The Brink, John Stossel and Greece

The other day, I came across an opinion piece that confounded me.  The piece was written by John Stossel, in it, he alleges that buying American is a dumb idea.  For those not familiar, Stossel is a libertarian with a conservative bent.  He’s the sort of fellow I usually find myself in almost complete agreement.  In this recent piece, Stossel does make some valid points, but they aren’t directly related to the concept of buying American.  For instance, he quotes David R. Henderson, an economist, talking about sweatshop workers, “They’re choosing their best of a bunch of bad options. And when you take away someone’s best of a bad option, they’re worse off.”  I entirely agree.  Other nations and peoples have different standards and interests than us. 

This brings me to my disagreements with Stossel and what he seems to have missed.  More from the article and to the heart of the article…….

“Almost all economists say it’s nonsense,” he said. “And the reason is: We should buy things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”

This is what people always forget. Anytime we can use fewer resources and less labor to produce one thing, that leaves more for other things we can’t afford. If we save money buying abroad, we can make and buy other products.

“If it’s good to Buy American,” Henderson said, “why isn’t it good to have Buy Alabaman? And if it’s good to have Buy Alabaman, why isn’t it good to have Buy Montgomery, Ala.? And if it’s good to have Buy Montgomery, Ala. …”  You get the idea. You wouldn’t get very good stuff if everything you bought came Montgomery, Ala.

Sorry John, but you’re wrong here.  And, you’re wrong because you don’t consider where the money is going.  Sure, there is savings in buying cheap.  Of course, inherent in Stossel’s argument is that all else is equal, which, we know isn’t true.  Consider wrenches.  We have American owned and manufactured products and products manufactured abroad by foreign owned entities.  I can buy a wrench from a foreign company and save a couple of dollars.  But, where does my money go?  When I do this, I’m engaged in the exporting of our capital!  The money doesn’t stay in the U.S.  When I buy an American product, the money I spend goes to pay for the labor and profit of the manufacturing.  (In either case, I’m also paying the retailer.)  If enough of us do this, this ensures that an American laborer has the capital to buy products of his own.  If that American laborer or owner, (they can be both) buys American, then they ensure another laborer……. and so on.  That’s real money churn!  But, again, recall, what happens to your capital once you buy the foreign made/owned product.  It immediately goes out of our borders.  There is no churn being generated in the U.S.  It is simply gone.  (And so are the tax revenues.)

As to the Montgomery, Alabama, U.S. logic, John, this is exactly how you’re suppose to act.  In my view, me and mine come before you and yours.  Sorry John, that’s just the way it is.  In things economic, my family comes first.  Next, my friends, neighbors, and community.  Next, my county and state.  Next my country.  Why am I this way?  Because my interests are not necessarily the interests of others.  The closer to me and mine, the more we have shared interests.

Much of what Stossel had to say would make sense in other economies, but not here.  For example, the U.K.  The U.K. is in a position where they have to engage in trade to get the materials and goods they need.  While the U.K. has some very significant advantages, they simply don’t have the resources (raw materials) required to fulfill their needs.  The situation in the U.S. is different.  There isn’t much that the U.S. doesn’t have.  We don’t have a need to import, we simply choose to do so.  Agriculture, mining, drilling, manufacturing, transportation, labor, we have it all, or rather we could have it all if we chose to.  Mr. Stossel can quote economists ‘til the cows come home, I’ll quote some observations.  Recall just a few decades ago.  The U.S., while not in a utopian economy, we had it pretty good.  We had a manufacturing base second to none, and agricultural base second to none, a good drilling and mining base, and the largest labor force in the free world.  The Dollar was set as the standard currency.  While we still have much of the advantages we had back then, they don’t seem to be utilized properly.  What happened?  Globalization.  You can use NAFTA as a euphemism, but it spreads much further than that.  We’ve economically connected with just about every 1st and 2nd world nation.  Have we kept more wealth and resources in this nation by freely trading with other nations?  No, we haven’t.  We’ve exported our wealth. 

This brings me to Greece.  Today, the nations of Europe are learning the lesson I’m trying to convey.  When the EU came into existence, as the various nations joined, by the common currency, they created a conflict of interest.  There is no logical or inherent reason why the interests of some fellow from Wales or some fellow from Rhineland-Palatinate is tied to what happens in Attica.  But, now, by way of common currency and trade, and even government, there are common interests.  So, here’s the problem.  Greece is broke, they are on the brink of default.  If they stay in the EU, without getting bailed out, the Euro and the markets will go nuts.  The ripples would be felt, and severely felt even in the U.S.  There are two options for the EU and Greece moving forward.  The EU has offered to bail out Greece, but they insist on Greece changing the way they do business.  Much of the funding would come from Germany.  Greece can opt out of the EU, and default, but that, too, would cause severe economic consequences, but probably to a lesser degree than the default and remain in the EU.  However, if they stay and accept the EU money, they in return, will cede some of their sovereignty away to the EU.  In many ways, they will be bound and tied to the will of people they have no inherent interest in.  Of course, we can save our tears, much of this is Greece’ own doing.  But, a generation from now, I’m betting the Greeks then won’t see it this way.  Italy, is a market bump away from the same occurrence.  If you think things are bad now, consider that Italy’s economy is 6 times larger than Greece’.  Greece and Italy combined have 167,000 sq mi., with a combine population of 72 million, and combined $2.1 trillion economies.  How is it that these tiny, seemingly insignificant countries hold so much interest and sway with the world?  Combined they occupy 0.18% of the earth’s land area, 1.03% of the world’s population, and less than 4% of the world’s economy. 

Why do we care?  Because we didn’t have the sense to understand that a self-reliant nation is immune to the decisions of politicians seeking to appease the populace of tiny nations halfway around the world.  We opted to buy the cheapest good and material searching for the short-term profit in exchange for long term economic security.  We are on the brink of insanity and economic suicide.  To right this boat and fix the list you start by taking care of your own and quit relying on others.  Stossel knows this, he just needs reminded from time to time.

(P.S. keep your eye on France.)

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3 Responses to The Brink, John Stossel and Greece

  1. Latitude says:

    Amen….and immigrant countries where people export their earnings back home

  2. Bruce says:

    Its always complicated. Here in Oz pretty much everything now comes from China or (increasingly) India. This is in part because the Aussie dollar is high – there is just no way manufacturers here can compete with the Chinese, who have mostly pegged to the US dollar, which is falling due to the Fed’s massive money printing program.

    But go into the shop and buy stuff. Its a complete lottery! Shoes can be good or they can literally fall apart in a week. Clothes likewise. But I have a Chinese Haier dishwasher which is excellent. And an Indian fridge which is terrible (but looks nice). Moral of the story is price may not be everything, but in practice its very hard to measure reliability and service life if you only have a dollar number to look at. Brands don’t help anymore because what were reliable brands have become unreliable as manufacturing is outsourced to random factories.

    Unfortunately though, I think the Chinese are getting their quality act together, and your ‘buy American’ efforts will fail as abysmally as our endless ‘buy Australian’ efforts have here.

    • suyts says:

      My point really wasn’t towards the quality of the products, but rather, even if you spend a bit more for a poorer quality product that is native to your nation, the capital stays in your nation and isn’t exported. Stossel failed to understand it doesn’t conserve resources if you send your capital abroad.

      Buy American may fail because there’s concerted effort to globalize our economies and globalists control the markets with little thought to the nation which allowed them to be. And, people are all about immediate gratification these days. But, it is foolish to head in this direction. Greece is only a precursor.

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