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Buy American?

Discussion in 'Business & Economics' started by GenSeneca, Nov 18, 2012.

  1. GenSeneca

    GenSeneca Well-Known Member

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    You've all seen the bumper stickers:

    Save US jobs, BUY AMERICAN!

    At first glance such slogans have appeal, it's patriotic to support US products and it helps the US economy... Or does it?

    Let's apply some "honesty in advertising" to that slogan:

    Lower your standard of living, BUY AMERICAN!

    How do you feel about that slogan now? Suddenly it's not so appealing.

    Here's just one example from my real life situation: I buy plain white T-Shirts for both of my part time jobs and, because I'm in foodservice, they don't last long, so I buy a couple dozen every year. I usually buy them from a bin in Walgreens where they are 4 for $10 and they come from a myriad of countries like Jordan, Philippines, China, etc. If I were to spend that $10 on a T-shirt made in the USA, like this plain white T-Shirt from American Apparel, I'd get less than half of ONE shirt - MSRP $22

    Because I have access to cheap foreign goods, my standard of living is higher than it would otherwise be. To purchase 4 US made shirts would cost me $88 vs. the $10 it costs me to buy the foreign made shirts, that's a savings of $78.

    But is my purchase helping the US economy? Yes!

    What people often do not consider when complaining about cheap foreign goods is the opportunity costs of purchasing the more expensive American goods. The substantial savings from my choosing to purchase cheaper shirts leaves me with money to spend on other goods and services, raising my overall standard of living.

    But am I supporting US jobs? Yes!

    As I said, I purchase these shirts from the Walgreens right down the street, right here in the US, my purchase helps support that company and it's employees. The "extra" money I save can also be spent in other stores or restaurants, money that I wouldn't be able to spend if I purchase American made shirts.

    Conclusion:

    Buying higher cost American goods rather than their cheaper foreign counterparts actually puts a drag on the economy and lowers your standard of living. Free Markets are good for everyone.
     
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  2. Pandora

    Pandora Well-Known Member

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    I had not thought about it that way. I like the reasoning in your idea.

    I used to be "buy American" but when I realized it was often supporting unions I didnt care so much about it. Now I worry more about how my buying non American supports slave labor. I am not sure that there is anything I can do about that though. So I end up buying what I can afford and usually that comes from walmart, winco and walgreens so I guess I should not feel so guilty after all :)
     
  3. GenSeneca

    GenSeneca Well-Known Member

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    Who is responsible for that perception? A: American Unions. Now if it's a case of actually slavery, where the workers are not free to quit their job but are being forced to labor, nobody would support that... But that's not what "sweatshops" actually are. You'll find sweatshops in just about every third world country, the labor is dirt cheap and the working conditions are usually terrible by our standards BUT, what nobody bothers to point out, those long hours in terrible conditions for very little money is actually more appealing to those laborers than the alternatives. Sweatshop employees freely chose to work there because they see it as their best chance to improve their lives.

    I know Dr.Who will probably skip this video but watch it if you have some free time, you'll have a whole new appreciation for sweatshops.

     
  4. Gipper

    Gipper Well-Known Member

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    I can accept your analysis...that YOUR standard of living is greater because you can buy cheaper foreign goods rather than the more expensive American goods. However the bigger picture leads one to conclude free trade/market policies will not benefit Americans in the long run.

    For one thing, America will not maintain a large and thriving middle class if the only jobs Americans can find are in food service or government (which appears to be the trend).

    Paul Craig Roberts just penned this article. The destruction of relatively high paying middle class jobs has terrible consequences for America in the long run. We are headed for third world status...and with the kind of irrational and corrupt power elite heading our nation today, believing our future holds promise is difficult to believe.

     
  5. Pandora

    Pandora Well-Known Member

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    I liked that video, You always bring a nice new perspective to things. :) I am almost afraid to click the next video on immigration and have my POV changed ;)
     
  6. dogtowner

    dogtowner Moderator Staff Member

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    low skill manufacture will always get done my the cheapest provider. ask the Swiss who used to own the time keeping marketplace. they all but died whe quartz watches were invented (by them). the supposedly higher quality tshirt made here is not sufficiently better to justify it's manufacture here.

    it was American innovation and ability to stay on the leading edge of high tech products that made America great. sadly we stopped aiming for that and started trying to protect jbs we were overqualified for. not to mention that this occurred at about the same time as the mushrooming of unions.
     
  7. GenSeneca

    GenSeneca Well-Known Member

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    Everyone's standard of living is greater: Free Trade is mutually beneficial, so it benefits both parties. Protectionists blame trade for the loss of US jobs to foreign manufacturers but the real culprit is the US government. We have the highest corporate tax in the world and regulations on business stifle both innovation and domestic production.

    Our corporatist system is designed to give favor to big business, they are better positioned to absorb regulation costs and they have the money to lobby Congress for even more favorable treatment - at the expense of their smaller competitors. Problem is, the majority of the US workforce is employed by small business; taxation, regulation, and Unions are all contributing to the demise of small business and taking the middle class jobs with them.

    Your author blames offshoring and globalism, his complaint about government is that government isn't totalitarian enough to prevent mutually beneficial trade. He want's more government roadblocks to innovation and production, more government intrusion into the economy, more regulation of business.... He's calling for more government and less freedom, as all protectionists do.

    What would happen to the US economy and US jobs if government stopped taxing and regulating US business? You already know the answer: We'd have a massive explosion of innovation, job creation, and US manufacturing production. Capitalism creates a negative unemployment number, we would have to increase immigration just to fill all the jobs that would be available.

    Gipper, you know Capitalism works, you know Free Markets work, and you know that government is the single largest impediment to job creation and growth. Allowing our government to enact protectionist trade policies will only make the problem worse. Even if you can stop companies from shipping jobs overseas, you can't stop them from closing down their US operations entirely and moving every job overseas.
     
  8. Cruella

    Cruella Well-Known Member

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    We are in a global economy with emerging third world countries. The biggest problem this country has is that everything here costs too much, and I think we know where we can put a lot of the blame for that.
     
  9. dogtowner

    dogtowner Moderator Staff Member

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    Bush ? Cheney ? : )
     
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  10. Gipper

    Gipper Well-Known Member

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    Paul Craig Roberts NEVER advocates for more government. He is a libertarian bordering on an anarchist. He is one of world's leading economists and was instrumental in developing Reaganomics when he worked in the Reagan administration. He has written extensively on outsourcing of American jobs and many economists agree with his findings.

    I think he would agree with you and I that the policies of the federal government is partially to blame. He did point out that the politicians are one of the culprits. However, as he clearly stated, other factors are at play here.

    Many Americans no longer have access to relatively high paying jobs in manufacturing and other sectors of our economy, due to outsourcing. Those jobs provided Americans with opportunities to attain a comfortable middle class life style, while also providing taxable incomes to support government programs like Social Security and Medicare.

    As Roberts writes, Apple Computers is a good example of the failures of outsourcing. Many good paying jobs would be available to Americans if Apple operated here, rather than in China. Now taken to its extreme, outsourcing will ultimately eliminate the American middle class. Who then will buy the products made by Apple and other out sourcing American companies?
     
  11. dogtowner

    dogtowner Moderator Staff Member

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    citizens of countries that understand that they can only get the jobs they prepare themselves for.

    one ferinstance... why did canned programming move to India ? programmers there have the equivalent of an engineering degree for a fraction of the salary.
     
  12. GenSeneca

    GenSeneca Well-Known Member

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    More government intrusion into the economy is exactly what he's calling for. His complaints about government's role in "globalization" is that government has done nothing to put an end to Free Trade - i.e. government has failed to enact protectionist trade measures to block companies from outsourcing.

    In How the Economy Was Lost he surveys the damage done by free trade and the off-shoring of the American manufacturing base. (7) When goods and services are created off shore and then brought back to America to be sold, they increase the trade deficit. Satisfaction of that deficit inevitably results in a transfer of ownership from U.S. assets to foreign hands. Because the trade deficit is financed by foreigners, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign accounts. The American economy has gone away, Roberts insists, and is not coming back until we free ourselves of the free trade myth.​

    He also opposes Free Markets and blames deregulation for the financial collapse:

    Congress, acting on this erroneous belief in free market perfection, deregulated the US economy in order to create a free market. The immediate consequence was resort to every previous illegal action to monopolize, to commit financial and other fraud, to destroy the productive basis of American consumer incomes, and to redirect income and wealth to the one percent.​

    Those aren't the kind of statements people who oppose greater government intervention into the economy would make. In fact, the more I read, the more the guy sounds like an OWS supporter. Nobody who opposes Free Trade and Free Markets can be considered a supporter of Capitalism and individual rights.

    You know damn well it wasn't a "Free Market" and deregulation of the economy that led to the housing bubble and financial collapse. If he could be so incredibly wrong on the topic of Free Markets, perhaps you should at least reconsider the legitimacy of his opposition to Free Trade.

    Roberts, like every other Anti-Capitalist, uses the broken window fallacy to convince you that we'd be better off if we'd stop outsourcing but that fallacy ignores the opportunity costs that come with the unnecessarily high costs of production that would result from manufacturing these products here at home.

    Who's going to pay $1200 for an iphone? Not a whole lot of people. There would be fewer iphones produced, fewer people would own them, Apples profitability and ability to expand would suffer, and the millions of people who could no longer afford to own an iphone would suffer as well.

    The middle class is a statistical designation for the middle 60% of income earners in the country. As such, there are only two ways to "eliminate" the middle class: 1, eliminate it as a statistical designation, 2, every single person in the US would have to earn the exact same amount of money.

    That aside, the "middle class" is a collectivist talking point. My concern is with the individual, not any one particular group of individuals. We need individual freedom, individual liberty, and a government that respects individual rights. Placing the focus on one group of individuals, in this case the middle class, is merely an excuse to sacrifice the labors of the upper class and the prosperity of the lower class and the inevitable result is a lower standard of living for every individual.
     
  13. Gipper

    Gipper Well-Known Member

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    Agreed and our country is not preparing enough of our citizens for the 21st century. The p-schools teach them about socialism and hatred of profit. The elites have outsourced many good jobs that our poorly educated could have taken to at least contribute to the nation and support themselves. Now these people are entirely dependent on government dragging us down to third world status.
     
  14. Gipper

    Gipper Well-Known Member

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    I agree with some of the positions held by OWS. They are right to condemn Wall Street for what occurred. But they fail to see that government is the greater criminal.

    I do not accept your premise that an Iphone MUST cost $1200 if made in the USA. Remove the onerous taxes and regulations imposed by government, and the cost would be much lower. It is the actions of our government, along with unions, that cause many big businesses to leave the nation for cheaper labor markets.

    I agree we need individual liberty and a government without coercion. But, that is a pipe dream. It is more likely government will get bigger and more coercive in the near future. The outsourcing of more American jobs is not going to help matters.

    The point is outsourcing hurts millions of Americans who no longer have access to good paying jobs. The consequence of outsourcing will be a diminished future for all Americans, but the power elite. When millions of Americans are not productive and become dependent on government handouts, they will ultimately implode the system.
     
  15. Dr.Who

    Dr.Who Well-Known Member

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    I agree with the analysis in the OP. The opportunity costs do need to be considered. What if one takes the saved money and buys more foreign goods with it? Taken to the end of that reasoning if one ONLY buys foreign goods then it has not helped America.

    But would one buy only foreign goods? It does not make much sense to buy much of any foreign service or labor, its not like that plumber can be shipped over here from Argentina. It also does not make much sense to buy things that are more expensive or perish because they were shipped long distances. So yes a lot of feoreing goods would be bought but a lot of american goods and services would be bought too. I think it would help america to buy some foreign goods and some local depending on just what 0ne does with the opporftunity costs.

    lets consider what would happen if many people only bought foreign? Many foreigneres would get work and the standard of living in other countries would go up and so would their wages. Many Americans would lose their jobs. Then those who lost jobs would be willing to take jobs for less pay and the price of goods would come down so people would buy american goods again. In short an equalibrium will be reached with free market forces having an influence accross national borders. Do we complain when free market forces have influence accross state borders? No competition betwen workers in Alabama and NY is a good thing. So too is competition between workers in different countries.

    But what about the lessening of the standard fo living here in the US? That is going to happen no matter what. Buying american won't stop or slow that down. Short of a complete isolationists policy there is no stopping markets from reaching equalibrium. And in fact efforts to meddle with markets only causes inefficiencies that lower the standard of living. I don't even think that a completely isolated america would have a higher standard of living. We would lose all that trade and opportunity for profit to help ourselves.

    Again: there is not stopping markets from equalizing. It will happen as surely as the sun rises.

    The best that we can do is do whatever we can to make sure that the standard of livingin other countries rises as fast as possible. Avoiding slave produced products does that since slavery is not a free market.
     
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