Today’s Blog Focuses on 1 question:
1. Should you try and only buy American made products?
Growing up I remember there were always “Be a Good American and Buy American Made Products” campaigns. The ones that tried to convince you to buy local, stay away from evil places like Wal-Mart, and really show your patriotism by proudly buying a Ford, GMC, or Pontiac.
Have any of you noticed that these campaigns have not been around lately?
Any guess why?
Before I attempt to give my reasoning, I am curious to whether YOU feel that we should try and buy mostly American made products?
Ok, here is my take after teaching economics for many years.
You should NEVER EVER encourage a country’s citizens to buy mostly from their own country. Why? For many reasons. First, if we don’t buy “their” products, they won’t buy “ours”. Next, the countries that have the tightest “protectionist” policies cause their citizens to pay much more for their products. Why? If I have to buy my t-shirts and clothes only from clothing companies that produce in the United States, I now lose my ability to spend $5.00 on a t-shirt because minimum wage/benefits will double or triple that cost. Am I ok with countries that pay their people very low wages? No. However, do I want them to lose their jobs and have no livelihood? Of course not! You can get mad and make Kathie Lee Gifford the scapegoat of third world problems, but would it be better morally to fire these people and have them starve to death?
Here is a mini economics lesson. You have a very successful CEO that can type very fast…super-fast-100 words per minute. They interview secretaries who can type half as fast. The CEO has the absolute advantage (he can do it faster). So does that mean he should type all of his documents? NO!!! The person who should type is the person that has the comparative advantage (lower opportunity cost- who is giving up less?). What is the CEO giving up by typing his own memos? $500.00 billable hours? What is the secretary giving up? (watching soap operas). Bottom line, just because you can do it, and even do it better, doesn’t mean you should.
Just because America can make t-shirts and make them better, doesn’t mean we should. Why? Because of opportunity costs. What are we giving up? We are giving up building jumbo jets and billion dollar pipelines. We have the resources, however we should only produce things for which we have the comparative advantage.
In fact, in the year 2014, you don’t know if you are buying an “American car” or not. Why? Globalization.
Basically Japan is a “closed society” and refuses to buy Rice from the Good Ole New Iberia, Louisiana Rice farmers. Who suffers more? The Japanese.
So here is the bottom line. Everyone wants to be “patriotic” and support American businesses. However, for every job that we “protect”, thousands of other jobs are lost because the cost of these products increase.
Read the book “The World Is Flat”. You will learn about globalization and why it is a good thing. Just because I can spend a million hours cleaning my house doesn’t mean I should. What are we giving up by two full time working parents who spend all day Saturday cleaning the house and all day Sunday doing lawn work- precious time with the kids. Opportunity cost. Just because you can do it, doesn’t mean you should!
So my question is, do you think we should still only “Buy American”?
*** the slides are courtesy of Ken Norman, greatest AP Macroeconomics teacher in Texas. He taught me everything about economics!!!