JCL Blog

More on Buying American

Here are a few more thoughts on each individual taking responsibility for their share of the trade deficit.  There are three main parts of the trade deficit - exports (things we make that people in other countries buy), imports (things we buy that are made in other countries), and domestic consumption (things we both make and buy).  

Domestic consumption is what I did when I bought a Jeep.  I know there are parts in the Jeep that invariably are made in China, but let's not let get dragged down that rabbit hole just yet.  Domestic consumption is not as good as exporting something, but a lot better than importing something, so if we have to consume, let's consume the things we make.

The argument against domestic consumption for the sake of domestic consumption (or avoiding imports) is that it dulls our competitiveness.  If we all just buy products made in America, because they are made in America, our manufacturers will get soft and lose their edge.  This also happens when domestic consumption is boosted by tariffs or other protectionist measures.

So the main measure of the health of our industries is not the extent to which our products compete for the domestic market, but the extent to which our products compete abroad.  

What about the labor union part of my last post?  The labor unions are better positioned to make a difference in the trade deficit than any other group.  If the unions spend all of their energy holding onto the past -- including onto benefits earned in the past from companies that cannot possibly sustain them -- it will deal American manufacturing a double blow.  Once for holding us back and once for not moving us forward.

Conversely, if the labor unions used their relationships with the workforce and employers to invest more in building the workforce of tomorrow -- we could prevail.  Sure it takes less workers to load a ship with a crane instead of by hand -- but we can afford to pay the crane guy many times the amount a manual laborer would command.  Sure it takes less workers to build a car with robots, but the robot operators and repair people make many times what the old assembly workers got paid.

We could dominate the next century of manufacturing as long as we invest in the right places and the labor unions are the key.

In the end it all boils down to the trade deficit.  We are surviving now because we can finance our trade deficit ($50 Billion per month).  Every time we dig that hole deeper we get weaker, and less likely to be able to continue to finance it.  Let's make products that compete on the world market, and also buy them at home.