Friday, March 31, 2017

Americans cannot afford to have government spending taxpayer dollars on higher-priced domestically produced products when lower-priced foreign products are available.

See Open Letter to Sen. Tammy Baldwin (D-WI) by Donald J. Boudreaux.
"Sen. Tammy Baldwin (D-WI)
Capitol Hill
Washington, DC

Sen. Baldwin:

Seeking to protect American steel corporations and workers from foreign competition, you introduced legislation to require that “100 percent American-made iron and steel is used in water infrastructure projects funded by the Drinking Water State Revolving Fund (DWSRF).”  In your statement meant to justify this legislation, you insist that “workers cannot afford to have government spending taxpayer dollars on foreign products.”

You get matters backwards: Americans – whether in their capacity as workers, consumers, entrepreneurs, students, retirees, or taxpayers – cannot afford to have government spending taxpayer dollars on higher-priced domestically produced products when lower-priced foreign products are available.

I realize that, being a politician, you see only that which is in your personal interest to see.  And so you see only two consequences of “buy American” policies: (1) more business and jobs for steel producers and workers in your state, and consequently (2) more votes for you.

Here, however, is some what you do not see; each, or some combination, of these consequences is unavoidable if you get your wish to oblige taxpayers to pay unnecessarily high prices for infrastructure materials:

– American households’ consumption and investment will fall as a result of rising current and future tax bills;
– government will cut back on its services;
– there will be fewer businesses, fewer goods and services, and fewer jobs in industries other than those that heavily supply inputs to infrastructure projects;
– with yet more special privileges doled out by officials in Washington, ever more resources will be wasted pleading for such privileges from politicians rather than used productively to improve the living standards of Americans and their families.

I’m aware that these negative unseen effects – spread out geographically and temporally as they are – will cause you to lose no votes.  And I’m aware also that the effects that you do see – concentrated heavily in states (such as yours) with steel producers, and occurring in time for the next election – will win you many votes.  So I send this letter not to persuade you to abandon your support for this harmful policy (I’d have better prospects trying to teach a hamster to recite “Hamlet”), but to instill in you at least some small, if passing, smidgen of guilt for the harm that you and your fellow protectionists inflict, for your own venal purposes, so cavalierly on millions of unsuspecting others.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030"

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