WWI and we were just the last one to do it. There is also a ton of evidence that tariffs actually improved economies during that period. Yes, trade collapsed during the late 20s but it also collapsed in 2008 without any protectionist policies.
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