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Buy American clause in bailout
Old 02-03-2009, 11:48 PM   #1
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Buy American clause in bailout

I'm curious how many believe that the requirement to buy American produced steel for infrastructure is a good idea. Since many economists have suggested that protective tariffs caused worsened the Depression, world opinion hasn't been on America's side. Now I see that POTUS is against it.

Where do you folks stand.
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Old 02-03-2009, 11:57 PM   #2
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I'm curious how many believe that the requirement to buy American produced steel for infrastructure is a good idea. Since many economists have suggested that protective tariffs caused worsened the Depression, world opinion hasn't been on America's side. Now I see that POTUS is against it.

Where do you folks stand.
It is definitely a good idea for the Demo congresspersons who are pandering to the unions. Which is all this is about anyway.

Ha
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Old 02-04-2009, 12:37 AM   #3
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I think this sums up my opinion:

"Let me just be blunt. Protectionism is the crack cocaine of economics," Richard Fisher, president of the Dallas Federal Reserve, said Monday on C-SPAN.
"It may provide a high. It's addictive and it leads to economic death," Fisher added.

DD
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Old 02-04-2009, 12:57 AM   #4
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Originally Posted by kumquat View Post
I'm curious how many believe that the requirement to buy American produced steel for infrastructure is a good idea. Since many economists have suggested that protective tariffs caused worsened the Depression, world opinion hasn't been on America's side. Now I see that POTUS is against it.

Where do you folks stand.
Dumb idea, but par for the course for the yutzes in Washington.........
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Old 02-04-2009, 02:48 AM   #5
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Wiki has a nice write up on Smoot_Hawley Tariff act. I think the only hope we have stop the protectionism train wreck is promise that any congress critter who supports this act, will become infamous in history.

"Despite the pleas of thousands of economist, business leader, and President Obama.
Congressman Joe Dumb and Diane Dumber pushed for a Buy American provision", prompted retaliation by the EU, Canada and Japan, thus turning the Great Recession or 2008 into the great depression"

If I was a reporter I'd ask the supporters if they are worried about future generation viewing them as idiots or worse?
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Old 02-04-2009, 05:40 AM   #6
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If we leave well enough alone, this economic downturn (call it what you will) will work its way out, if we put in protectionist "Buy American" tariffs, it will be much, much worse and will take us years more to get out of. When will they ever learn. Hey, I elected Obama as president, not Pelosi.
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Old 02-04-2009, 07:25 AM   #7
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I'm against a Buy American clause. Every dollar in additional cost that we pay to Buy American instead of buying the most cost effective product is the same as taking a dollar of taxes from the citizens of the USA. It is a direct subsidy to the inefficient* American producers and a burden on the average US taxpayer. Just another transfer of wealth.

*by inefficient I mean that someone somewhere else can produce an equivalent quality product for less.
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Old 02-04-2009, 08:58 AM   #8
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One of the benefits of learning history is that it provides us with enough background information to observe cause-and-effect -- what happened, what we did about it, what worked well and what didn't work so well.

But it's only as good as our willingness to learn from it. As good as protectionism may feel on a base level, it's an economic loser. In the longer term, high tariffs and trade wars benefit almost no one.
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Old 02-04-2009, 09:20 AM   #9
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I think you have to think of it from a political standpoint. No politician wants to run on the premise that a bill they signed was used to buy X billion dollars worth of foreign goods while Americans that could have provided these goods were unemployed. Unfortunate political reality.
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Old 02-04-2009, 09:30 AM   #10
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The whole point of borrowing all this money is to create jobs to convert the downward spiral into an upward spiral. It's important to maximize our "jobs per dollar borrowed", so at first glance it looks like a good idea. We also want to maximize the "good stuff we get by spending the money", but that's secondary in this economy.

Since the slowdown is global, we want everyone else to do their own stimulus plans as well. If the "buy domestic" clause gets baked into everyone's plans, then we (the whole world) get less efficiency than we could (all countries combined get less real stuff for the dollars they borrow).

I see the "buy American" clause to be something we are quick to drop, as soon as we're sure that other countries are going to do their own programs.
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Old 02-04-2009, 10:03 AM   #11
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I think Buy American came about because of quality control issues? I could be wrong.

If you can inspect some steel beams or rebar as they are fabricated, or inspect them shortly after, I think you'll have a better product that something that came from overseas. Tougher to inspect things in Hong Kong or Japan. What is their quality control/quality assurance program? Do they test their carbon content, etc.?

I've had one experience with this. A bridge I was inspecting during construction had magnesium coated rebar. Manufactured in Great Britain? The stuff had sat on the ship so long that the steel had rusted under the cladding, from either not being clean when it was dipped or from pinholes in the magnesium cladding. All "certified" steel. Don't run into that with American made, epoxy coated bridge deck steel.

Apparently someone failed to realize that if the test project didn't work out too well, that this product would probably never be used again.

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Old 02-04-2009, 10:09 AM   #12
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It is definitely a good idea for the Demo congresspersons who are pandering to the unions. Which is all this is about anyway.

Ha
What Ha said.
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Old 02-04-2009, 10:18 AM   #13
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Seems interesting that protectionism is coming back......I thought we were "trying to improve the view of the US in the world"...........don't think protectionism is going to help.....we'll probably lose MORE jobs than we would otherwise.

Global competition is good for EVERYONE......
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Old 02-04-2009, 10:55 AM   #14
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I've had one experience with this. A bridge I was inspecting during construction had magnesium coated rebar. Manufactured in Great Britain? The stuff had sat on the ship so long that the steel had rusted under the cladding, from either not being clean when it was dipped or from pinholes in the magnesium cladding. All "certified" steel. Don't run into that with American made, epoxy coated bridge deck steel.
Do you have adequate inspection methods to verify that US-origin steel is meeting specifications? Can the same inspection methods not be used on foreign origin steel? Aren't there a number of non-destructive testing methods to inspect steel members (xray, ultrasonic, etc)?

In the end though, I don't see a difference between trusting a US-origin steel beam produced potentially 3000 miles away or one from a foreign source 4000-10000 miles away.

But again, it goes back to can "someone somewhere else produce an equivalent quality product for less"? If so, then let's save some money and either cut taxes, reduce the debt or spend it elsewhere.
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Old 02-04-2009, 11:08 AM   #15
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The "buy American" clause is yet another example of a short-sighted, misguided, populist drift IMO.

I think that, with such a clause, for each US job saved in the steel industry, there would be many more US jobs lost in the export industry due to retaliations from our overseas trading partners.
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Old 02-04-2009, 11:12 AM   #16
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The "buy American" clause is yet another example of a short-sighted, misguided, populist drift IMO.

I think that, with such a clause, for each US job saved in the steel industry, there would be many more US jobs lost in the export industry due to retaliations from our overseas trading partners.
Probably true. And while "buy American" as a sound bite sounds good, especially during periods of elevated unemployment, the truth -- like it or not -- is that global trade has become so critical to the prosperity of economies all over the globe, and a "trade war" would benefit almost no one.
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Old 02-04-2009, 11:12 AM   #17
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Yes, protectionism is a long-term loser. I am encouraged that Obama is fighting it.

From what I'm reading, we have a new form of "gridlock" going on. Rather than the traditional D-R gridlock, we have the Obama/Change versus Pelosi/Status-Quo, with the Rs thrown in the mix, which Obama can use for leverage.

In terms of getting decent bills passed, this might be the best form of gridlock ever. I'm trying to be positive, so maybe this will work out for the best.

Seems to me, any "stimulus" package really needs to be looked at from a "Return-on-Investment" viewpoint. If the (borrowed) money we spend today does not provide an attractive ROI, all we are doing is putting our purchases on the unpaid balance of a credit card and pretending we are better off today. It's an illusion.

What I think needs to be done is, to look at the ROI of all potential stimulus spending, and try to prioritize based on that. From what I've seen, govts simply do not seem to do that. Lacking that, I'm tempted to think that tax cuts are the best stimulus - let the people and businesses decide, since the govt probably will not.

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Old 02-04-2009, 03:31 PM   #18
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What I think needs to be done is, to look at the ROI of all potential stimulus spending, and try to prioritize based on that. From what I've seen, govts simply do not seem to do that.
How is such a future ROI measured? This isn't a CD or T-bill where a projected ROI has historical precedent. The "Green Jobs" initiative may work, or it may fail miserably. Likewise, giving billions to AIG may work, or it may fail miserably.

This is a problem with no known solution. Everyone is making educated guesses on how to fix it.
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Old 02-04-2009, 04:05 PM   #19
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How is such a future ROI measured? This isn't a CD or T-bill where a projected ROI has historical precedent. The "Green Jobs" initiative may work, or it may fail miserably. Likewise, giving billions to AIG may work, or it may fail miserably.

This is a problem with no known solution. Everyone is making educated guesses on how to fix it.
Educated guesses are fine - you do the best you can do.

All I'm saying is they ought to take a stab at it, and try to prioritize from that.

Let's take "green jobs" as an example. Should people be put to work putting solar panels on homes/buildings? We've seen the numbers on this forum - the payback can be a very, very long time, even with govt subsidies (which would be a shell game in this calculation). I'm thinking there must be better investments.

We ought to try to determine which jobs have the best payback.

I have not looked at the bill in detail yet, but I doubt (based on past experience) that any of this was done. It should not just be about "creating jobs", it ought to be about creating jobs that create value. We can create jobs by paying people to dig holes and paying others to fill them up. I think there are better alternatives.

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Old 02-04-2009, 04:19 PM   #20
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Educated guesses are fine - you do the best you can do.

All I'm saying is they ought to take a stab at it, and try to prioritize from that.

Let's take "green jobs" as an example. Should people be put to work putting solar panels on homes/buildings? We've seen the numbers on this forum - the payback can be a very, very long time, even with govt subsidies (which would be a shell game in this calculation). I'm thinking there must be better investments.

We ought to try to determine which jobs have the best payback.

I have not looked at the bill in detail yet, but I doubt (based on past experience) that any of this was done. It should not just be about "creating jobs", it ought to be about creating jobs that create value. We can create jobs by paying people to dig holes and paying others to fill them up. I think there are better alternatives.

-ERD50
An attempt should be made. They're in such a hurry now that they're just throwing money around.

It's difficult to calculate payback though. What's the payback on the rural electrification program? Waste of money or did it make America the world producer of food? How long before payoff, if any?

As far as solar and wind power, they do have long paybacks. Do we take into account oil wars though? The Cato Institute certainly does when calculating how much a gallon of gas truly costs. Is it worth it to reduce our oil dependence (even excluding the known factor of peak oil, which is estimated by the DOE to be ~2028)? Maybe not with solar.

I agree that little of this analysis is being done.
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