ABC News Buy America Program is Naive and Off Base

ABC’s Made In America series is naive, puerile, vision-less, and bad for America in the Long run. America needs the rest of the world to sell it’s products and services. The rest of the world needs America, too. However, it won’t stand by as America implements this myopic, anti-trade policy. Individual countries will retaliate.

The thesis is flawed. What is its point? To show that patriotism should trump common sense? Are we merely trying to prove that with major effort, American producers can furnish a house, a student dorm, or whatever, with American made stuff alone? What about the cost? What about the eventual price to the consumer? Don’t these ABC folks grasp the difference between manufacturing output and manufacturing jobs?

Made in America is Short Sighted

Made in America: Buy America only is Myopic
Made in America: Buy America only is Myopic

American manufacturing is healthy. Since 1975 output more than doubled; but with a sharp productivity increase that lowered employment by 31%.

ABC looked at the reduced jobs’ number, and concludes naively that manufacturing is declining. While we should not rejoice when people lose their jobs, we must cheer productivity increases. That’s what drives American competitiveness.

Surely, America should have a goal of improving productivity. This means fewer jobs for the same output. We must never forget that business employ people for specific tasks, unlike governments. Sadly, governments employ people for many other reasons. Governments don’t focus on performance. Often they create non productive work. They do this because they have no pressure to live inside a budget.

These ABC folks are thinking like politicians. We must applaud business for raising productivity. Instead of trying to get firms to employ more people, we should encourage them to continue to hike productivity. American manufacturing has become more sophisticated and switched it’s focus to higher-end manufacturing. That’s why it is more difficult to find many made in America items like clothing, toys, and many consumer items. ABC’s series is off base and has not identified the correct issue. Until they do, their series is merely a reality show that will appeal to emotions, but with little real value.

Here is a small point worth considering: What is made in America? What percentage of American content in a finished product means made in America? Is 100% the goal? How about 40%? Let’s focus on improving productivity.

It is crucial America understands it needs the rest of the world to sell its products. Besides, it needs to buy stuff from abroad. The US Department of Commerce, announced on September 8 that total July exports were $178.0 billion and imports $222.8 billion. This resulted in a goods and services deficit of $44.8 billion. Though this is a large trade deficit, the two-way flow is significant.

American firms cannot live in cocoons. GE, Apple, and many well known firms’ sales are in the foreign trade numbers. I am sure they know that to prosper, America needs the rest of the world. We should ask leaders of those firms about potential effects of the made in America policy. Wake up ABC! Asking Americans to buy products made in America only is not smart. It might be popular, but it is bad policy.

Let’s urge companies to grow in the USA. As well, let us support export to other countries. However, unions and governments must remove barriers to productivity increase. Firms relocate factories outside the USA for specific reasons. They don’t do it to increase costs. Unions and governments need to know they must partner with firms. They need to realize that America needs to export its products. And boosting exports, and growing the economy, won’t happen with a made in America campaign.

Another factor Americans must realize is that highly competitive, growing, and profitable firms tend grow employment. However, growing employment is not guaranteed. It must not be a goal, it is merely a byproduct. Unions can play a major positive role to achieve this. But let’s be realistic, only the market will decide which firms survive.

Unions create inflexible working conditions, job guarantees, and other demands. These remove a firm’s ability to compete. These restraints might appear popular to workers in the short term. However, we know they are harmful in the long run. Unions and management must move away from old-style behavior that contributes to factories fleeing to friendlier places.

Then again, is the American education system producing the right skills in the right numbers? Surely, the education system needs fixing. As well, families need to focus more on the education of their kids.  Governments are too involved in our kids’ education. Are our children graduating high school with needed skills to fill vacancies, or to go on to higher learning? These are issues we need to examine.

Finally, government must pave the way for firms to grow. They must ensure workers’ rights are safe. And they must remove unneeded rules and high taxation from firms. More important, firms must work with solid ethical practices. They must use their comparative advantages to produce products in places where their firms will thrive. However, they must treat workers fairly and be good stewards of all resources.

An earlier version of this article was published as ABC News Buy America Program is Naive and Off Base on Technorati.

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© 2011, 2016 Michel A. Bell

Michel A. Bell

Michel A. Bell is a former senior business executive, author of six books (including Business Simplified released in 2018), speaker, and adjunct professor of business administration at Briercrest College and Seminary. Michel is a Fellow of the Chartered Certified Accountants (UK), holds a Masters of Science in management degree from Massachusetts Institute of Technology and a Doctor of Business Administration honoris causa from Briercrest College and Seminary. He is founder and president of Managing God's Money.

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