Posted on Friday, October 22, 2010
Buy American" -- it's one of the most common suggestions I get from readers emailing me with job-creation ideas.
The federal government could certainly do more of that directly, by expanding domestic-content requirements on government contracts.
As businessman/activist Leo Hindery and four co-authors wrote in the American Prospect last year, the administration and Congress need to not only embrace a broad manufacturing policy:
They also need to adopt "buy domestic" requirements for federal procurements, which represent 20 percent of our nation's GDP. The United States is the only nation among the G-20 not to have a significant "buy domestic" procurement program, yet no single economic stimulus initiative would do more to resuscitate U.S. employment and reduce our massive trade deficit. In May, China, which is by far the single largest importer of goods to the U.S., confirmed its policy of 100 percent domestic procurement. We should call our new comparable requirement the "U.S. Domestic Investment Act."
But whether it's the government or just regular people, one big problem with "Buy American" is that it's increasingly hard to do. So many jobs have already been shipped overseas; such an overwhelming majority of products sold at your local Wal-Mart are made elsewhere; and so often, it can be difficult to tell whether you're buying American or not. (What creates more American jobs, a Toyota Camry or a Ford Fusion? Answer: The Toyota.)
"There are 5 billion cell phones in the world, and we don't make any of them," said Scott Paul, executive director of the industry-labor Alliance for American Manufacturing. "We don't make any laptops. No flat-screen TVs."
And, Paul added: "The big-box stores are so ubiquitous that their sourcing policies sort of dictate where a lot of things come from."
As Richard McCormack, the editor of Manufacturing & Technology News, wrote in the American Prospect: "Americans stopped making the products they continued to buy: clothing, computers, consumer electronics, flat-screen TVs, household items, and millions of automobiles."
The White House's position is that Buy America is a fine idea, but that the key is having a lot more things made in America in the first place. President Obama on August 6, for instance, spoke of his desire to "rebuild our economy around three simple words -- Made in America. That is what I'm committed to doing, and that's what I hope members of both parties will join me in doing in the days ahead and beyond."
An administration official told the Huffington Post that Obama sees restoring manufacturing and increasing exports as a key step "as we begin to recover and not only pull out of the recession, but address some of the deeper structural problems of our economy."
The best example of Obama's approach so far, the official said, is the administration's clean energy policy.
When the incentives are simply for the production of renewable and alternative energy, "then you can create a wind farm that produces renewable energy where the entire supply chain and all of the components that went into the wind farm were imported," the official said.
The alternative approach, the official said, is: "Let's provide incentives for not only the end use but also the manufacturing of the components." (See, for instance slide 5 of my "11 Very Reasonable Places Your Stimulus Dollars Went" slideshow.)
The official acknowledged that there probably is more the government could do as far as its own purchasing, through goverrnment contracts, as well.
Paul, of the Alliance for American Manufacturing, considers the Buy American provisions in the 2009 stimulus package to have been a clear success.
Infrastructure -- transit and transportation, in particular -- have long had domestic requirements attached to them, and .the result is easy to see. "For instance, we're building streetcars for the first time in this country for at least a generation because there's a domestic content requirement on streetcars," he said.