The "Buy American" Campaign and the Age of Global Trade

I was recently having a little dialog, via email, with a friend about Americans' buying products made in other countries. The ultimate inspiration behind this was a series on ABC TV news called "Made in America," which aims to make us Americans aware of how much imported merchandise we are buying and, presumably, stimulate us to look for domestically produced alternatives; that is, "buy American" and help the American economy.

There are a lot of reasons why so much of what Americans are buying and consuming is not domestically produced. Much of it comes from China these days, so we talk about the value of China's currency, which the government of China keeps artificially low, and low wages in China—both of which result in China being able to produce and sell its goods very cheaply.

But there is one reason that's possibly overlooked. At least I do not hear it mentioned. But I have occasion to see evidence of it.

If you look at freight trains, freight yards, or those yards where shipping containers are transferred from trains to trucks, you see just how wide-spread containerized shipping is these days. And the names on many of the containers show they're involved in the China trade.

Here is a quote from a Wikipedia article on "containerization":

The system, developed after World War II, led to greatly reduced transport costs, and supported a vast increase in international trade.

Therefore, items made in China (or in many other countries) can be shipped cheaply. Thus, starting with the items' original low cost and adding (as businesses must do) the cost of shipping and any tariffs, the items can still be sold cheaply because per-item shipping costs are low. Without this cheap means of shipping, it might not be profitable to sell much of the imported merchandise that we buy.

So a revolution in shipping has caused much more globalization and internationalization. No doubt it's not only Americans who are buying a lot of imported stuff of all kinds. In Europe, there is now more international trade: trade moves more freely within the "Eurozone" because of the removal of tariffs and other trade barriers, plus improved highways, tunnels, and bridges.

But to get back to the "Made in America" campaign: Actually, the whole idea that consumers need to go out of their way to support domestic manufacturing because American manufacturing has declined or is threatened is false. In fact, American manufacturing is thriving.* The value of American manufactures currently is greater than it ever has been, and is greater than that of any other country.
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*This information and the statements in the following sentence are based on assertions in an installment of the PBS television series "America Revealed."

Copyright © 2012 by Richard Stein