Wednesday, February 11, 2009

John Stossel on the Stimulus Bill

The "Buy American" provision of the stimulus bill, which mandates the use of domestic iron, steel and manufactured goods even if imports are cheaper, makes our trading partners nervous...

As long as it remains in the bill, the "Buy American" section will haunt us. Protectionism is poison. Prosperity means having access to the least expensive goods the world has to offer. When we save money buying something cheaper from abroad, we have more money to spend on other things or to invest. Laws that force us to pay more for things cannot make us wealthier.

Protectionist unions and firms say that a "Buy American" policy creates jobs at home.

But that is misleading, because while protectionism does save some American jobs — often temporarily — the policy also destroys jobs at home.

It destroys jobs in two ways. First, when foreigners lose sales here, they have fewer dollars with which to buy American exports or to invest in the U.S. economy. Jobs in the export sector disappear, and the jobs that would have been created through the new investment won't be created.

Second, when foreign nations retaliate against American exporters, even more jobs are destroyed...

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.

read the entire essay

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