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Buy American?

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February 04, 2009 – Comments (12)

http://www.fool.com/investing/value/2009/02/04/buy-american-and-the-death-of-competition.aspx

I may be missing some complexities and arguments here, but I'm looking forward to some good discussion on the topic; this was my reaction to the whole idea of "Buy American" provisions in the stimulus package, which just struck me as immediately messed up and damaging.

The comments on the article are rolling in and somebody called me a tree hugging dirt worshiper in the comment boxes, which is a bit strange to me.

12 Comments – Post Your Own

#1) On February 04, 2009 at 4:23 PM, socialconscious wrote:

Alyce I have found when one espouses a strong opinion in blogs or articles ad-hominem attacks abound. This includes the horrible and confusing "tree hugging dirt worshiper." 

After much deliberation on the issue it is confusing and hard to implement. I think we should buy from American-based companies. I would think US Steel, Caterpillar,GE,etc would sell their inventories first. These inventories could have been maufactured anywhere. I am of the opinion it should not have been written as a provison but done as a matter of course.

 

 

 

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#2) On February 04, 2009 at 4:49 PM, jgseattle (34.03) wrote:

What I find funny is the U.S Chamber of Commerce is leading the charge against buy America.  It would seem they should be all for it.

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#3) On February 04, 2009 at 5:24 PM, n6532l (< 20) wrote:

The U. S. Chamber of Commerce is as anti American as they come.  If anything helps the American people count on them being against it.  They are leading the charge against E-Verify to protect employers who want to hire illegal aliens. 

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#4) On February 04, 2009 at 6:39 PM, UltraContrarian (31.20) wrote:

Last year I decided to do my part for the trade deficit by only buying American beer.  I could really go for a Konig Ludwig or a Paulaner right now though.

The years before 2008 were our opportunity to cut tariffs and let structural inefficiencies work themselves out (i.e. people losing their jobs and getting new ones in different sectors).  Now WTO progress is probably dead in the water for a generation.  Hopefully more protectionist legislation is not in the pipeline.

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#5) On February 05, 2009 at 12:47 AM, Option1307 (29.72) wrote:

You dity tree hugger!

Obviously the perosn who wrote that hasn't read any of your previous works. I thought the piece was well written as usual.

This "protectionist" mentality that seems to be creeping up right now, is just plain scary. Have we not learned anything from our past. Do we not remember what happened when we tried this brilliant plan back in the 1930's? This is the very last think we as a Country should be promoting right now, we need all the trading we can get currently.

This is a perfect example of a well intentioned idea having horrible consequences that nobody realizes (well nobody in power seems to see coming). I honestly hope that we get over this "buy American" idea really quickly before we enact some absolutely idiotic legislation and bring about the Great Depression 2...

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#6) On February 05, 2009 at 7:49 AM, TMFLomax (50.40) wrote:

Thanks guys -- yeah luckily I am able to have a sense of humor about "dirty tree hugger" type name calling. It is really funny. People do often resort to some weird attacks when they disagree with strong opinions.

Personally I'd like to see more manufacturing come back here and I kind of blame failure to innovate... and I don't get the illegal immigrant thing, I think immigration is great but when they are illegal, I don't get letting companies get away with that. It all gets messy... but bottom line, the government trying to plan these things scares me. And yeah, learning from history would be nice too! Protectionism not working in the 30s seems like a pretty good point to make in our current circumstance...!

Thanks for the thoughts...  and UltraContrarian, drinking only American beer, that's funny. :)

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#7) On February 05, 2009 at 10:06 AM, socialconscious wrote:

Ultracontrarian I am with you SAM ADAMS is  good in moderation. Also speculators fueled the crash like this market. Tariffs were already high before Smoot Hawley from other legistalation. The increase was 2.5% on average and import/export wasn't a big part of Amercian Life.From WIKIPEDIA ... According to the U.S. Statistical Abstract, the effective tariff rate was 13.5% in 1929 and 19.8% in 1933 with 63% of all imports being duty-free. From 1821 through 1900 the United States averaged 29.7% effective tariff rates and peaked in 1830 at 57.3% with only 8% of all imports being duty-free, dwarfing the Smoot-Hawley rate....at 57.3% with only 8% of all imports being duty-free, dwarfing the Smoot-Hawley rate. In addition, imports in 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. Smoot-Hawley's effect on the entire U.S. economy may have been small, compared to the monetary policy of the Federal Reserve System. By 1937 the effective tariff rate was reduced to 15.6% when the reaction of 1937-1938 occurred, demonstrating no statistical correlation between this economic downturn and tariff levels. Senator Robert L. Owen testified at the hearings on HR 7230, the bill to make the Federal Reserve banks a national property, that; "In 1937, when the Federal Reserve Board called upon the banks to raise their reserves to twice what they had been before, there was a contraction of credit of two billion dollars.[

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#8) On February 06, 2009 at 10:17 AM, redneckdemon (< 20) wrote:

Well, I can't toss out numbers like the high-rollers here, but that piece made sence enough to me: "Buy quality.  If it's American, great!  If not, they'll just have to make it better, won't they?".

 That's my paraphrase, anyhow.  When people break down into name calling it reminds me of the name calling battles of grade school, where the tactic of last resort was usually "Oh, yeah?  Well...oh, yeah?".

I was unaware that this bit of legal sillyness was being tossed around till I read your article.  Thank you for keeping us folks over-seas up to date!

P.S.  I am flattered to find myself on your fav list.  Thanks!!

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#9) On February 06, 2009 at 1:41 PM, TMFLomax (50.40) wrote:

Hi redneckdemon -- yeah your comment on the article was great... and cracked me up in the midst of all the name-calling about how I am anti-American, etc., lol. No, I never did say "Burn in hell, my fellow American pig-dogs!" Not in the least. Ha! That just made my day. :)

And your assessment of my article is right on, that's pretty much what I meant to say, and also of course, express worries about an economy that is too controlled. And I'm glad the article kept you up to date! It's hard to keep up with all the utter wackiness going on these days... Cheers! :)

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#10) On February 06, 2009 at 2:05 PM, truthisntstupid (82.95) wrote:

I disagree with the whole "buy american" idea because it'll never work. This came up frequently in the debates about the auto industry bailouts. The idea that middle-and-lower income people should feel constrained to "buy american" (which usually involves paying more for something) and settle for less of things they want/need in order to support spoiled rotten american union workers who make 4 to 5 times as much as they do if not more is never going to sell to many people. Especially to people who just can't afford to make that choice. And too often this is what "buying american" means. If americans can't make a competitive product thay had better get unspoiled or things will never get better. Perhaps some of our economic problems (losing jobs) stem from the fact that people in other countries don't want to pay more for american-made products and americans don't either.

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#11) On February 06, 2009 at 2:26 PM, jettrey (< 20) wrote:

One of my favorite cartoons from the last round of "Buy American" sentiment was a single cell showing a couple at a car dealership and the man is saying "I want to buy an American car!".  To which the dealer responds, "Very good sir.  Would you like an American car built in Mexico, an American car built in Canada, or a Japanese car built in Ohio?"

That's a classic.  I read the other day that the Toyota Sequoia is 80% domestic.  So "Buy American" is not as simple as it seems. 

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#12) On February 06, 2009 at 2:32 PM, TMFLomax (50.40) wrote:

Hi guys -- good points (and I did get an email with similar feedback -- pointing out that most "American" cars have so many foreign parts).

I do have a lot of problems with the way the American auto industry has been run. I believe in treating employees well, but the way they have done so has been completely non-competitive. And of course, consumers did vote with their wallets and went to where they could get quality and value (and of course, if people didn't have those options, how much worse would the American auto industry be?!) I had a Dodge that was a lemon as my first car... no end of problems... I bought a Japanese car that I had for 10 years with hardly any problems and haven't bought an American car since. I think a lot of people did the same.

Agreed... competition is also the way we all push for quality and value. 

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