Don't give me special treatment

The US Congress wants to include "Buy American" provisions in the stimulus bill. I say "no thanks." Protected industries aren't going to pull America out of recession.
Written by John Carroll, Contributor

Debates continue in the US Congress over the size and shape of an economic stimulus intended, in true Keynesian fashion, to create demand for products where it is in short supply. The size of the stimulus will be nothing short of awe-inspiring, though the shock-value is somewhat reduced after approving a similar-sized bailout for the banking industry last year.

In contention are "Buy American" rules which would require that much of the money be spent on products made in the United States. To some, this is a bit rich. Most of the money for this bailout will come from overseas sources given that low-saving Americans are hardly in a position to buy the government bonds necessary to finance this bailout-sized deficit. Foreign governments have already warned this would violate WTO trade rules. The Smoot-Hawley tariffs of 1930 whacked more than 10 percentage points off of global demand in short order. Could "Buy American" provisions result in similar levels of demand destruction?

Maybe. But what I find most galling about all this is that America, a country that is supposedly a "champion" of global capitalism, practically sprints away from its principles at the first opportunity.

How soon we forget the legacy of protected markets. Americans watched as former Warsaw bloc countries opened their markets to foreign products, only to have many of their state champions blow away like dandelion spores in a strong wind. China has companies that employ three and four million people and absorb billions in investment capital that otherwise might have gone to Chinese entrepreneurs, while contributing almost nothing to national GDP.

I've called these "baby cribs" of domestic employment, and they are surely extremes. But, pointing out the morbidly obese isn't reason to ignore the tire developing around ones own belly. Capitalism is a discipline. Like gym attendance, cutting corners has costs.

America used to be the prime mover behind globalization. We drove the world trade talks that eventually lead to the World Trade Organization (WTO). America has some of the lowest tariffs on imports in the world. And as I mentioned last Friday mostly to counter those Republicans who spew anti-immigrant and anti-trade invective (which is depressingly the norm these days), the hero of the party, Ronald Reagan, was nothing short of a globalization fanatic.

America has benefited from this. This recession is notable because it is something Americans aren't accustomed to experiencing. In terms of buying power, Americans can buy a heck of a lot for their dollar. I'm frequently called upon to bring electronic goods bought at American stores with me on journeys overseas, because nowhere else can you find prices as good as they are in the US. Even so, our companies and brands are the biggest and most well known in the world.

Competition forces companies to work hard to make their products truly competitive on a global stage. Lack of competition breeds lazy companies that have trouble surviving once the shield is removed.

Granted, America faces competition in ways we didn't in the 1950s (which was more a historical accident; few countries emerged from WWII with their national industries largely intact). We now face both low-tech and high-tech competition, and the industries not accustomed to that (a group which includes most readers of ZDNet) are complaining the loudest.

But at the end of the day, Capitalism is a discipline. We emerge from the doldrums of a global recession by earning the right to emerge from the pit. The companies that survive the battle are well positioned to become the profitable companies that are the true source of jobs in this country.

I'm a business owner, and I am as affected as anyone else is by this downturn. I do NOT, however, want my government to give me special treatment.

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