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The Ramifications of Buying Solely American Products – Will This Help the American Economy and Serve the Citizens' Interests at The Same Time?
America, just as most other countries around the globe, was severely affected by the global recession, and everyone, everywhere, found a more or less effective solution to the problems experienced, like unemployment, expensive living and not only. The solution that was embraced with enthusiast by many officials, personalities and common people alike was to start buying solely American products. But, while this strategy, applied when given a choice, could be helpful for the economy and even for people's budget and well being, rejecting foreign products at all cost will not help anyone.
On one hand, certain foods and items are not produced in the United States due to the climatic and soil conditions or to the lack of resources, or are more expensive than imported competitive products of the same quality, case in which buying them would be detrimental to the consumers' interests. On the other hand, importing and exporting products does have its benefits for the economy and, as proven with the American Recovery and Reinvestment Act, neglecting these benefits and ceasing imports could cause more harm than good.
While the trend of buying only American products had begun long before, it gained an enormous popularity starting with January 2009, when the House of Representative passed the American Recovery and Reinvestment Act. It was a plan meant to stimulate national economy, covering no less than 700 pages. One small section of this plan drew the attention of the entire world, by imposing that the public projects to be funded use only steel and iron from the country's production.
There was another similar but less notorious provision referring to the uniforms of the Homeland Security Department. When it was proven that these provisions would have a negative impact on the country's foreign policy, trade obligations, jobs and not only (Hufbauer and Schott), the media and several movements began to urge citizens to support the country's economy by buying only goods produced locally and nationally (Martinez, 9).
The environmental movement, for example, encourages people to choose their food based on geographic considerations, as a way to oppose transportation on long distances and, implicitly, greenhouse gas emissions.
The adepts of the food-security movement assure that buying American will provide access to safer and healthier food, more appropriate for the American consumers and the culture they were raised in.
There are also international movements opposing the domination of multinational corporations and mass food production, like the Slow Food movement, who militate for traditionally grown, produced and prepared food.
With many principles in common with the Slow Food movement, the local food movement encourages consumers to support local farmers and track down the origins of their food (Martinez, 9).
The idea of buying solely American products as a solution to the problems of the country's economy is most fervently supported by the "Buy American" movement who, according to Macionis, brings together workers and manufacturers with the purpose of persuading consumers to buy products made in America (16).
Why Buying American Products Means Supporting the Country's Economy
According to the adepts of the "Buy American" movement, imports and the deindustrialization of the country's economy were the main causes for the decreasing number of jobs, and there are figures supporting this allegation.
Dudley showed that the number of jobs in the field of manufacturing decreased by more than 850,000 in 1988 (408). On one hand, this happened because, with the increasing number of imported products available at lower prices and preferred by consumers, many local factories and plants were forced to close their gates. On the other hand, many American corporations chose to have their products manufactured in countries like Mexico, China, India and Vietnam, where work force was and still is much cheaper. According to Dudley, 1,800 manufacturing plants were started in Mexico (407) by U.S corporations aiming to increase their profits. These corporations choose countries like Mexico for the resources, cheap labor and wide markets they make available. At the same time, this strategy allows them to decrease their tax liability and to move money from one country to the other, taking advantage of currency rate fluctuations (Mucionis, 276).
Some may argue that these corporations create jobs, or that Americans should not be selfish and allow other countries to grow economically. Macionis concluded, based on the research of dependency theorists like Vaughn (1978), Walterstein (1979), Delcroix and Ragin (1981) or Bergesen (983), that multinational investments create only few jobs, they inhibit local industry and they encourage developing countries to export their products rather than sell them locally (276).
Leaving the low number of jobs available aside, another consequence of deindustrialization are the poorer working condition. All manufacturers do their best to reduce their costs, and in order to succeed, they often neglect their employees' safety, well being and interests. They can afford to do so because they know their employees will have a hard time finding better paid jobs or better working conditions. Besides, there are more and more immigrants willing to fulfill vacant positions for lower salaries. Harrison and Bluestone, the authors of The Great U-Turn, report a dramatic decline in number of well-paid jobs throughout the last four decades (Dudley, 404).
In The Falling Rate in Post War U.S. Economy, Moseley discusses a significant increase of unproductive labor between 1950 and 1980, from 46% to 78%. Already described above through lower salaries and poorer working conditions, unproductive labor is considered by Moseley responsible for the decrease of profits in the American economy (cited by Wolff, 1).
Job instability, poor working conditions and low salaries hurt the economy, and when this happens, no one benefits. When plants and factories close and people lose their jobs, buying power decreases, companies go out of business, which, in turn, causes loss of jobs and decrease in buying power. The long-term result is a continuous cycle of deprivation that could end with mass poverty, unless immediate, drastic measures are taken at all levels.
These measures involve that each citizen starts buying products manufactured in America. It is important to make the difference between products manufactured abroad under American brands, products assembled in America from components manufactured abroad, and products manufactured in America, using American labor and resources. Obviously, buying products in the latter category is the strategy that would benefit the country's economy the most.
Roger Simmermaker is maybe one of the most fervent supporters of this idea, and he has gained some notorious supporters himself. Former president Bill Clinton for example, considers Simmermaker's initiative as a way to support American manufacturers and, implicitly, the creation of valuable products, the rise of the employment rate and the workers' loyalty towards their employers and towards the communities they belong to.
In an article in New York Times, Simmermaker assures that buying American can save the country's economy. If every citizen makes this commitment, they will help create more jobs. "More U.S. manufacturing jobs not only reduce the unemployment rate, but also expand the tax base to pay for benefits". He explains with statistics that every job created will support other jobs, in fields like food and restaurants, parts manufacturing, health and beauty, entertainment, etc.
According to him, in the last decade, the country had a cumulative trade deficit of $2 trillion only with China. If that money had been spent or the products had been manufactured in America, starting from a conservative tax rate of 30 %, millions of jobs would have been created and the national revenue would have reached $600. He urges readers to buy American in order to reduce trade deficit, increase the tax base and stimulate economic growth.
Buying American, in his vision and that of many others, means hating, ignoring, avoiding import products. Books and websites were created to teach people how to read the labels of the products they buy in order to make sure they only by American, what brands to look for and where to buy from. Buy American: The Untold Story of Economic Nationalism, by Dana Frank, How Americans Can Buy American: The Power of Consumer Patriotism, by Roger Simmermaker and Buying America Back by Alan Uke are just a few examples.
But, most of the above presented ideas and books overlook the interdependency of imports and exports, the positive ramifications of imports and exports on the American economy and the immediate consequences of buying solely American products on the consumers.
Local Markets, Imports and Exports and Why Buying Solely American Will Not Work
In the first half of the 20th century, nearly half of the Americans population lived on farms, but their number had already decreased to 1% by 2000. Most of the food consumed was grown locally, saw no processing besides canning, salting, dehydration and smoking, was rarely packaged and was bought directly from farmers, who rarely travelled more than a day to take their products to the market.
After WW II, national and global food sources began to prevail over local ones, supported by regional and global specialization, the decrease in transportation costs and the improvements in refrigerated trucking. This made it possible that perishable foods be shipped over longer distances faster, in better conditions and at lower prices. Land and climate, coupled with technology, helped create global and regional specialization patterns. Fruits and nuts began to be produced in California, Florida and several other states that provided adequate climate and soil conditions.
Other aspects this geographic concentration took into account were the feasible alternatives available for commodities that could no longer be produced competitively by local farmers. When the cotton industry crashed in the South, for example, the broiler industry took its place and expanded based on production contracts.
Slowly but surely, food imports began to grow, favored by consumer demand, the increasing number of immigrants, the progresses made in goods shipping and storage and the free-trade agreements implemented.
Some of the imported foods competed with those produced locally and nationally, while others complemented them (seasonal fruits and vegetables began to be available year round. Tropical fruits and derived products that cannot be profitably produced in the United States, like pineapples, bananas, papayas and mangos received a greater demand from consumers, causing a significant growth of the country's imports (Martinez, 8).
At the same time, many U.S. farmers began to export their products, thus succeeding to obtain higher prices and maintain their economical stability despite the demand changes registered on the local market. For example, the consumption of grapefruit and derived products diminished significantly throughout the last 2 decades, but the producers survived by exporting. If one third of the country's fresh grapefruit production was exported in the 1980s, more than half of it was being exported around 2005.
In the USDA report prepared by Steve Martinez and his team, it is shown that consumers manifest a growing interest in foods produced locally, considering them safer, healthier, cheaper and of higher quality. The same tendency has been noticed in other fields as well, so it is safe to say that, when given a choice, consumers do support the economy and buy American products. However, import products are necessary as well, especially those for which there is no local alternative, so buying solely American products would not be feasible.
Both imports and exports are beneficial for the country's economy, because both importers and exporters pay taxes and create jobs, the former category in transportation, packaging and selling, the latter in production and manufacturing. America lacks some of the resources necessary to meet consumer demand, but has other resources in excess, and imports and exports help create a balance between the two and meet both consumers' demands and producers' needs.
Besides, as shown by Hufbauer and Schott, in their analysis of the Buy American Act, imports and exports go hand in hand. Provisions like Buy American would not only violate the country's trade obligations and damage its reputation, but even cost jobs, if other countries responded in the same way. Of course, some may say that this would only happen if official measures are taken, but nothing bad can happen when common people join forces to inhibit imports.
However, Ahmed Shawki argues that such protectionist initiatives will not work, and inhibiting imports will not create more jobs. According to him, all the "Buy American" craze is a mere attempt of diverting responsibility from the government and the authorities, and it should be opposed by trade unions and socialists.
He explains that the claims according to which recession is caused by imports have no factual support and that the increase in imports is just a natural consequence of the global capitalist economy's integration and interdependence. He argues that exports depend on imports, and uses a study of the Economic Development and Cooperation Organization according to which 20% of the jobs depend on exports to justify his position. Cutting imports from Western Europe countries or Japan would only cause those countries to react in the same way and thousands of jobs would be lost.
Countries depend on exports, so throwing up quotas and tariffs would only increase unemployment and deepen the recession. Besides, it is every day more difficult to tell which products are imported and which are American. As Shawki shows, a great part of the Japanese automotive industry is owned by Americans, considering that 34.2 % of Isuzu and 5.2% of Suzuki is owned by General Motors, 25 % of Toyo Kogya (Mazda) is owned by Ford, and 15% of Mitsubishi is owned by Chrysler.
Not even the cars in the U.S. are genuine American products, as, while the assembly takes part in the country, most of the parts are imported. The engines, ball joints, transaxles and transmissions come from plants owned by American companies in Mexico. Even the vice-president of Ford declared on one occasion: "We don't consider ourselves basically an American company. We carry a lot of flags". Before creating new jobs in the auto industry, preventing imports would raise the price of the American cars and, thus, lower the already low living standards of the U.S. workers (Shawki).
Diminishing steel import would have similar negative consequences. Shawki shows that while the country's steel imports dropped from 21.1 million tons in 1978 to 19.9 million tons in 1981, 75,580 people working in the steel industry lost their jobs, representing 16.5 % of the overall workforce.
Buying only American products from a certain category may temporarily maintain or even raise the number of jobs in the respective sector, but it will raise the unemployment rate in a different sector, negatively affecting the economy and, indirectly, the very sector those products belong to.
The most relevant example is found, again, in the steel industry, whose two decades of protectionism only increased the profits of the major players. Not only that no jobs were created, but, due to the high price of the American steel, the car prices increased, and so did the auto industry slump.
Of course, these are large scale effects, what would only appear if everyone stopped buying import products, which is unlikely to happen, but the basic idea is the same: the economy crisis is not caused by imports, and boycotting imports will not end it.
And the list of arguments against buying only American products does not end here. In an article titled The Stupidity of "Buy American", John Stossel, notorious author and television host, citing reputable economists, sustains that people should buy the cheapest products rather than agreeing to pay more only to buy American products.
This way, they can use the price difference to buy products they would otherwise not afford. Inherently, some of those products will be American and will create jobs. Using less labor and fewer resources to produce or buy one thing leaves more for other things. If buying import products helps people save money, they should continue to do so, because this way, they will be able to produce more locally and spend more on other American products.
Stossel agrees with Henry Hazlitt that Americans should look beyond immediate beneficiaries and effects, otherwise, they risk accomplishing the exact opposite of what they intended.
As for those who complain about poor working conditions and low salaries, they exist because there are people willing to accept them. Those people accept them because, for them, what others consider abuse and exploitation, is a Godsend, the only chance they have to support themselves and their families. They would not be better off without those jobs, and the little money they make, they invest it in the same American economy everyone wants to see prosper.
Should Americans Support the Economy by Buying Solely American Products?
As shown above, and as concluded by Steve Martinez in the above-cited USDA report, buying American products could be beneficial for the economy. However, as shown by Stossel, people would have to afford to buy only American and to be able to find all the products they need.
The problem is more complex than buying or not buying solely American products. On one hand, some of the import products people buy are simply not produced in the country, and it would be unfair and useless to ask or expect people to stop drinking coffee, tequila, using spices, eating Chinese food or wearing diamonds in order to prove their support for their country's economy. Some simply cannot start their day without their cup of coffee, others rely on spices for their diet, and there are people for whom Chinese food is a treat, a way to relax, to escape routine and reward themselves after a day's hard work. Buying solely American products would mean depriving themselves of certain pleasures, and it is not like their effort will save the country. On the contrary, it could negatively affect their productivity, their health and their mood.
Then, the decision of buying a product should be the result of analyzing several criteria, like quality, cost and satisfaction degree. It is a great idea to buy American products when they deliver the same quality as import products, at the same price, but not when the price is the same and the quality of the American products is lower or when the quality is the same, but the American products are more expensive.
In the end, people would be much better off buying import products and stimulating the foods and restaurants industry by taking their loved ones out to dinner or buying a cake on their way home, to give just two examples.
If they want more buyers, manufacturers should make available better and cheaper products, rather than waiting to be supported and paid more for the sole reason that they are doing business in America.
Hufbauer, Gary Clyde, and Jeffrey J. Schott. 'Buy American: Bad For Jobs, Worse For Reputation'.Policy Brief P B 0 9 – 2. Peterson Institute for International Economy: 2009. Web. 15 Jan. 2015.
Macionis, John J. Society, the Basics. 3rd ed. New Jersey: Prentince-Hall, 1996.
Martinez, Steve, et al. Local Food Systems: Concepts, Impacts, and Issues, ERR 97, U.S. Department of Agriculture, Economic Research Service, May 2010.
Shawki, Ahmed Shawki. 'Don't Buy "Buy American"'. Socialist Worker 2011. Web. 15 Jan. 2015.
Simmermaker, Roger. 'How Americans Can Buy American'. Howtobuyamerican.com. N.p., 2013. Web. 16 Jan. 2015.
Simmermaker, Roger. 'Why Buying American Can Save The U.S. Economy'. New York Times 2011. Web. 16 Jan. 2015.
Stossel, John. 'The Stupidity Of "Buy American"'. Reason 2011. Web. 15 Jan. 2015.
Wolff, Edward N. "Is a Discussion of Unproductive Labor Still Productive?" Science & Society. 58 (1994): 204-210.
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