do "buy American" policies increase inflation?

[dead0man]

https://twitter.com/LHSummers/status/1499028896846684160
https://twitter.com/LHSummers/status/1499028897912037378
https://twitter.com/LHSummers/status/1499028898796945412

[Mad Deadly Worldwide Communist Gangster Computer God]

I'm fine with repealing the Jones Act but at the very least, public infrastructure should be American-made because not having them so undermines the point of economic stimulus.

[RI]

They do increase inflation under normal circumstances, to the extent they force consumers to choose less efficient production processes. In a tail event such as the severe port congestion we've seen over the past year where products literally can not be imported into the country to the point of shortage (a bare shelf is essentially an infinite price), they can be deflationary.

[John Dule]

Option 3, because it is sometimes important for national security interests to develop a particular industry domestically so that we don't have to rely upon untrustworthy foreign """partners""" for certain vital resources and products. I agree that this isn't generally the case though.

[Klobmentum Mutilated Herself]

Many 'Made in America' products are made in American prisons by people getting paid cents per day, who have to end up paying multiple dollars per minute for a phonecall or to use a vending machine. Slavery is alive and well in the United States, and just about every sector of manufacturing relies on prison slavery.

[All Along The Watchtower]

Yes, obviously.

[Aurelius]

Yes, at the margins, but it's very good for jobs, wages, national security, and community stability reasons which outweigh that. The current surge in inflation has little if anything to do with these policies.

[Aurelius]

I'm fine with repealing the Jones Act but at the very least, public infrastructure should be American-made because not having them so undermines the point of economic stimulus.

An original purpose of the Jones Act was to strengthen Seattle's strangehold over Alaska. Bearing that in mind, it should be repealed for Alaska, Hawaii, Puerto Rico, and other outlying territories. It should remain in force for the lower 48 though IMO.

[Person Man]

I used to think that if we want to help American workers, we should focus on creating new industries for them to work in instead of building our house by tearing down the houses of others that are still being built. National Security has become an issue. That is, one producer might decide to go to war with another trading partner Then there’s how fragile our supply chains are and then there’s the potential that all savings by outsourcing will be lost if a producer corners a market.

I still think Free Trade can still work, but we shouldn’t trick ourselves into thinking “the freer the markets, the freer the people”. That didn’t work out that way.

[dead0man]

I used to think that if we want to help American workers, we should focus on creating new industries for them to work in instead of building our house by tearing down the houses of others that are still being built. National Security has become an issue. That is, one producer might decide to go to war with another trading partner Then there’s how fragile our supply chains are and then there’s the potential that all savings by outsourcing will be lost if a producer corners a market.

I still think Free Trade can still work, but we shouldn’t trick ourselves into thinking “the freer the markets, the freer the people”. That didn’t work out that way.

can you list some examples of places that don't have free markets that are free and places that have free markets that aren't free?

[TheReckoning]

Many 'Made in America' products are made in American prisons by people getting paid cents per day, who have to end up paying multiple dollars per minute for a phonecall or to use a vending machine. Slavery is alive and well in the United States, and just about every sector of manufacturing relies on prison slavery.

Just wait until you learn about foreign-made products…

[Aurelius]

Many 'Made in America' products are made in American prisons by people getting paid cents per day, who have to end up paying multiple dollars per minute for a phonecall or to use a vending machine. Slavery is alive and well in the United States, and just about every sector of manufacturing relies on prison slavery.

Even ignoring that prison labor isn't remotely slavery, I wonder why those people are in that situation? Perhaps they may have chosen (the operative word) to commit serious crimes for which it is well known that this is the punishment?

[Southern Senator North Carolina Yankee]

They do increase inflation under normal circumstances, to the extent they force consumers to choose less efficient production processes. In a tail event such as the severe port congestion we've seen over the past year where products literally can not be imported into the country to the point of shortage (a bare shelf is essentially an infinite price), they can be deflationary.

Also the dystopian hellscape where the global economy is dominated by a totalitarian hegemon that functions along with its influenced multinationals as a global cartel. Arguably you see this on a smaller scale with OPEC for instance as they worked to stamp out American competition by dumping to preserve market share and then after it is stifled raise prices substantially. rinse repeat.

[Southern Senator North Carolina Yankee]

The "Bidenomics" on display in his SOTU were an incoherent mess. "Lower your costs, not your wages"? What the hell does that mean? But I'm not going to complain about onshoring. We're not obliged to allow the rest of the world to sell us the shovels with which we are to dig our own graves.

The only thing I can think of to do that is hard money. Raise the value of the dollar means your pay goes further and the prices of commodities would be lower, which would lower cost for food and fuel. Of course doing so without causing a recession and doing so as a Democrat post William Jennings Bryan, is another matter entirely.

[Southern Senator North Carolina Yankee]

I took micro and macro econ in 2010 and 2012 and I passed both with As. I also read both Smith and Ricardo of my own volition, so it is not from a position of ignorance of "liberal" economic theorem that I approach these matters.

However, I think that there are some important things that economists miss with the neoliberal monopoly on economic theory:
1. Maximizing efficiency urber alles isn't always best generally, even if it is good economics
2. Embracing free trade while everyone else is cheating, is like unilaterally disarming your nukes in the Cold War
3. The growth of the economy and the interconnectedness, creates chains of dependencies that can be abused by despotic governments to silence geopolitical opposition
4. In terms of China, rather than trade forcing the gov't to liberalize, access to the global economy and WTO has merely given China the resources and leverage to oppress its people, build up its military and thwart attempts by dependent countries to move to oppose them geopolitically
5. It assumes the default status of the global trade system is one of competition and fair play, but as I said in the previous post, if such is increasingly dominated by state run firms, subsidized entities and dependent multi-nationals, you begin to approach a situation where the global dynamic is one of a monopolistic cartel
6. Rising Powers have historically benefitted from Protectionist policies, seemingly lending credence to the infant-industry protectionist model. England's embrace of protectionist led to the rise of its textile industry, followed by a shift to free trade only once it became the dominant economic force in the world. Likewise America went from nothing to the number one economy in the world under the American System, and likewise only embraced free trade once the realization set in that the dominant industrial power needs markets not protections.

This history seems to reject the hard and fast economic rules and formula applied by liberal and neoliberal economists and instead suggest that other factors both economic and not are important considerations to determining the value and benefits of free trade relative to protectionism, including relative position to the global economy, the state of the global economic situation, the geopolitical considerations and the preservation of domestic sovereignty and autonomy from foreign subversion.

To me it seems that rather than "Protectionism, always wrong", the history shows that protectionism becomes a negative or a positive based a complex array of considerations your country and its economy in relation to such.

This applies also to the question of monopolization as I stated above, not just with regards to the global situation, but also how your domestic laws are with regards to the formation of monopolies versus the preservation of competitive markets internally. Likewise with inflation, while trade can have an impact either direction in this regards, other policies affect this too, including the budget situation, the currency, the national banking setup and policy, the regulations on energy and commodity production and the transportation situation creating supply bottlenecks (ports today, or in say 1800, when transportation from Ohio to New York, was best done through New Orleans, rather than via direct road, canal or rail).

[Saint Milei]

I took micro and macro econ in 2010 and 2012 and I passed both with As. I also read both Smith and Ricardo of my own volition, so it is not from a position of ignorance of "liberal" economic theorem that I approach these matters.

However, I think that there are some important things that economists miss with the neoliberal monopoly on economic theory:
1. Maximizing efficiency urber alles isn't always best generally, even if it is good economics
2. Embracing free trade while everyone else is cheating, is like unilaterally disarming your nukes in the Cold War
3. The growth of the economy and the interconnectedness, creates chains of dependencies that can be abused by despotic governments to silence geopolitical opposition
4. In terms of China, rather than trade forcing the gov't to liberalize, access to the global economy and WTO has merely given China the resources and leverage to oppress its people, build up its military and thwart attempts by dependent countries to move to oppose them geopolitically
5. It assumes the default status of the global trade system is one of competition and fair play, but as I said in the previous post, if such is increasingly dominated by state run firms, subsidized entities and dependent multi-nationals, you begin to approach a situation where the global dynamic is one of a monopolistic cartel
6. Rising Powers have historically benefitted from Protectionist policies, seemingly lending credence to the infant-industry protectionist model. England's embrace of protectionist led to the rise of its textile industry, followed by a shift to free trade only once it became the dominant economic force in the world. Likewise America went from nothing to the number one economy in the world under the American System, and likewise only embraced free trade once the realization set in that the dominant industrial power needs markets not protections.

This history seems to reject the hard and fast economic rules and formula applied by liberal and neoliberal economists and instead suggest that other factors both economic and not are important considerations to determining the value and benefits of free trade relative to protectionism, including relative position to the global economy, the state of the global economic situation, the geopolitical considerations and the preservation of domestic sovereignty and autonomy from foreign subversion.

To me it seems that rather than "Protectionism, always wrong", the history shows that protectionism becomes a negative or a positive based a complex array of considerations your country and its economy in relation to such.

This applies also to the question of monopolization as I stated above, not just with regards to the global situation, but also how your domestic laws are with regards to the formation of monopolies versus the preservation of competitive markets internally. Likewise with inflation, while trade can have an impact either direction in this regards, other policies affect this too, including the budget situation, the currency, the national banking setup and policy, the regulations on energy and commodity production and the transportation situation creating supply bottlenecks (ports today, or in say 1800, when transportation from Ohio to New York, was best done through New Orleans, rather than via direct road, canal or rail).

I don't understand the second point you make. Honestly, I don't understand the argument conservatives make when it comes to free trade. Trade deficits aren't a bad thing at all. Never have been never will. Additionally, we don't even have free trade. Sorry to sound like a purist but anyone who's read the trade deals since free trade has been supported in the mainstream can only conclude these aren't free trade deals. Managed trade with some FT benefits is not free trade. There's a variety of reasons for why jobs are outsourced and even if you imposed protectionism, you would still have businesses outsourcing labor overseas.

[Southern Senator North Carolina Yankee]

Sorry to sound like a purist but anyone who's read the trade deals since free trade has been supported in the mainstream can only conclude these aren't free trade deals. Managed trade with some FT benefits is not free trade.

I agree with you to an extent, Ron Paul opposed NAFTA as I recall in part because of some of the components thereof.

Honestly, I don't understand the argument conservatives make when it comes to free trade. Trade deficits aren't a bad thing at all. Never have been never will.

It was in the days of hard money, though this was partially because of the reliance on a finite resource to back money. There is even a school of thought that this depletion of Gold and such, played a role in the decline of the Roman Empire as the flow of this eastward, left Europe impoverished. This would obviously be not a singular factor, but one of a multitude obviously.

I don't understand the second point you make.

The point of the second part is basically that whether or not a policy of free trade is inflationary or anti-monopoly is not a given, but is dependent on the degree to which the global economy is dominated by a few large firms or cartels of firms. Obviously, in such circumstances you could make the case that the state of the global economy in such a scenario is not free trade either, but you can only realistically impact your posture with regards to the rest of the world.

Honestly, I don't understand the argument conservatives make when it comes to free trade.

It depends on what you mean by "conservatives" in this context. For instance a conservative as understood in terms of say the 19th or early 20th century, would take the position (with exceptions based on special interests etc as is usually the case with trade policy) that trade is an extension of the foreign policy conceptualization of "conservative - realist vs. Liberal - idealist". With the conservative posture being that a free trader is taking an idealistic view of the world, whereas a conservative is one who takes a more realistic, skeptical, pessimistic view of the global situation. This would have been a view most common in late 19th century and early 20th century America, and one very prevalent among the old Right.

America's isolationism and protectionism marched together hand in hand with a foreign policy that minimized foreign entanglements, and a trade policy that minimized the ability of foreign actors to subvert/undermine the American sovereignty/unity (a view that many Republicans of the period would have seen the relationship between the antebellum South/Confederacy and the British Trade empire as being an example of). This viewpoint waned as America's relative economic position improved to the point of dominating global GDP, especially post World War II. It is my view that if there is one thing that would undermine this post-war consensus on trade and foreign policy, it is the undoing of this relative economic power and the likely outcome is going to be suspicion of both foreign trade and foreign entanglements together because of the fear of intrusion, subversion, etc.

The fact that both Parties have operated in this bunker mentality for the past half decade, with Democrats lamenting "Russian interference in 2016" and Republicans embracing an "America First Agenda" is that Americans are now primed to view things this way (a kind of siege mentality), right as the global dynamic is about to drastically shift. So much so that if you think the changes seen in the past five years have been disruptive, the next ten will make those look minimal.

[All Along The Watchtower]

The xenophobia and economic illiteracy in this thread is kind of stunning. I'd expect this from casual low-information types, not people on this forum.

[dead0man]

The xenophobia and economic illiteracy in this thread is kind of stunning. I'd expect this from casual low-information types, not people on this forum.

What kind of person drops into a thread and says "you're all stupid and I'm smart.  I know things you don't know, but I'm not here to share my information with the likes of you!"?  Are you too scared to call out individuals?  Are you not sure if you're right?  Are you just an asshole?

[Saint Milei]

I'm surprised he said this
https://twitter.com/BloombergTV/status/1507040251952484357

[Southern Senator North Carolina Yankee]

The xenophobia and economic illiteracy in this thread is kind of stunning. I'd expect this from casual low-information types, not people on this forum.

What kind of person drops into a thread and says "you're all stupid and I'm smart.  I know things you don't know, but I'm not here to share my information with the likes of you!"?  Are you too scared to call out individuals?  Are you not sure if you're right?  

Also, it is worth pointing out that PR has the only "National Republican" President in his signature.

[darklordoftech]

places that have free markets that aren't free

China and Russia come to mind.

[lfromnj]

I took micro and macro econ in 2010 and 2012 and I passed both with As. I also read both Smith and Ricardo of my own volition, so it is not from a position of ignorance of "liberal" economic theorem that I approach these matters.

However, I think that there are some important things that economists miss with the neoliberal monopoly on economic theory:
1. Maximizing efficiency urber alles isn't always best generally, even if it is good economics
2. Embracing free trade while everyone else is cheating, is like unilaterally disarming your nukes in the Cold War
3. The growth of the economy and the interconnectedness, creates chains of dependencies that can be abused by despotic governments to silence geopolitical opposition
4. In terms of China, rather than trade forcing the gov't to liberalize, access to the global economy and WTO has merely given China the resources and leverage to oppress its people, build up its military and thwart attempts by dependent countries to move to oppose them geopolitically
5. It assumes the default status of the global trade system is one of competition and fair play, but as I said in the previous post, if such is increasingly dominated by state run firms, subsidized entities and dependent multi-nationals, you begin to approach a situation where the global dynamic is one of a monopolistic cartel
6. Rising Powers have historically benefitted from Protectionist policies, seemingly lending credence to the infant-industry protectionist model. England's embrace of protectionist led to the rise of its textile industry, followed by a shift to free trade only once it became the dominant economic force in the world. Likewise America went from nothing to the number one economy in the world under the American System, and likewise only embraced free trade once the realization set in that the dominant industrial power needs markets not protections.

This history seems to reject the hard and fast economic rules and formula applied by liberal and neoliberal economists and instead suggest that other factors both economic and not are important considerations to determining the value and benefits of free trade relative to protectionism, including relative position to the global economy, the state of the global economic situation, the geopolitical considerations and the preservation of domestic sovereignty and autonomy from foreign subversion.

To me it seems that rather than "Protectionism, always wrong", the history shows that protectionism becomes a negative or a positive based a complex array of considerations your country and its economy in relation to such.

This applies also to the question of monopolization as I stated above, not just with regards to the global situation, but also how your domestic laws are with regards to the formation of monopolies versus the preservation of competitive markets internally. Likewise with inflation, while trade can have an impact either direction in this regards, other policies affect this too, including the budget situation, the currency, the national banking setup and policy, the regulations on energy and commodity production and the transportation situation creating supply bottlenecks (ports today, or in say 1800, when transportation from Ohio to New York, was best done through New Orleans, rather than via direct road, canal or rail).

My opinion is we should be protectionist against large countries like India or China but expand trade with more medium sized nations like Brazil,Vietnam, Philliphines. Always seek to have the upper hand.

[All Along The Watchtower]

Not at all convinced protectionism makes any sense (or can actually "protect" much of what it claims to do) when markets are global.

We'll see what consequences cutting off Russia will have for the global economy going forward - and what consequences flow downstream from that.

[Senator Incitatus]

The xenophobia and economic illiteracy in this thread is kind of stunning. I'd expect this from casual low-information types, not people on this forum.

Oikophilia is good and the reduction of utility to GDP is economic illiteracy.