Buy American clause in bailout

[kumquat]

Seems the senate is getting the message:

reportonbusiness.com: U.S. Senate agrees to soften 'Buy American' plan

 

[ERD50]

Sorry, quoting myself as I forgot to include a comment relevant to this:

I've only heard that wind is cheaper after the govt (we) pay for part of it from another pocket, and then pretend we didn't really do that.

So, if wind energy is part of the stimulus package, doesn't that mean that we are spending money (that we don't have) to make electricity more expensive for people? Does that make any sense in an *economic* stimulus package?

-ERD50

 

[Independent]

So, if wind energy is part of the stimulus package, doesn't that mean that we are spending money (that we don't have) to make electricity more expensive for people? Does that make any sense in an *economic* stimulus package?

-ERD50

The way I get it, "stimulus" means hiring people. It would be better to have the workers create something that will be useful for the future rather than have them dig and fill up holes, but we'd get the stimulus today even in the second case.

Most of the cost of wind energy is the initial cost of building the windmills. After that it's just maintenance. If the gov't borrows the money to subsidize the construction, the future out-of-pocket costs for electricity consumers can be the same or less than the cost of coal. The total cost to our economy is higher, but the extra cost is in borrowing the money to hire the unemployed people (assuming there are unemployed people with the skills) to build the wind farm - this is money that was going to be spent in the name of "stimulus" anyway.

Building windmills and power lines is certainly better than digging holes and filling them up. The question is whether it's better than other things (roads, schools, houses, cars) that could be built with the stimulus money.

 

[ERD50]

Most of the cost of wind energy is the initial cost of building the windmills. After that it's just maintenance. If the gov't borrows the money to subsidize the construction, the future out-of-pocket costs for electricity consumers can be the same or less than the cost of coal.

Aren't you falling victim to the "shell game" here?

If the gov't borrows the money to subsidize the construction (of wind power), the future out-of-pocket costs for electricity will include paying back that money that was borrowed, plus interest.

It is not a free lunch.

Plus, while I cannot vouch for the accuracy in the numbers i posted, they do include the lifetime costs. Over the lifetime of the installation (coal plant versus wind farm), they indicate that coal is cheaper even after paying for the fuel versus free wind.

Building windmills and power lines is certainly better than digging holes and filling them up. The question is whether it's better than other things (roads, schools, houses, cars) that could be built with the stimulus money.

Exactly. I just threw out the digging holes to make a point. And I'm questioning if some of these green initiatives are the best use of the money. I don't expect perfection, but some reasonable analysis should go into spending billions.

I keep meaning to dig up some specifics on this bill, but I'm trying to finish my taxes. I'm tempted to just write an obscenity in big red letters across my 1040 and just mail it in, as it seems that you can do the equivalent of that and be nominated to office that oversees the IRS. That would save some time for me.

-ERD50

 

[FUEGO]

Some of your statements make it sound like you don't think much of American manufacturers. When you speak against "buy American" and level playing fields, don't forget that many foreign manufacturers such as Japanese autos and Chinese steel are subsidized by their governments. Don't talk to me about level playing fields.

I don't think there was anything in my posts to indicate that I don't think much of American manufacturers.

I am merely suggesting that we should buy the best quality products at the lowest price. If "someone somewhere else can produce an equivalent quality product for less", then we should save money and purchase those products. Otherwise we are wasting taxpayer dollars. If we want to give money to steelworkers, just write them a check.

And as long as Japan and China are graciously wasting their taxpayer dollars making the autos and steel that they produce cheaper, I say we take advantage of their generosity.

As far as quality goes, as long as the products we are buying meet specifications, from an engineering standpoint it shouldn't matter what their country of origin is. Does the tensile strength, yield point, carbon and other metal content, etc, meet the ASTM or other standards? Are steel members welded per specifications? It is a commodity good.

 

[FUEGO]

From the Economist:

The return of economic nationalism | The Economist

A nice international perspective on our domestic policies and their effects. This editorial is against a "Buy American" type protectionist law.

 

[Independent]

Aren't you falling victim to the "shell game" here?

If the gov't borrows the money to subsidize the construction (of wind power), the future out-of-pocket costs for electricity will include paying back that money that was borrowed, plus interest.

Yes. But we're going to borrow and repay (or pay interest on forever) the stimulus money anyway. To me the stimulus spending is a little like "sunk cost", you don't have the option of not incurring it.

I think we agree that we should still look for the best bang for the buck. First, we want to reverse the economic cycle, then we want to get as much as we can out of the borrowing/spending we're going to do.

I figure that anything with a great ROI would have been done already by private business, just because it was a good investment. The gov't stimulus is probably stuck sorting through some less than great options. Maybe someone has a way of spending $800 billion on jobs that will have better pay-backs than windmills. I just haven't seen the list.

 

[ERD50]

I think we agree that we should still look for the best bang for the buck. First, we want to reverse the economic cycle, then we want to get as much as we can out of the borrowing/spending we're going to do.

I figure that anything with a great ROI would have been done already by private business, just because it was a good investment.

Wow, that is a really good point. But think about what that means - it means that the govt is by definition going to put money into things with low ROI. Is that really a good use of our tax money?

I think this is exactly why some people prefer tax cuts as stimulus. Let the people and businesses decide which are the good ROI projects.

An exception would be things that the govt could organize and pull off that businesses could not. Can't think of any off hand.

I guess a case can be made for stepping up infrastructure maintenance. But we should realize we will be paying for that in the future, and work done now means less work done in the future, all things being equal. So, if you look at it as leveling off the boom/bust cycles, OK. But that's all it would be, it would not be "creating" any wealth, just time-shifting it, right?

-ERD50

 

[ziggy29]

I figure that anything with a great ROI would have been done already by private business, just because it was a good investment.

I think that depends on how long it took for the ROI to be realized. Many businesses (especially publicly traded ones) tend to be very focused on this quarter, and if the "payoff" from an investment might take a couple years or more to realize, they won't do it.