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Today, Pres. Biden signed a “Buy American” Executive Order. Buy America provisions sound good, but they’re actually counterproductive. There are solid practical and normative reasons to oppose them. A thread. 1/
Here’s the EO. Its major thrust is in its rules on content and waivers. Previously, only 1/2 of a product’s value needed to be US-made to count and it wasn’t too hard to get a waiver. The EO tightens rules on measuring value and granting waivers. 2/ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on-ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/
Why is that bad? First, it drives up costs for govt. projects. For example, if Minneapolis is going to expand its light-rail to promote transit and combat climate, it will now have to buy US-made trains even if Japanese trains are better and cheaper. 3/
It’s weird to both complain about inefficient government spending (which many Americans do) and then also pass rules that force government to be less efficient in that spending. 4/
Second, they drive up costs for businesses. That is not helpful for those businesses or their workers. Here is a link with some really good detail on business and Buy American (via @JGodiasMurphy) https://www.uschamber.com/issue-brief/qa-buy-american-policies 5/
Even if you think you don’t like business, raising their costs means they’re either less competitive in global markets, produce less so have to cut jobs, raise prices or some combination of all three. Not good. 6/
Third, the ostensible purpose of the EO, i.e. “to save American manufacturing”, isn’t even true.
Manufacturing isn’t suffering. It’s manufacturing employment that is down. 7/
Manufacturing isn’t suffering. It’s manufacturing employment that is down. 7/
Most manufacturing job losses, esp. outside of textiles and furniture is related to automation, not trade. Buy American provisions don’t do anything about that. Automation related job losses are a current research of mine (so more from me on this down the road- hopefully). 8/
The argument that we need broad Buy America provisions, and not just on obviously defense-related technology, for national security is malarkey. @scottlincicome will have a paper out on this later this week. 9/
These Buy America provisions, like much other protectionism, are ostensibly aimed at China, but it mostly ends up hitting Canada and our EU allies. That doesn’t help build an international coalition to respond to the rise of an illiberal China. 10/
Buy America provisions encourage other countries to respond with their own Buy National provisions which then hit American exports. 11/
Trade isn’t just about efficiency. It’s about tying countries together to promote peace, interdependence, and cultural exchange. The construction of the US-led liberal international order is one of the great achievements of the 20th century. 12/
Trade, along with immigration, promotes cosmopolitan values, values which, by the way, happen to be very common among Millennials and Gen Z. For Democrats, protectionism isn’t just bad policy, it’s bad politics. 13/
Buy American runs against both the liberal international order and cosmopolitan values. Biden’s protectionism isn’t xenophobic in the way Trump’s was but economic nationalism is still economic nationalism even when it’s served with progressive rhetorical accoutrements. 14/
Finally, Biden’s protectionism seems to flow from an understandable but wrong-headed economic nostalgia. That’s the wrong approach. The challenge is not in how to bring back the halcyon days but how to help us all prepare for tomorrow. 15/
Yes, there is a lot of economic pain out there and yes people are struggling and were struggling before COVID, but this isn’t the way to help them, and it’s the job of the scholar to point out when emotionally attractive policies are misguided. 16/
To be fair, if you want the smartest argument in defense of these provisions, see @toddtucker’s thread from earlier today. I think he makes some good points, particularly on Sec. 10. But I still think those arguments fully don’t counter the problems I’ve laid out here. 17/
So in sum, Buy American provisions raise government’s and business’ costs unnecessarily, solve a problem that doesn’t exist, doesn’t solve problems we do have, encourages retaliation, undermines our alliances, and gives oxygen to nostalgic nationalism. End/
