Trade, like Beauty, is in the Eye of the Beholder

Here is a post by Dean Baker in his Beat The Press website at The American Prospect. Generally I'm a big fan of Baker, but here I think he as fallen short.

Baker argues that you show contempt for workers by passing legislation that doesn't shackle it to a "Buy America" requirement. He goes on to argue that Canadians are going to be happy enough with this restriction because they will realize this is the "best possible" stimulus given political realities. Is that so?

Canadians have their own stimulus, but no "Buy Canadian" restriction. Think about this. If every country decided that any stimulus should be restricted to its own borders, then a lot of American exports would be blocked. Why would China buy airplanes from Boeing given the poor treatment by Americans? Wouldn't they rather buy from Airbus, from Europeans that trade fairly and openly? Why would Canadians want to buy machinery from the US? Why not buy from the Germans who trade fairly and openly?

Carry this thinking to its logical extremes... why would any country buy anything outside it borders? Any purchase will put some countryman out of work. In fact, carry this logic a little further. If you live in California which is suffering from hard times, why would you want to trade with some stranger in New York when your fellow Californian needs the work? Why not restrict all purchases by Californians to just California. In fact, why doesn't every city impose a "buy only from your city" restrictions on all trade? Certainly if you live in Los Angeles, why would you want to let the jobs slip off to Sacramento where there is so much obvious unemployement in Los Angeles? I'm beating this into the ground because it is such ridiculous logic.

Anyway... I'll let Dean Baker speak for himself. I won't embargo his words. I'm a free trader in economics and ideas...

The Post has repeatedly expressed its contempt for ordinary workers in both its news and editorial sections. It does say again today in its discussion of "buy America" provisions of the stimulus package.

The article notes that these provisions have shut out some Canadian firms from portions of the stimulus. While the article asserts that these provisions have created friction with Canada, as a practical matter the stimulus has almost certainly increased jobs in Canada, even with the buy America provisions. This is due to the fact that the buy America provisions apply to only a small portion of the stimulus. Furthermore, insofar as the stimulus increases demand in the economy more generally, it will also increase demand for imports from Canada.

Any bill that gets through Congress requires political compromise. If the options were to exclude any buy America provisions, and therefore not get a stimulus bill through Congress, or to get the stimulus bill through with buy America provisions, then Canadians will undoubtedly see more demand for their products in the latter case. The Post badly misrepresents the issue by not pointing this fact out.

It is also striking that the Post has never once mentioned the buy America provision in the Treasury's Public Private Investment Partnership plan. This provision has an absolute prohibition on the participation of any investor not headquartered in the United States. This omission is consistent with the Post's editorial policy which has consistently supported large taxpayer subsidies for the banks.