Second, when foreign nations retaliate against American exporters, even more jobs are destroyed.
"Buy American" is a dishonest slogan because it leads to a loss of American opportunities for prosperity. It is special-interest legislation that is paid for dearly by other Americans. As my first college economics professor, Burton G. Malkiel, wrote in The Wall Street Journal last week, "Beggar-thy-neighbor policies create more beggars and hostile neighbors."
The alleged "stimulus" bill is a rotten idea to begin with. Government has no resources that it hasn't first taken from someone else. By borrowing $800 billion to pay for pet political projects, government prevents that money from being used to rebuild the economy according to consumer preferences. Bad stimulus drives out good.
Protectionism makes it even worse, and we should know better. In 1929-30, President Herbert Hoover and the U.S. Congress helped turn a depression into the Great Depression by enacting the infamous Smoot-Hawley tariff. Hoover's mere announcement that he would sign the bill pushed the stock market into the tank. Hoover and Congress then made their bad tariff decision worse by approving a "Buy America Act," which required federal projects to use only American supplies. Hoover signed it on his last day in office. Countries the world over retaliated, and by 1932, U.S. exports had fallen 64 percent, aggravating unemployment, which approached 25 percent.
The effects of the "Buy American" provision of the "stimulus" bill may not be as egregious, but who knows?
What we do know is that many of our so-called leaders have learned nothing from history.
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