John Stossel: The Stupidity of "Buy American"

[Kregisen]

I'm not gonna read through the last 18 pages of this thread, but guys this issue is ridiculously common sense.

I'm currently in an upper division international economics course, and we've gone over this all in great detail. Out of 430+ students, I'm in 1st place with a 112.1% test average, LOL. (so I know a little bit about this topic)


Buying American, tariffs etc, are not helpful at all. This goes back to the economic phrase of "what is seen and what is not seen" - tariffs may seem like they're good because we can easily see the benefits which are, in the short term, more jobs in that domestic industry. What is NOT seen are the higher prices to consumers, and higher prices to OTHER industries.

For example: A tariff on steel to save steel makers in the US causes steel prices to rise. This in turn causes other industries that use steel, to have higher costs, such as the auto industry. Suddenly U.S. auto makers are at a disadvantage to foreign makers, and in the end more jobs in all other industries combined are lost as a result. I can try to see actual stats that I've read if you guys can't find them.


Also, the people complaining about "we're losing all of our manufaturing industry..if we dont protect it, we'll lose ALL of it!" are the biggest dumbasses on the planet. Three reasons for this. First off

1. Our manufacturing has been increasing steadily for the last few decades by a few percent a year. What is happening is we're losing manufacturing JOBS. This is due to technology (for example...tractors at a farm take the place of 100 workers, and make the community much richer as a result), and outsourcing.

2. Look up Comparative advantage.

3.On top of that, due to exchange rates, we can never lose all of it. I encourage all of you to go take economics courses or atleast do research online. The more China exports to the U.S. for U.S. dollars, the weaker the U.S. dollar gets. When the U.S. dollar gets weaker in relation to China, suddenly our exports to them are cheaper and their imports to us are more expensive. Think of this is stretching a rubber band. The farther you stretch, the more force that pulls it back to the middle. Same thing here. Also, statistically all richer nations in the world have more service-related economies and poorer nations have more manufacturing. This is because wages are much lower in poorer countries, and wages are directly correlated with productivity.

 

[Kregisen]

And I see Anti Federalist is posting in here too...AF have you read up on economics or taken a course yet? Having you debate this issue is like having me debate rocket science.

P.S. I'm not a rocket scientist.

 

[Kregisen]

Now having said this, a tariff in a large country (large as in it's a big buyer/purchase of a specific item...i.e. brazil is a large country in regards to coffee beans) can be optimal for that country. It's not likely, but it technically is possible that when you combine the change in producer surplus with government revenue, under certain circumstances it can outweight the loss in consumer surplus.

It would greatly hurt the world as a whole, and if the country you put a tariff on puts one back on you then you're worse off, but if they don't retaliate and you're a large country (meaning your supply or demand of an item affects the world price) then it's possible to have an optimal tariff where only your country will be slightly better off in terms of total wealth. Finding the exact amount of a tariff to do this is also very difficult. Too small of a tariff won't help your country enough, and too big of one will hurt your country.



In all other cases, countries big and small, tariffs hurt the country as a whole, and GREATLY hurt overall world wealth as a whole.

 

[low preference guy]

And I see Anti Federalist is posting in here too...AF have you read up on economics or taken a course yet? Having you debate this issue is like having me debate rocket science.

P.S. I'm not a rocket scientist.

AF is a joke, he just throws phrases he heard some time and gives them an emotional twist. He has no idea what they mean. An example:

How can you make Ricardo's law work with a government prison?

As if the reason for low prices affects the validity of comparative advantage. Now, when you say he isn't arguing logically, he comes up with stuff like this:

Logic will tell us that the needs of the many outweigh the needs of the individual.

See? If logic leads to a conclusion he disagrees with, he tries to discredit logic with. So stupid it's funny. Not to mention that's what marxists do when you point them where logic leads to: they say logic is wrong.

Now, don't get me started in the dishonest techniques and distractions he uses when arguing the topic. He used to seem like a decent poster but somehow he turned into something like the most brainwashed poster at the Democratic Underground. Not worth reading his crap anymore. It's embarrassing.

 

[seraphson]

I'm not gonna read through the last 18 pages of this thread, but guys this issue is ridiculously common sense.

I'm currently in an upper division international economics course, and we've gone over this all in great detail. Out of 430+ students, I'm in 1st place with a 112.1% test average, LOL. (so I know a little bit about this topic)


Buying American, tariffs etc, are not helpful at all. This goes back to the economic phrase of "what is seen and what is not seen" - tariffs may seem like they're good because we can easily see the benefits which are, in the short term, more jobs in that domestic industry. What is NOT seen are the higher prices to consumers, and higher prices to OTHER industries.

For example: A tariff on steel to save steel makers in the US causes steel prices to rise. This in turn causes other industries that use steel, to have higher costs, such as the auto industry. Suddenly U.S. auto makers are at a disadvantage to foreign makers, and in the end more jobs in all other industries combined are lost as a result. I can try to see actual stats that I've read if you guys can't find them.


Also, the people complaining about "we're losing all of our manufaturing industry..if we dont protect it, we'll lose ALL of it!" are the biggest dumbasses on the planet. Three reasons for this. First off

1. Our manufacturing has been increasing steadily for the last few decades by a few percent a year. What is happening is we're losing manufacturing JOBS. This is due to technology (for example...tractors at a farm take the place of 100 workers, and make the community much richer as a result), and outsourcing.

2. Look up Comparative advantage.

3.On top of that, due to exchange rates, we can never lose all of it. I encourage all of you to go take economics courses or atleast do research online. The more China exports to the U.S. for U.S. dollars, the weaker the U.S. dollar gets. When the U.S. dollar gets weaker in relation to China, suddenly our exports to them are cheaper and their imports to us are more expensive. Think of this is stretching a rubber band. The farther you stretch, the more force that pulls it back to the middle. Same thing here. Also, statistically all richer nations in the world have more service-related economies and poorer nations have more manufacturing. This is because wages are much lower in poorer countries, and wages are directly correlated with productivity.

Interesting stuff; I'll have to look it up. But your first point grows a concern for me. Could we, or are we currently leaning towards a point where our country could reach an efficiency where larger majorities of our populations become useless? I've always thought about that. If we magically filled every single position available would we still have unemployed people?

 

[jmdrake]

http://en.wikipedia.org/wiki/Nauru

 

[jmdrake]

Now having said this, a tariff in a large country (large as in it's a big buyer/purchase of a specific item...i.e. brazil is a large country in regards to coffee beans) can be optimal for that country. It's not likely, but it technically is possible that when you combine the change in producer surplus with government revenue, under certain circumstances it can outweight the loss in consumer surplus.

It would greatly hurt the world as a whole, and if the country you put a tariff on puts one back on you then you're worse off, but if they don't retaliate and you're a large country (meaning your supply or demand of an item affects the world price) then it's possible to have an optimal tariff where only your country will be slightly better off in terms of total wealth. Finding the exact amount of a tariff to do this is also very difficult. Too small of a tariff won't help your country enough, and too big of one will hurt your country.



In all other cases, countries big and small, tariffs hurt the country as a whole, and GREATLY hurt overall world wealth as a whole.

It's funny (and sad) how your side continues to conflate a voluntary choice of buying American or buying local or whatever with tariffs. It's like conflating charity with taxation. Once you realize that we're talking about a voluntary choice it should be clear why Stossel's view is nonsense. Value is whatever the consumer deems it to be. If a consumer wants to pay $120 for a pair of shoes made in China for $5 just because they say "Nike" that's his choice. If some other consumer gets the same level of pride from a locally made shoe that probably costs less because it's not a big name brand he has value too. It's not like the crap we buy is really worth the price we pay anyway. Sometimes local is actually cheaper once the "Madison Avenue stupid tax" is taken out of the equation.

But for the sake of argument, let's say the name brand crap from China is really "worth it". In the grand scheme of things those who choose to "buy American" will cause the price of the Chinese crap to drop even further due to supply and demand. So there is no economic loss to the overall consumer.

 

[phill4paul]

I'm not gonna read through the last 18 pages of this thread, but guys this issue is ridiculously common sense.

I'm currently in an upper division international economics course, and we've gone over this all in great detail. Out of 430+ students, I'm in 1st place with a 112.1% test average, LOL. (so I know a little bit about this topic)


Buying American, tariffs etc, are not helpful at all. This goes back to the economic phrase of "what is seen and what is not seen" - tariffs may seem like they're good because we can easily see the benefits which are, in the short term, more jobs in that domestic industry. What is NOT seen are the higher prices to consumers, and higher prices to OTHER industries.

For example: A tariff on steel to save steel makers in the US causes steel prices to rise. This in turn causes other industries that use steel, to have higher costs, such as the auto industry. Suddenly U.S. auto makers are at a disadvantage to foreign makers, and in the end more jobs in all other industries combined are lost as a result. I can try to see actual stats that I've read if you guys can't find them.


Also, the people complaining about "we're losing all of our manufaturing industry..if we dont protect it, we'll lose ALL of it!" are the biggest dumbasses on the planet. Three reasons for this. First off

1. Our manufacturing has been increasing steadily for the last few decades by a few percent a year. What is happening is we're losing manufacturing JOBS. This is due to technology (for example...tractors at a farm take the place of 100 workers, and make the community much richer as a result), and outsourcing.

2. Look up Comparative advantage.

3.On top of that, due to exchange rates, we can never lose all of it. I encourage all of you to go take economics courses or atleast do research online. The more China exports to the U.S. for U.S. dollars, the weaker the U.S. dollar gets. When the U.S. dollar gets weaker in relation to China, suddenly our exports to them are cheaper and their imports to us are more expensive. Think of this is stretching a rubber band. The farther you stretch, the more force that pulls it back to the middle. Same thing here. Also, statistically all richer nations in the world have more service-related economies and poorer nations have more manufacturing. This is because wages are much lower in poorer countries, and wages are directly correlated with productivity.

As one of the biggest dumbasses on the planet I ask you....

1. I agree that manufacturing output has increased. However, and I think the point being made by the dumbasses here, like myself, is that as you say "we're losing manufacturing JOBS."

2. Does not Comparative advantage include an analysis of each nations employment rate? Does not the entire premise rest on full employment by each nation engaging in it?

3. Rubber bands eventually wear and break. What then when one or the other nation has lost all of it's manufacturing capacity in certain industries and and the nation is so far into insolvency that this manufacturing cannot easily be resurrected?

 

[Kregisen]

As one of the biggest dumbasses on the planet I ask you....

1. I agree that manufacturing output has increased. However, and I think the point being made by the dumbasses here, like myself, is that as you say "we're losing manufacturing JOBS."

2. Does not Comparative advantage include an analysis of each nations employment rate? Does not the entire premise rest on full employment by each nation engaging in it?

3. Rubber bands eventually wear and break. What then when one or the other nation has lost all of it's manufacturing capacity in certain industries and and the nation is so far into insolvency that this manufacturing cannot easily be resurrected?

1. Yes, we're losing manufacturing jobs, and on average, with protection, it costs consumers $169,000 per job saved..many times worth the salaries of these jobs to begin with. Even if you did want to help these people with certain manufacturing jobs, it would be far better to simply not use tariffs/quotas/other NTB's and simply redistribute some of the wealth from the consumers to these producers, and don't even make them work. They can be paid $100,000 without working, and the consumers are still $69,000 ahead. If you want, I can find you the stats for this. This point is not subjective.

2. I'm not sure what you're trying to say. Have you studied comparative advantage?

3. If you would have read my 3rd point, you would know it is impossible for a country to lose all exports due to the exchange rate effect alone.


phill4paul, I encourage you to go to your local community college and enroll in a class, because this is getting silly.

 

[Kregisen]

Interesting stuff; I'll have to look it up. But your first point grows a concern for me. Could we, or are we currently leaning towards a point where our country could reach an efficiency where larger majorities of our populations become useless? I've always thought about that. If we magically filled every single position available would we still have unemployed people?

No, being more efficient and streamlining jobs doesn't decrease jobs (in the long run), it increases job opportunities. If a factory previously used 100 workers to make 200 clothes a day, and then suddenly gets a machine that 5 workers use and make 500 clothes a day, you are now creating more wealth than before, and the other workers can create wealth elsewhere; be it other factories or other industries.

Also, keep in mind the cost of living goes down as technology increases. You're extrapolating data from today and saying that if jobs are taken away in the short run today, that someday we would follow a linear progression and eliminate all jobs. If that situation were possible (it's not), then all goods and services would be free and there would be no cost of living. Your concern is what most Americans think of when they see jobs being outsourced, or technology advances that negate jobs, but it's largely unfounded.

 

[specsaregood]

3. If you would have read my 3rd point, you would know it is impossible for a country to lose all exports due to the exchange rate effect alone.

How well does that point hold up if the country in question has the ability to print the international reserve currency on demand, a seemingly inexhaustible ability to create debt and is backed by being needed in order to purchase a commodity such as oil?

 

[Kregisen]

It's funny (and sad) how your side continues to conflate a voluntary choice of buying American or buying local or whatever with tariffs. It's like conflating charity with taxation. Once you realize that we're talking about a voluntary choice it should be clear why Stossel's view is nonsense. Value is whatever the consumer deems it to be. If a consumer wants to pay $120 for a pair of shoes made in China for $5 just because they say "Nike" that's his choice. If some other consumer gets the same level of pride from a locally made shoe that probably costs less because it's not a big name brand he has value too. It's not like the crap we buy is really worth the price we pay anyway. Sometimes local is actually cheaper once the "Madison Avenue stupid tax" is taken out of the equation.

But for the sake of argument, let's say the name brand crap from China is really "worth it". In the grand scheme of things those who choose to "buy American" will cause the price of the Chinese crap to drop even further due to supply and demand. So there is no economic loss to the overall consumer.

I didnt see any posts talking about voluntary choices by consumers. This thread reached 19 pages because it's obviously talking about the government stepping in....why would you think libertarians would argue over whether or not consumers have buying choices?

If someone wants to foolishly spend their money that encourages ineffiency that decreases wealth, that's their perogative.

 

[Kregisen]

How well does that point hold up if the country in question has the ability to print the international reserve currency on demand, a seemingly inexhaustible ability to create debt and is backed by being needed in order to purchase a commodity such as oil?

Not sure what your point is....are you asking me how inflation enters into how imports and exports work?

 

[specsaregood]

Not sure what your point is....are you asking me how inflation enters into this?

1. inflation decreases the value of that currency.
2. because of this, exports will be "cheaper" to foreigners while imports will be "more expensive" to the domestic country
3. Foreigners gain wealth by trading their non-inflated currency in for additional imports due to inflation in exporting country

Does that answer your question? I'm not sure what you're trying to ask.

How many dollars have we printed up and exported, do you think price inflation has really kept up even near with the amount of our monetary base inflation?

 

[Anti Federalist]

AF is a joke

Fuck you.

Why is that I can have a constructive conversation with everybody here, even with people that vehemently disagree, without the name calling, neg repping, personal insults, and all all the rest, except for you?

Congratulations fuckstick, in four years, you are the first and only person to make my ignore list.

 

[phill4paul]

1. Yes, we're losing manufacturing jobs, and on average, with protection, it costs consumers $169,000 per job saved..many times worth the salaries of these jobs to begin with. Even if you did want to help these people with certain manufacturing jobs, it would be far better to simply not use tariffs/quotas/other NTB's and simply redistribute some of the wealth from the consumers to these producers, and don't even make them work. They can be paid $100,000 without working, and the consumers are still $69,000 ahead. If you want, I can find you the stats for this. This point is not subjective.

2. I'm not sure what you're trying to say. Have you studied comparative advantage?

3. If you would have read my 3rd point, you would know it is impossible for a country to lose all exports due to the exchange rate effect alone.


phill4paul, I encourage you to go to your local community college and enroll in a class, because this is getting silly.

Thanks for the condecension but since you're the expert I'll let you school me.

1. O.K. let's give all those Americans $100k. I'm one of them. How do you propose we go about this?

2. I thought you had? Is not full employment of each trading nation not considered in the law of comparative advantage? I believe it must be. The two people on the island story that the 'comparative advantage' school of thought likes to promote both have a job to fill. Unfortunately, that is not the case in reality.

3. I'm not talking about ALL imports. I'm talking about a VARIETY of exports/national consumption in the manufacturing base.

 

[AFPVet]

If I had a choice, I would always buy American. Why?

1. Higher quality control standards
2. Manufacturing employs Americans
3. Encourages further growth
4. Increases exportation
5. Increases demand for U.S. made goods as consumers start purchasing American made products

 

[phill4paul]

phill4paul, I encourage you to go to your local community college and enroll in a class, because this is getting silly.

Ah. O.K. That is about as much as I need to know about the situation. A lowly dumbass like myself could not possibly understand the expanse of economics without a local community college edumacation. Fuck community college. I've dealt with the fucking mentality of the enlightened that teach curses there.

 

[specsaregood]

//

 

[phill4paul]

Now, now, I was much more impressed with the teachers at the various community colleges I attended than the various univerities I have attended. The CC teachers tended to have actual hands-on experience in a related field! My stats and calc teacher at one was a retired nasa engineer, good stuff I'm telling you.

Fair enough. Community college faculties may vary.