Subsidizing some at the expense of others is old-school leftism, and it won’t make America great again.
This week, President Trump reiterated his commitment to his “hire American, buy American” program — a supposedly crucial element in his “economic nationalist” program. The notion here is threefold: American companies should be forced to hire American labor; government contracts should go to American companies; American producers should be protected from domestic competition by revoking or altering international trade agreements. All three of these policies have a long, ingloriously stupid history.
First, the notion that American companies should be forced to hire American labor is a conceit of the Left. It is based on the same failures of economic understanding that lead to advocating higher minimum wages: the notion that cramming through an increase in labor cost does not cost jobs to a company, does not raise costs to the consumer, and does not degrade the quality of future products....
...Second, Trump’s program of ensuring that government contracts go to American companies makes little sense, given that this is merely a government subsidy of popular political interests. Why should taxpayers foot the bill for cement made in Pennsylvania rather than China, absent some political payoff from politicians? And in fact, Trump’s new program allows widespread waivers for government contracts if the government decides that product or pricing is insufficient from American suppliers. As Kevin Williamson wrote earlier this week: “In practice, that means if you have the right friends and make the right donations, the Buy American rules may be used to steer contracts your way. If you don’t, they won’t.”...
...Finally, Trump’s program of producing everything in America is economically illiterate. Earlier this year, (alleged) White House chief of staff Reince Priebus stated, “We can make everything here, or our goal should be to try to make everything we can in the United States so that the money gets put in the pockets of Americans.” That’s not only untrue, it’s simply nutty. Subsidizing domestic industry and cutting off imports in order to “help” the economy is a fool’s errand. Back in the 1930s, Nazi Germany embarked on a course of “autarky,” assuming that they could strengthen the domestic economy through a combination of subsidies and tariffs. The result, which Hitler actually wanted: a requirement for territorial expansion, since trade enriches countries with resources beyond their own borders. North Korea is autarkic today. So is Venezuela. Both are impoverished. Trade enriches both sides; banning trade indirectly taxes certain domestic parties in behalf of others....
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Originally Posted by Chris
