Friday, January 2, 2015

New Jersey's Stupid, Immoral 'Buy America' Bill

A bill dubbed “Buy America” was introduced in the New Jersey legislature in 2014. Senate Bill 1811 (3059 in the state Assembly) “Requires use of goods made in the United States for public [state of NJ] contracts.” “Public contracts” applies to state and local governments and public colleges. Recently, the bill passed the legislature and was sent to Governor Chris Christie.

This bill represents bipartisan ignorance. Any half-decent economics textbook will explain why protectionism is economically destructive, harming businesses and consumers alike, including the very American jobs such protectionist ilk is allegedly intended to protect. As Brent Shafer, CEO of Philips North America, explains in a NJ Star-Ledger op-ed:

[T]he United States is part of a global economy and our future success depends on how well we operate within a worldwide marketplace.

For example, many of New Jersey’s workers are employed by companies headquartered abroad with operations in the United States – including mine, Philips, which employs more than 300 throughout the state and more than 20,000 in the U.S. These foreign companies that have chosen to invest in America are known as insourcing companies, and they directly employ more than 228,000 people in New Jersey . . . .”

Noting that “[m]ore than 1.1 million New Jersey jobs are driven by trade,” Shafer observes:

This bill would discriminate against an array of companies and their employees that have built businesses with cross-border supply chains to compete in today’s global economy, and that will hurt the very workers New Jersey is trying to protect.

The New Jersey Star-Ledger also weighed in with some good points in its 12/30/14 editorial Buy American Bill Would Backfire, Deserves Veto:

[I]f we refuse to buy products from places such as Canada and China, they are likely to do the same thing to us. The attempt to create jobs here would backfire, as we saw during the Great Depression.

Trade protectionism makes even less sense today, when products — from cars to computers — tend to be built from pieces made all over the world.

The Star-Ledger makes the point that, at best, NJ taxpayers would be forced to pay more, and at worst some products may not even be available for purchase.

I left these comments to the Star-Ledger editorial:

The S-L’s logic is impeccable and backed up by decades of experience and by any half-decent basic economics textbook. By the very nature of trade, free trade among people of the world is win-win and lifts all nations’ general standards of living. Our legislatures cannot fail to know this. But economic blindness in NJ is apparently bipartisan: The bill passed both houses of the state legislature on December 18 by wide margins; 43-24 in the Assembly, and 27-4 in the Senate.

This so-called “Buy America” bill is not just economically stupid: The “Buy American” principle itself is un-American. It is discriminatory, in violation of a core American principle; a government of, for, and by the people—This means all of the people. The government has no moral right to discriminate against companies that market foreign-made products. To do so is to discriminate against their employees, owners, and investors who have done nothing wrong and are merely exercising their inalienable individual rights. Under America’s principles of individual rights, the moral right to freedom of association is a fundamental legal right. Trade is a form of free association. This principle doesn’t distinguish between trade among Americans and trade between Americans and individuals living and working in other countries. Aside from countries against whom our government has embargoed trade for national security reasons, every American has an inalienable right to freely trade with people anywhere in the world. That right doesn’t disappear for companies bidding on their own government’s contracts.

Hopefully, Governor Chris Christie will veto this immoral piece of economic insanity, and the legislature will fail to override.

Related Reading:

'Buy American' is UN-American—Harry Binswanger

No comments: