I'll concede that as recently as 3-4 years ago I still clung to the idea of "buy local" and "buy American" It just seemed to make sense, both logically and viscerally. But a little deeper consideration and analysis will make the errors of this thinking clear.
Some good reading below. Dr. Boudreaux's column is not to be missed. And I can not recommend this book (The Choice: A Fable of Free Trade and Protection) strongly enough. Buy it, borrow it, get it at the library, but do read it.
This HuffPo piece is scary-ignorant, sadly.
Donald J. Boudreaux's Economics in Many Lessons: Ask the protectionist - Pittsburgh Tribune-Review: "Protectionism is a disease that feeds on fear and ignorance. With an unusual amount of economic uncertainty sparking an unusual amount of economic fear, protectionist sentiments today are growing. Blatant protectionist pundits such as Lou Dobbs, and blatant protectionist politicians such as Sen. Sherrod Brown (D-Ohio) and Sen. Byron Dorgan (D-N.D.), enjoy larger platforms than they had even just a few years ago. Protectionism's allure is understandable. 'If we make it harder for Americans to buy foreign-made goods,' alleges the protectionist, 'we increase the demand for American-made goods. With more goods being made in America, more Americans will find jobs. QED.' In this case, though, 'QED' should be read as standing for 'Quite Especially Dumb.' Every protectionist, before he or she attracts your allegiance, should answer the following questions ..."
Additional links:
The Choice: A Fable of Free Trade and Protection
Open Letter to an Anonymous E-Mail Correspondent
Tariffs and Freedom - The Freeman
Book Review: The Price of Everything: A Parable of Possibility and Prosperity
Wednesday, January 26, 2011
Let's Talk Protectionism, Trade, and China
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China’s Innovative Way of Skinning the United States!
Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.
In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
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