President Joe Biden reiterated his predecessor’s emphasis on “buy American” during his State of the Union Address. Biden stated that he had been chastised for his comment that “we’re going to buy American,” but he would not apologize. According to Biden, implementing the “Buy American” policy, lumber, glass, drywall, and fiber optic cables will have to be acquired from the United States under the new regulations. Moreover, he promised that American roads, bridges, and highways would be constructed using American products under his watch.
The 2021 Infrastructure Investment and Jobs Act has a provision mandating the use of domestically produced materials in government-funded construction projects, which is what Biden was alluding to. The White House released a statement the day before Biden’s speech to set the stage for his promise, saying that the Biden-Harris administration is working to guarantee that the materials used for roads, bridges, airports, transit, rail, water, high-speed internet, and clean energy infrastructure are manufactured in America and support American jobs.
Workers’ patriotism may be swayed by the promise of “saving” American employment through such measures, but upon deeper reflection, they are counterproductive. As a result, American taxpayers will end up paying more for fewer products and services. Fewer bridges, airports, and other infrastructure will be built as a result of limited tax money and higher prices if cheaper and better-imported supplies aren’t allowed. Additionally, there wouldn’t be a need to mandate that government agencies purchase American-made goods if they were competitively priced and of high quality, as New York Times writer Peter Coy puts it.
In such cases, the rule is either unnecessary or damaging to federal government consumers and, by implication, taxpayers.
But what about the domestic employment that “buy American” campaigns are meant to support?
The President believes that spending American taxpayers’ funds should support American workers and businesses, said Livia Shmavonian, director of made-in-America initiatives at the White House. The President thinks it will ultimately increase domestic production and boost the economy by increasing the number of manufacturing plants and employment, fortifying supply chains, and decreasing overhead. It is worth considering not just the obvious but also the less obvious impacts of a policy.
Government spending that has benefited domestic manufacturers and construction companies have given the Biden administration plenty of opportunities to brag about creating American employment, which is an “obvious” outcome.
The downside is that incentives for domestic enterprises to participate in infrastructure projects draw money away from other government initiatives that may use those dollars to create jobs. However, the government spends more than is necessary on these infrastructure projects. In that case, it will have to take that money out of the economy through higher taxes, interest payments on borrowed money, or inflation rates.
When people have to pay a higher percentage of their income in taxes, they have less money to spend on things like going out to eat, buying new clothes, and upgrading their home equipment. There will be less money for private sector investment if the government has to borrow it.
When the Federal Reserve prints money out of thin air, prices rise, and people have to spend more of their hard-earned savings and income. Ultimately this leads to a decrease in purchasing powers, with consumers foregoing unnecessary items. No matter what approach is used, other domestic industries will suffer, and jobs will be lost. This “unseen” effect is more difficult to spot but no less real.
The government shouldn’t mandate or otherwise adopt protectionist policies that would favor home manufacturing of items that may be obtained elsewhere for a lower price.
Legislation encouraging consumers to “buy American” is likely to find favor with protectionist law supporters and those whose focus is limited to visible results. Yet it wastes resources, eliminates employment in other industries, and makes us poorer to create locally what can be purchased elsewhere for less money. It would be better to invest money where the U.S. has more market control. Increase dollars for the advancement of technology and coding, which will provide jobs and pave the way for the future and lastly, invest in stem-related education so that the young have a competitive edge over their Chinese-related counterparts.
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