Freedom Philosophy: Why Only Stupid People Support “Buy American”

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In our long history, nothing has appealed to baser intellects more than policies of protectionism especially in regards to buying American. It’s antiquated tribalism at its finest. It’s also coupled with the barbaric notion that someone born on one side of a river has more value than someone born on the other side. It’s not only highly unethical, it’s also anti-science as it violates principles of sound economics.

IGM Forum conducted a poll of economists and posed the question of whether or not US trade with China was beneficial to America and 59% strongly agreed it is, 41% agreed it is, 0% were uncertain, 0% disagreed, and 0% strongly disagreed. The reason for the economic aversion to protectionism is clear: if Americans have the working capital and infrastructure to produce electrical machines superior to that of Canadians, and Canadians have the environment to produce lumber superior to that of Americans, they can work out a trade.

However, some patriot in Canada might foolishly interject and claim that we ought to tax American imports in order to save Canadian jobs in electronics. Or an economically-nescient American might impose a border tax on Canadian lumber to protect the American lumber industry.

The difficulty is in the fact that in the situation of tariffs and border taxes, we see the Canadian electronics manufacturer and American lumber producer are protected, but the Canadian lumber producer and the American electronics manufacturer are less employed. Protectionism doesn’t actually increase employment on the whole; it increases it for some and decreases it for others. What’s worse, it actually decreases employment on the whole.

Because Americans now have to pay more for lumber, and Canadians now have to pay more for electronics, the cost of living in each country will rise. As the cost of living is increased, which also increases poverty levels, people have less disposable income. With less disposable income, people are spending less money, and because fewer products and services are demanded, less will be supplied, decreasing employment even further.

The support for protectionism usually stems from superficial observations, currency manipulation or subsidies from the trade partner nation. If a country is subsidizing an industry, they are only subsidizing the cheaper prices for their trade partner. If Canada subsidizes its lumber industry, the Canadian taxpayer is covering the cost of decreasing the price of lumber in America, which has economic consequences for Canada.

I doubt I could improve upon the literary eloquence of Adam Smith, who wrote on the under-performing intellect of people who support protectionism:

“That it was the spirit of monopoly which originally both invented and propagated this doctrine (protectionism) cannot be doubted; and they who first taught it was by no means such fools as they who believed it. In every country, it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind.”

(Wealth of Nations Book IV, Chapter 3, Part II)

Protectionism might be good for Canadian electronic manufacturers, and it might be good for the American lumber industry, but it’s bad for the Canadian lumber industry, it’s bad for the American electronic manufacturer, and it’s bad for everyone who purchases those items and has to pay higher prices because of the economic ignorance from politicians.

As I always caution libertarians, the general public isn’t receptive to our ideas, which is good news. Wealthy people can manipulate the system with respect to central banking, retail banking, deficit spending, regulations that favour monopolies and oligopolies. The wealth gap in Athens was surprising when I traveled there, but in deficit spending, the rich can position themselves to profit while the poor suffer the consequences (and are usually the ones voting for more deficit spending). As the rich get richer and the poor get poorer, ensure that you are one of the ones getting richer.

Source: IGM Economic Experts Panel

Weyerhaeuser is America’s largest lumber producer and a publicly-traded company. We can invest in it, and as Americans pay more for lumber and become poorer and poorer with respect to purchasing things as basic as home construction, we can retain those profits for ourselves and get richer and richer.

Nationalism is a sentiment, an emotion, a feeling of connectedness. There is, however, a remarkable folly in having a policy based on emotion rather than reason. When feeling trumps science in politics, the national direction is fundamentally wrong-headed.

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Brandon Kirby

Brandon Kirby has a philosophy degree with the University of New Brunswick. He works for a Cayman Island hedge fund service firm, owns a real estate company, and has been in the financial industry since 2004. He is the director of Being Libertarian - Canada. He is a member of the People’s Party of Canada and the Libertarian Party of Canada.

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