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Letters to the Editor

Letter: Silly idea

October 29, 2012

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To the editor:

The state Democrats’ proposed “Buy American” law is a classic example of what Thomas Sowell describes as “stage one thinking.” At first blush, it sounds like good idea, but when one thinks beyond the feel-good, it is, in fact, a very silly idea.  

First, the cap on 25 percent, sounds reasonable when no dollar amount is discussed but begins to sound quite the opposite when spoken of in terms of real dollars. Would you be willing to pay $125 for something equivalent that costs $100 elsewhere? Of course not. Now consider purchases in the millions of dollars: $2.5 million more on a $10 million purchase? How warm and squishy do you feel now? That $2.5 million could be used to support schools or roadways instead. Better yet, it’s money that taxpayers could simply keep in their pockets and spend as they see fit.

Second, by paying more just because it’s “made in America” the state is supporting companies with inefficient business models. Through protectionism, the state is actually hobbling American business by not requiring them to strive toward more competitive practices. In the long term, this hurts their ability to compete for all business, foreign and domestic. Competition improves ALL players.  Protectionism hurts everyone.

This proposal illuminates the stark differences between “progressive” and conservative ideology:  Progressives think that the economy grows best from the top down, when government makes the rules; conservatives believe it grows from the middle out, when government gets out of the way.

Comments

Ken Lassman 2 years, 1 month ago

The writer has a point: I seek out buying local and products from the USA and am willing to pay extra for it without a mandate, and encourage everyone else to do this as well. The Democratic proposal would have very little effect for me since I plan to do it anyway, so the question becomes: should those who don't understand the multiplier effect of buying locally and US products be forced to do the right thing? I dunno. Maybe buying products that undercut American jobs and/or extract wealth from local communities should be allowed in the same way that Californian extremists should be allowed to make slanderous movies about Mohammad. It's a free country, after all.

just_another_bozo_on_this_bus 2 years, 1 month ago

Under proposals such as this, the devil is most certainly in the details. But as is often the case with ideologues such as Sowell, and apparently Mr. Jambor, they often omit ideologically inconvenient details in their fatally flawed and incomplete economic equations.

One important detail omitted in this letter is that any extra money spent buying US-made goods doesn't just vanish into thin air. As DougCounty points out, it stays here and circulates in the economy, spent at US businesses, which increases American incomes, and increases tax revenues.

Another detail is that the low prices obtained by shifting manufacturing out of the country doesn't come from "efficiency." It comes from closing manufacturing plants and increasing unemployment in this country by outsourcing to countries with low wages and poor working conditions, often including child labor. This is efficient in the same sense that slave labor on southern plantations was "efficient." The only thing truly efficient about this is the transfer of wealth from the middle class to the wealthy investors concerned solely with the quarterly profits statements.

Armstrong 2 years, 1 month ago

Boz you were almost right this time. If you have ever dealt with the manufacturing industry you would realize how much " efficiency " does drive down price / cost. I work with manufacturers daily, they are constantly looking for ways to become more efficient, drive down cost and increase productivity. The very last thing on their list of to do's is relocate to a foreign country, set up a factory, build and train a labor force, ship the same product they made in the states back overseas to make an extra buck. It may work that way on tv but not in real life.

Bob Forer 2 years, 1 month ago

"It may work that way on tv but not in real life."

Nonsense. If it doesn't work in "real life" why are most non-food and non-medicinal products sold my Walmart made in China. If it doesn't work in "real life" why is the US trade deficit at an all time high. Armstrong, your perception of "reality" and true reality are obviously incongruent.

Armstrong 2 years, 1 month ago

You're talking about retail crap and drugs not industrial or heavy industrial, I am. You should probably stay out of posts you know absolutely NOTHING about. Berry Palstics, Global Mfg, Excel corp, Good year..... Do you want me to go on or do you think you look dumb enough now.

Bob Forer 2 years, 1 month ago

Gee, you sound like a nice guy, Armstrong. How bout if we have a beer together sometime.

Ken Lassman 2 years, 1 month ago

Wow. You can also drown from drinking too much water but that doesn't mean that you should conclude that all water is deadly. To say that there is no such thing as the multiplier effect is just silly, and your proofs and conclusions are even sillier.

George Lippencott 2 years, 1 month ago

Is there a source for the alledged "multiplier effect?? Does it include the impact of the taxes to pay for the additional costs - money not spent on goods and services in Doug County

parrothead8 2 years, 1 month ago

"If this were true, then the wealthiest man in the world would be the guy who made everything for himself."

You don't get it. The multiplier effect implies people actually buying and selling things. A guy who makes everything for himself does neither.

Ken Lassman 2 years, 1 month ago

There is nothing but atoms swapping electrons, too, occasionally fusing nuclei, occasionally splitting nuclei. Everything else is footnotes. Glad we cut to the chase.

George Lippencott 2 years, 1 month ago

God save me from the "right thing". As in just about every argument on here the case you cite is accurate - sometimes. Some times it is not

rtwngr 2 years, 1 month ago

Once more the Dems want the government to intervene. Let the free market operate and have government enforce fair trade.

jayhawklawrence 2 years, 1 month ago

I think that this letter illuminates a disease that permeates our society. The disease is believing that political ideologies can be applied to every situation and produce the correct answer.

The dumbest people are now occupying political positions and making decisions.

This idea is worthy of discussion and for that reason alone, I believe Brownbacks office even made some positive comments about it.

We need more discussion about how to compete in the global economy and all ideas should be on the table.

After nearly 40 years of dealing with buyers and contracts I have seen a number of problem areas. Oftentimes there is a lot of pressure to choose the cheapest price even though over the life of the product, it will actually become more expensive because of poor quality, poor service or just poor communication.

There has been a pattern where a country such as China, (identified as a trading cheater), will buy their way (dump their way) into a market and destroy the US competition. Later, they will raise their prices and there is little incentive to achieve the same level of support or quality that the US companies provided because they are no longer in business.

Over 66,000 manufacturing companies closed their doors from 2000 - 2011. This means that the US has failed to meet the challenges of the new global economy and simply blaming labor costs has been disproven many times in many manufacturing studies by those representing US manufacturers. In my view, the biggest problem has been the ignorance of academia in promoting us toward a service based economy and the lack of attention and understanding from both political parties.

I have often seen a situation where a buyer working for a government office was forced to buy a very poor quality product from a very poor company offshore because of price even when the price difference was within 5-10%. That discount cost them parts, service and productivity from a lesser product.

Ken Lassman 2 years, 1 month ago

To say that there is no such a thing as dumping and that it has no consequences is a purely ideological stance that is totally bereft of proof. There are literally thousands of examples of prices being artificially suppressed in order to gain market share, and in the global marketplace, there are hundreds and hundreds of these issues being litigated every year, currently seen mostly through the United States Court of International Trade, or if it is between countries, the WTO. These issues have been litigated since the 1800s in our country, and for much longer elsewhere. To use the Japanese electronics example as proof that such patterns don't exist is laughable and denying the existence of the very large and dynamic field of law that oversees and regulates these things.

Ken Lassman 2 years, 1 month ago

Ah, no thanks. I'm not going to play your favorite little game of "try to guess what I mean." You have already staked out your position as being that there is no such a thing as the multiplier effect for buying local and American, which is a piece of turf that in the mind of virtually every economist and social scientist is located well beyond the pale. Since you've already wrapped yourself in this flag, so be it. Flap away.

kansanbygrace 2 years, 1 month ago

Libert_One, you express, sometimes, an appreciable interpretation of economic issues based on a minority view of economics with which you are somewhat familiar. Then you lose the handle on the issue and become smug, seldom express yourself clearly in those conditions, and lose your place. There is obviously a multiplying effect. The money which purchases local products from local sources pays local producer forces who buy their commodities in the local grocery stores. There is absolutely no question of that reality. Then those people pay sales taxes, the people from whom they purchase pay rents and local property taxes.
Your initial screed above was simply off base, and you just get hotter and hotter rather than analyzing your wrong turn and getting back in the game. Chill, dude.

George Lippencott 2 years, 1 month ago

The suit claimed they were going to raise prices later after pushing American producers out of the market. The Court thought it was a silly claim and they were right--it never happened.

Because they got tax breaks - tax expenditures - from the government. Made them more competitive and ta ta ta we retained a critical industry for our National defense (if you believe the industry)

kansanbygrace 2 years, 1 month ago

It has just happened in the last 2 years in the tire industry. Ask anyone in the business.

labmonkey 2 years, 1 month ago

I don't care if it costs extra... I always look to see if I can purchase American made. It usually turns out to be the better value because American made goods tend to be higher quality and last longer. The $45 American made jeans I buy may cost twice as much as the jeans I can get at Wal-Mart or Old Navy, but they are the better value because the American made jeans last me a year whereas the cheaper jeans are lucky to last 6 months. Same goes with equipment. $1.25 million may sound like a lot of money over $1 million, but that extra $250K was well spent if a piece of equipment lasts 6 years instead of 4. Plus I/we are investing in keeping jobs here... more jobs means more taxpayer money coming in. Since my taxpayer money is chipping in to pay for this, I want a mandate saying we have to buy American made.

kansanbygrace 2 years, 1 month ago

Well, Libby, I make some of my clothes, grow most of my produce, cook at home; trade with a neighbor, not a Korean, for my meat and milk; dug my well and filter my own water, maintain my automobiles, built one of my houses, maintain the other, and the quality of my surroundings is surprisingly pleasant and so economical in the overall that I live quite above the money I need to spend. Quite to my taste, no complaints about the quality or the durability or that they're designed to be easily maintained. I can't find that in Chinese crap (like those tires that now cost 120 dollars apiece). YOU should live so comfortably. I also appreciate the plumber with whom I trade. He's a local. So's the electrician I trade with. .........and on and on and on.

George Lippencott 2 years, 1 month ago

Why do we not allow people to make their own decisions on what they buy? If the government is going to tell me what to buy and when I would start to wonder just how much "freedom" I actually have.

just_another_bozo_on_this_bus 2 years, 1 month ago

So, to disprove the existence of a multiplier effect, all that's necessary is demonstrate that you have no idea what it is and then declare it doesn't exist.

George Lippencott 2 years, 1 month ago

bozo the mutiplier effect I understand relates to the addition of resources to a market which yields new demand that ultimately leads to jobs. Those resources come from somewhere. Draw the system large enough (say the US) and the removal of those resources from somehwere else leads to less purchasing and ultimately the loss of jobs somewhere else. There is no evidence that there is a net gain in the aggregrate if yuo represent the full system. Now if China invests here then there would be a net gain here (but a loss there)

Borowing to prime the pump is actually different. As long as the system starts working so that the restored gains pay for the pump priming. You can pump prime forever and get nothing but debt unless the system starts generating new tax revenue (not increased taxes that take money out of the system)

jhawkinsf 2 years, 1 month ago

I may be willing to pay slightly more for a product made in Seattle or Miami compared to China, but I know I would pay even more if it were made in Lawrence or Douglas County. I certainly hope our state government seeks products made in Kansas. Who knows, maybe by doing so, they would encourage people to start making things here.

Trumbull 2 years, 1 month ago

The letter writer reflects exactly what we learned in economics decades ago. It is true. However, there are diminishing returns and US "inefficiencies" are a factor of our standard of living. In a worldwide economy, this inefficiency will not be removed until worlwide standard of living balances out. This is good for the world (as we are beginning to see in China, Singaphore, Taiwan, etc), not so good for the US. This can also lead to a severe trade imbalance which can cause a host of other problems.

For this reason I believe in buy USA. We should not necessarily import goods we cannot produce ourselves.

Richard Heckler 2 years, 1 month ago

Supply side economics sends USA industry,jobs and dollars to China to make USA goods with American names still attached = reckless thinking and keeping millions of Americans out of jobs = ANTI AMERICAN. Mitt Romney has made a monster fortune sending USA jobs abroad by way of leveraged buyouts yet blaming the unions when in fact it is corporate greed that is the culprit.

You can support our regional economy by purchasing goods and products that are grown, crafted, and manufactured in our region. When you buy goods made by local workers and craftsmen your money stays in the community. The businesses you support in turn pay local workers, pay local taxes, use local services and contribute to the community in a variety of ways.

Richard Heckler 2 years, 1 month ago

--- Therefore the loss of stable American jobs specifically leads to low-paying service work, which hurts the economy. To better see how these factors are related you have to view it on a wider scale. Meaning that once the economy is hurt no one benefits.

--- Everyone suffers because as the majority of Americans (the middle class) lose jobs their buying power goes down. When this happens some U.S companies go out of business therefore American's ability to purchase a variety of goods declines. Buying power is decreased then further jobs are lost.

--- The long term affect could be an on going cycle of deprivation which could lead to mass poverty.

--- The solution to all these problems lies in the proposal, Americans should buy American made products. This is true because once Americans start buying more American goods the demand for them will increase. As a result of the rising demand, more factories or plants will be developed.

--- Many good job opportunities will then be available.

--- Not only will the manufacturers benefit, openings in higher paying fields will increase. A few of these include the engineers of the building and the plumbing and construction companies. Hence when all this is put into action many Americans will be on better economic standing.

--- That means they will once again have high buying power. Rising profits for American base business and their employees will take place. All of this combined will keep the U.S economy and its citizens financially healthy. In order to achieve this, all Americans must be properly informed by the government, as to why they should buy American.

Richard Heckler 2 years, 1 month ago

In fact we consumers and taxpayers need to educate ourselves how local governments actually increase our cost of living by way of a variety of tax increases. All the while telling us it is improving our quality of life. The question becomes how does putting local business people out of business improve our quality of life?

--- http://www.pbs.org/moyers/journal/01182008/transcript.html

--- http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

Clara Westphal 2 years, 1 month ago

I have bought 'Made in USA' for years. I have and will pay more for American goods. The only import I buy are bananas. I wish we could grow them in the USA.

I am of the older generation so I have a different view point than today's experts.

jafs 2 years, 1 month ago

Money circulating in a local economy is a good thing, whatever you want to call it.

And, it's obviously much better in a number of ways for money to be spent on American made goods than foreign made ones, if one is concerned about American jobs and the American economy.

The interesting question is how much more one can spend on those and have it still be a net positive, since there's clearly some value to cheaper goods for consumers.

2 years, 1 month ago

"Money circulating in a local economy is a good thing, whatever you want to call it."

Yes, but it does not follow that more money is necessarily better. Money greases the skids of trade, but it is trade that is important in an economy, not money. Sufficient money makes trade efficient, more money than that simply makes traded goods expensive.

I'll admit that I am not opposed to the Dems in this exercise in windmill-tilting.* However, let's look at it from another angle. Assume #1 that American goods cost 2x what foreign goods cost. And assume #2 that the government has a static number of dollars to spend. The end result is that government will be able to acquire only 50% of the things under this new rule that it would have acquired under the old rule. Half the cars, half the blacktop, half the armored crowd-control vehicles, half the plastic Pokemon toys. Paying more for everything means that government gets fewer "things" for the same amount of money.

Is that good for American business? Perhaps, if you define "good" as keeping them busy making stuff. Is it good for government? Probably not, as they get less stuff to play with. Is it good for the average taxpayer? That's where it becomes arguable. I'm quite thankful that we do not get all the government we pay for. In fact, while L1 is correct that supporting inefficient businesses is not helpful in a macro sense, I would argue that making government more efficient is even less helpful in a macro sense.

Like trade is helped by a certain amount of money but not helped by more, so society is helped by a certain amount of government but not more. The best thing a government can do is not tax, but if it must tax, giving the money back to those it taxes, with little benefit to itself, must be a close second.

  • for the simple reason that salaries are the highest cost of government and are therefore unaffected by this idea.

jafs 2 years, 1 month ago

Sure it does.

More money circulating means more money to businesses, which means more jobs, etc.

That's the question - how much more can we spend before the positives of local/American spending are outweighed by the negative of higher costs.

In this particular example, they're saying that they will buy American stuff if it's not more than 25% more expensive, which is a lot less than your 2x the cost.

The best thing a government can do, in my view, is to tax appropriately and provide high quality services to citizens.

jayhawklawrence 2 years, 1 month ago

I will give you one simple example but I have seen thousands.

I know a company where a part they could do competitively was jobbed out to a company in India. That company had to buy a machine to do the job and they had to build a fixture and they had to tool it up and the job required skill. It was not a job where you push a button and the part automatically bounces out a window into a basket. Most of the people talking like experts about manufacturing actually know nothing about what it takes to manufacture a product.

After one year...they bought a machine that was not suitable, they built a fixture that was a piece of crap, they used the wrong tooling and they didn't have the expertise to produce the part correctly. One year lost and a pile of scrap.

The shop foreman in the US told me he could have farmed that out to a local company, made a profit, then used that profit to buy their own machine and hire a local guy to run the job. He said the whole thing was completely rediculous. I asked him why they (top management) insisted on doing the job in India. He said he didn't know other than perhaps they just thought that is what everybody else is doing these days.

I have long believed that we are oftentimes a nation of lemmings running off the edge of a cliff. A lot of the offshoring business has been a waste of time and money but none of these buyers are going to admit it. Like turning a battleship, it takes time to turn our country in a different direction. Now, there are many companies bringing this work back.

What other countries are doing right now is eating our lunch and laughing at us. Because we have so many people making decisions that have no business doing that. That is why we need a national manufacturing plan, strategy and organization made up of leaders in manufacturing. Not just the largest companies because over 60% of the actual production in this country comes from small job shops where the real skills are. Not the unions and not the academics. We need to have a system in place that represents a true cross section of manufacturers and especially not ideologues that don't know what they are talking about.

We need a government more responsive to reports of unfair trade practices. Believe me, there are many many companies that went out of business waiting for the government to stop unfair trade practices from foreign competitors. We have to change that situation by helping US manufacturers compete just like every other country on the planet is doing because our political leaders, whether they are Republicans or Democrats, have not been making good decisions. The evidence is easy to see.

I am afraid what we have been doing as a nation is arguing politics and political theory and letting down our best and most skilled Americans. We have been creating Plutocrats instead of patriots and sending the wrong people to represent us in Washington.

jayhawklawrence 2 years, 1 month ago

It has been almost 40 years since I got into the manufacturing business and at that time, everyone thought that someday you would be able to show a print to a machine that took a picture and within a few minutes automatically spit out the part. The reality is completely different.

I have visited over 10,000 manufacturing companies in my career all over this country and have watched this struggle to compete being waged. You can make a lot of money in manufacturing but at the same time, you can become very disappointed with how little the government actually understands or supports manufacturers. Much of what politicians talk about is lip service only.

Today, after many years of not listening to the advice and complaints of manufacturers, the issue of our economy has brought the state of manufacturing to the forefront. If we keep listening to people like Liberty and to political theories that lead to polarization, loyalty oaths and corporate bill factories where legislators are required to sign what they are given without even reading it, then nothing is going to change.

Japanese competition forced our auto makers to focus on quality issues. In a similar way, global competition is going to force change in America. Massive tax cuts are only going to help a small percentage of wealthy plutocrats. Pushing down wages and cutting away our social safety net is going to pulverize the middle class. Greed is taking control of our political process and political ideologues are clogging all lines of communication. We are raising up Plutocrats and tearing down patriots.

We need to elect better people to represent us or we are going to watch this country continue to slide. We need people who can think and act independently of any national pressure and have the courage to do what is right for average Americans regardless of how much money you contribute to their campaign.

George Lippencott 2 years, 1 month ago

Good discussion. What about where the manufacturing of something is moved offshore so that that tooling and equipment are functional (maye bought from Germany). If that new facility now produces parts that are cheaper and therefore more competitive in other markets (as well as here) does that company not make for a net increses in sales and profit?

Liberty275 2 years, 1 month ago

Kansas can't really go unilaterally into a position of buying American for more money if other states aren't involved. If Kansas can pay more for "Made in America" stuff, the people in Arkansas will make it for minimum wage and a little less.

Instead, if we have any such program it should be a "Made in Kansas". I'd pay 25% more on exceptional items (not heavy industrial) to see a Kansan get a job.

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