Buy American?

This is a response I wrote to a thread on the Ron Paul Forums (http://www.ronpaulforums.com/showthread.php?327501-John-Stossel-The-Stupidity-of-quot-Buy-American-quot&p=3740269#post3740269 ):

A “Buy American” campaign is fine, but the argument that the buying of American-made products, in itself, helps the American economy generally is incorrect. Certain sectors of the American economy would be helped, of course; but it would be at the expense of other sectors.

A lot of the blame for economic problems that should go to government intervention is laid at the feet of free trade, and further government intervention is demanded to solve a problem created by the government. This would be a counterproductive course of action.

The Chinese gov’t has orchestrated its nation’s economy to be export based, and at least one commentator on this thread counts this as a “win” for China. But the Chinese people are enjoying a lower standard of living than they otherwise would because of the Chinese gov’t’s protectionism. Protectionism helps the Chinese government, with both increased revenues and increased prestige among mercantilists, but it doesn’t help China, as in the Chinese people.

Anti-Federalist is correct in pointing out that most of what is labelled “free trade” today is actually gov’t-managed trade. I disagree, however, with the premise that making things necessarily creates wealth (see Solyndra). Manufacturing can actually destroy wealth, if the products that are manufactured are not demanded by the market. The resources that were hypothetically used to make, say, “skunk-flavored soda pop” might have been better used to make soft drinks with more palatable flavors.
Trade, on the other hand, always creates wealth; if a proposed trade did not make each party better off, then the trade would not happen. And if China is manipulating its currency (as if the U.S. isn’t the master of manipulating its national currency) due to an ill-advised mercanitilist philosophy, that hurts the Chinese people rather than the American people. Fears that a demolished American manufacturing base would be unable to ramp up production in time to meet the demands of the market are, I infer, based on a belief that the free market doesn’t really work. Most of the obstacles in the path of starting a factory can be sourced to government intervention rather than an inability of free market participants to adequately garner and use capital. The “apple juice” analogy mentioned earlier is also unpersuasive. There is a near-zero likelihood that American apple trees would all be uprooted in the face of miraculously cheap Chinese apples. Agriculture is one of the areas in which Americans hold a comparative advantage. Even so, Chinese apples would still have to compete with apples grown in other nations, and with the constant possibility that the American apple industry would eventually be restored, were Chinese apples to become too pricey.

Here’s a little tale by Bastiat concerning Robinson Crusoe: http://www.thefreemanonline.org/colu…nd-free-trade/

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