By now you would have to live in a cave to not experience the blow back in the simple act of buying U.S. steel. This is the Buy American provision in the American Recovery and Reinvestment Act of 2009.
This is not even the real issue. The question really should be why are not U.S. taxpayer funds to be used first and foremost to create jobs for U.S. workers?
Banks receiving massive U.S. taxpayer funds are firing U.S. workers while keeping temporary foreign guest workers. Why? Because they are an important conduit to offshore outsource and they are cheaper.
Even worse, Democrats ripped from the bill the attempt to tie U.S. taxpayer funds to jobs for American workers. Yes, this is Democrats who did this.
Senator Byron Dorgan has written an op-ed in USA Today speaking common sense economics.
Spend money on U.S. goods
If the goal is to create jobs, it only makes sense to buy American.
By Byron Dorgan
Here's a thought. If we want to stimulate the American economy and create new jobs here, we ought to be investing in American-made products with the stimulus money.
A radical proposition? Hardly. But when I added "Buy American" language to the economic recovery bill making its way through the Senate, a lot of big interests that have a habit of moving American jobs overseas began to scream foul.
If the goal of the economic recovery plan is to create American jobs, then it stands to reason that the Buy American provision is essential. My language simply says that any public works or public building projects — such as roads, bridges, tunnels or schools — funded by the stimulus bill should be built with American-made steel, iron and other manufactured goods.
Of course, I recognize that there are a variety of products that are not made in this country anymore, and there also might be instances where U.S. products are not sufficient — either in quantity or quality. So my provision allows for these common-sense exceptions. But it just makes sense that, where possible, we try to stimulate our own economy, rather than the economy of other countries.
Some decry the Buy American effort as the start of a trade war. They say it's just disguised protectionism. That is thoughtless nonsense. It's nothing of the sort. It is entirely within international trade rules to require that these kinds of public projects use American-made inputs.
I believe in trade and plenty of it, but this is about creating American jobs at a time when nearly 20,000 people a day are being laid off. This is an economic emergency. Let's treat it like one.
Our country's economy is facing challenges we haven't seen since the Great Depression. Our government is preparing to respond by investing upwards of $800 billion to stimulate our economy. I want that money spent on American goods so that our workers can reclaim the jobs on the factory floors that are now empty.
We won't just be building public works projects that will create assets for our country. We'll also be putting people to work. That's an investment I can support.
Indeed, even Paul Krugman notes the economic case for stimulating a domestic economy first and foremost.
My argument is this: In Keynesian economics, spending~= income.
From the Keynes equation: C+I+G+X-M=GDP
C = savings + income + debt.
So, if one is going to increase G, government expenditures and get the most bang for the buck one must increase income and that implies hiring first and foremost, American workers for American jobs.
The U.S. trade deficit (X-M) is already out of balance and does it make sense to increase G, only to have that difference of X-M increase to a larger negative number since so of the jobs created will not be for Americans? That increased spending on the bottom will actually buy goods that are made abroad? Does it make sense, trying to dramatically pump up GDP to turn around and let the equation hemorrhage a negative with increasing imports?
C or Consumption has now dramatically declined. We have no savings, we're in debt, we are not getting investment in the middle class future and ....we ain't got no money, no income, especially disposable income.
So why use a temporary jump in G, government expenditures, financed by deficit spending, where the U.S.A. only takes on the debt yet other nations make the profits?
Is it not Okun's Law:
Okun's law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called "natural" rate of unemployment, real gross domestic product is reduced by 2% to 3%. That is, unemployment above the inflation-threshold unemployment rate reduces GDP below potential output, and for every 1% excess of the natural unemployment rate, a 2% to 3% reduction in GDP is predicted
that is applicable currently? The United Sates has assuredly exceeded the natural rate of unemployment.
In 2004, Paul Samuelson showed offshore outsourcing can indeed hurt a domestic economy, as well as Gomory and Baumol. Even Alan Blinder shows offshore outsourcing is not the lower skills and as many as 29% of all U.S. jobs are offshorable
While we pour U.S. taxpayer money into R&D, our own university system has unlimited access to H-1B guest workers, is engaging in and advanced research and development offshore outsourcing. As a trend, advanced R&D offshore outsourcing is accelerating.
Considering the United States trade deficit and the unemployment numbers, does Keynesian economic theory blow up under these global labor arbitrage conditions and a stimulus is for naught? What happens when one is really stimulating another countries offshore outsourcing industry, labor arbitrage, their exports, their GDP with U.S. taxpayer money, with American debt?
Looking at the mathematics, it certainly appears that way to me
Comments
If 'buy american' can't be part of a stimulus bill
then there has to be some question of sovereignty. How did we sign over so much of our sovereignty to international trade agreements?
It's a sign that something has to change.
I agree
I also think since the WTO is plain hurting so many different groups, this creative destruction or temporary decimation of small regions in an economy is underestimated and obviously wrong.
and the idea the WTO can overrule a nation-state based on trade....that's an obviously bad idea, if they are not disbanded entirely then their power should be reduced to govern only direct finished products as trade and anything like people, turtles to environment they should have no jurisdiction.
WTO vs. Buy American
I read the GPA, which is the document of Government Procurement and I believe Lori Wallach weighed in yesterday...
but it appears questionable that the WTO can overrule on even goods, but it is in this document.
What is not in that document or in any WTO document I have seen is tying government expenditures to U.S. workers.
They can do it on a host of reasoning, from national security to the fact that trading people hasn't made it into the WTO GATS mode 4 (but they are literally trying! they want to trade workers as "services") so, there is no reason they could not put a condition on the stimulus money to go to hiring only U.S. workers and the money only going to U.S. companies.
Even if the U.S. companies was challenged, from what I can see U.S. workers is not....and that's a sure fire way to guarantee the Stimulus funds would recirculate into the U.S. and directly affect domestic income...
which is supposedly the entire idea.
Side note: I caught on CSPAN a "Republican hearing" on the Stimulus where some idiot from the Heritage foundation claimed that FDR's work programs lengthed the great depression and blamed Smoot-Hawley. That's pure bullshit and Smoot-Hawley did not have that great of an effect for at that time the United States was primarily a domestic economy.
This is a really serious problem in the United States, intellectual "expert" dishonesty, for hire, per huge funding from multinational corporations under the guise of "think tank".
We've gone from
"Buy American!" in this country to "Buy, American!" Sickening.