Made in the USA?
The admonition to buy local is heard everywhere. But while a romantic notion, it's not an economically sound one. Instead we should cherish the importance of true free trade.
"Buy USA" is a very popular slogan and you have probably even received emails from well meaning friends urging you to only buy products "Made in the USA." This, we are assured, will result in more jobs for American workers and more factories here. Some very popular (well not the ones I admire) but well known economists agree with this. Certainly many politicians tout this mantra frequently. Let us, though, tear this common idea apart and see if it passes the logic test.
First, it actually ignores what happens when a good is produced anywhere. In manufacturing many factors have to come together to create even the most simple product. In something as simple as a common old wooden pencil the many materials and people required are almost impossible to imagine (please read the simple but profound essay, I Pencil, by Leonard Read).
If one analyses almost any item manufactured here in the USA, even those stamped with a "Made in the USA" boast, one will quickly realize there are materials, chemicals, metals, and components which are grown, mined and manufactured elsewhere. Though a product may be assembled in one country, it could probably not exist without the materials imported from all over the world.
Second, this is also a fallacy expressed by the people who insist all will be fine if we only trade locally. Where that may be true for some perishables (true, they taste fresher if not transported a long distance), for most products it is really a very limiting idea, as we would have far less variety.
If it were truly a valid idea, why confine the idea to a town, a state or a country? Why not go back to each family producing and making all they need? (Thanks to Donald Boudreaux of the Cafe Hayek site for this perfect question.) My grandparents were not even that bad off. Though they had to do many things themselves on their early 1900's farm, they could, at least, buy a plow, knives and axes and some products they could not, or had no time to produce. They understood, for that day and time, the desirability of trade, and barter was a way of life.
There are those strong "Green" people who suggest that if each family had a few acres and had to produce everything needed for themselves, life would be wonderful. Do you really want to grow all your own food, make your clothes from growing the cotton or sheep for wool, to spinning and weaving the material? Chances are our Green friends have not accomplished that themself. Self sufficiency is very difficult and is about all one can do just to maintain bare survival.
The more specialization there is the wealthier we all are. We gain from the actions of many individuals who can concentrate their efforts, as we can, and with whom we can exchange. The more people there are who are specializing in what they want to do and trade with others for what they do not want to do, the more productive each can be and the more items and skills there are available to us all. Not trading outside of a small circle is one of those ideas which may sound romantic, but in reality leads to a cruel and meagre existence.
Third, is the much greater benefit of interaction as opposed to isolation. Our ability to outsource and import, whether from our own little acreage to our town, state or country gives all people the ability to have far more than if each person had to produce all they needed and wanted. Countries whose people have grown into specialization and trade have less poverty and a far higher standard of living than those who are confined to just what they, or their little village, can produce.
Forth, we can see that as goods flow, ideas flow. Our "poor people" in this country have more than the richest had only a hundred years ago. This is largely the result of the vast amount of people who are creating, producing and trading with one another. Ideas feed upon ideas and each concept is a building block for a better concept. With the growth of the internet, ideas are flowing so rapidly the poorest people, here and across the world, are finally able to have a better life. Interestingly, their improved longevity and better life has come through trade interaction (and the concomitant diminishing of the power of their rulers) than even from receiving generations of charity.
Fifth, "Buy USA" has a sordid history. The idea of limiting trade to "our group only" is indeed an old idea re-invented. Though it is a popular slogan, it should be recognized as an outgrowth of the jingoism that was and is used by war lovers to whip people's sentiment up against a particular country. If we trace history, sadly there have always been a few power hungry people who need scapegoats. Whether it is directed against so called invaders, the different, those envied for their land or wealth, or those people far distant and unfamiliar, the propaganda usually the precedes a call for some form of trade hostility.
When the undercurrents of a war are brewing, the first human action to be demonized is trade with "the others". Whether the imposition of sanctions, embargoes or tariffs, would be rulers have always used some variation of anti-trade propaganda. They found centuries ago this is a useful tool for creating a hostile attitude toward a given group of people and makes it possible to characterize the "others" as dangerous, sub-human enemies. Then it merely requires one more incident (usually created by the propagandists themselves) and frenzied people are willing to murder, send their children to die, and bomb other people's children. History cautions us to be wary, very wary, of anti-trade rhetoric.
Sixth, and most important is the huge benefit of trade itself that is almost invisible; an intangible benefit to all. As trade expands in an ever widening circle, others, even on the periphery, benefit greatly. Harmonious relations are encouraged, for when people trade they rarely fight. As Bastiat famously noted, "if goods do not cross borders, armies will." Where trade is desired, goods and peaceful relations follow.
A different perspective of reading history, a natural outgrowth of reading the Austrian economists, impels one to place the trade routes and mutual agreements as of more lasting importance than the wars and rulers usually emphasized. It is fascinating to study trade in ancient times and see how powerful a force it has always been for peace.
Sometimes trade cannot overcome an agenda of conquest and war, but unlike war and theft, the impetus for exchange must begin with the idea of a mutual benefit. The use of force must be eschewed and replaced with tolerance, good will and honesty. An exchange ends with an agreement on the mutual benefit of the trade and a handshake to prove there is no hidden weapon in one's hand. Though symbolic now it is still just as important, even when virtual.
As a final note, three areas to be explored are the trade deficit, which is a misnomer, manufacturing, which actually has increased in this country, and our problems with unemployment which is terrible but is not caused by our trade with other countries. These issues will require we all dig a little deeper.
Image Credit: CC BY-NC-ND 2.0 (Flickr)/velo_city