Buying American, is it over?

[Koolblue13]

So i've gotten some heat in a few threads about trying to buy American as often as I can. I buy Bud over Miller or Coors because it's the only one 100% US owned. I buy Ford or Chevy, because my dollar stays here, even use suave and irish spring soaps, because they're made here. I know the lines are blurry, but why is it useless to buy products made at home or at least by companies from here.

A few of you have told me you'de like to set me straight about this, here is your chance. Why is there no more reason to buy American?

How is outsourcing helping Americans now and in the future?

How is NAFTA and CAFTA good for you and I?

Why is it beneficial to import billions more then we export?

Why is it benificial for small business to be closing more than they are opening?

I know we have a global economy, but what about our local one. Why is it so much less important. The products get more expensive when they are made overseas and imported, so whats the point?

Set me straight if you would, it's hard to buy American products.

[ldysknzfn1]

Good questions. I'd like to see the answers to these myself. I am upset that so much work is being outsourced these days. When you call to get help from a company, you're talking to someone in BFE most of the time. It's aggravating imo. Interesting topic. I don't know that buying American helps or doesn't anymore. Good for you tho unless there's something I'm missing.

[SkinsHokieFan]

Simple: Comparative advantage

The global economy has made things far far cheaper for you and I the consumer, thus keeping more money in our pockets

A good example is the price of steel. Foreign steel is far cheaper then US made steel. What does this do? Well if a bridge is being built with foreign steel, it saves you the taxpayer tons of cash

There is plenty you can do with that extra money. You can start your own small business, you can buy more things in America to keep the economy going, or you can save it or invest it. The products are in fact much cheaper when they are made in different countries, compared to products only made in America

The global economy has made your purchasing power that much greater.

Outsourcing is expanding what used to be stagnant economies a generation ago in China and India and opening up new markets for Americans to sell to, to invest in, and raising people out of poverty. It isn't necessarily military power that won the Cold War, it was economic power, our ideas following our products when we traded with nations

Granted, the trade deficit is a bad thing, as is the fact our currency is almost worthless now compared to the late 1990s. Those are two areas that must be addressed

[BAFGA]

Simple: Comparative advantage

The global economy has made things far far cheaper for you and I the consumer, thus keeping more money in our pockets

A good example is the price of steel. Foreign steel is far cheaper then US made steel. What does this do? Well if a bridge is being built with foreign steel, it saves you the taxpayer tons of cash

There is plenty you can do with that extra money. You can start your own small business, you can buy more things in America to keep the economy going, or you can save it or invest it. The products are in fact much cheaper when they are made in different countries, compared to products only made in America

The global economy has made your purchasing power that much greater.

Outsourcing is expanding what used to be stagnant economies a generation ago in China and India and opening up new markets for Americans to sell to, to invest in, and raising people out of poverty. It isn't necessarily military power that won the Cold War, it was economic power, our ideas following our products when we traded with nations

Granted, the trade deficit is a bad thing, as is the fact our currency is almost worthless now compared to the late 1990s. Those are two areas that must be addressed

I don't believe sending all of our manufacturing jobs overseas is the way to go. Without a strong manufacturing base, we are setting ourselves up for failure if relations between us and other countries sour. If you keep those jobs here in the U.S., our dependence is less.

I believe that outsourcing jobs to other countries creates a deeper divide between the haves and the have nots in this country. With outsourcing jobs overseas mean the people that had those jobs become unemployed. Of course retraining is an option, but that costs money not only for the employee, but employers as well.

[AsburySkinsFan]

No such thing as buying American anymore, not when soooo many of American corporations are outsourcing all over the world, and not when companies like Toyota have more American manufacturing plants than any of the big three combined (edit--over-stated). Who cares if your dollar goes to an American company when the jobs it creates are overseas, because that was always the argument for buy USA, but now buy USA only benefits those white collars.

[AsburySkinsFan]

I don't believe sending all of our manufacturing jobs overseas is the way to go. Without a strong manufacturing base, we are setting ourselves up for failure if relations between us and other countries sour. If you keep those jobs here in the U.S., our dependence is less.

BINGO! Just wait until the other not so friendly nations of the world realize how badly they have us by the short hairs. No way its a good thing to become so dependant upon other nations; and quite honestly you'd think we'd have learned after becoming so dependant upon OPEC. IMO this is the same mistake only with everything else we use, but hey its brings bigger profits so why worry right?

[isle-hawg]

No such thing as buying American anymore, not when soooo many of American corporations are outsourcing all over the world, and not when companies like Toyota have more American manufacturing plants than any of the big three combined. Who cares if your dollar goes to an American company when the jobs it creates are overseas, because that was always the argument for buy USA, but now buy USA only benefits those white collars.

Last I looked we still make Chevy's and Harleys here in the USA? Granted some of the parts are outsourced:mad:. But I always try and buy American when there is a choice. As keeping US Manufacturing jobs here in the US is a good thing for many reasons IMO.

[SkinsHokieFan]

I don't believe sending all of our manufacturing jobs overseas is the way to go. Without a strong manufacturing base, we are setting ourselves up for failure if relations between us and other countries sour. If you keep those jobs here in the U.S., our dependence is less.

.

Well how do you keep manufacturing jobs here when it costs 1/5 in labor to do it overseas?

Detroit is already in enough trouble and can barely make ends meet. If you are willing to have a massive corporate tax cut in America, you will see jobs flood back here

[Chump Bailey]

Good questions. The only thing I can remember from the couple of econ courses I have taken is that as long as we continue to lead in the areas of specialization and innovation we'll be okay. That gap is narrowing though - to what extent I'm not sure.

[Koolblue13]

Okay, so if thing are cheaper, why do goods cost me more. Dickeys, Carhart, Vans, or any clothing for that matter has gotten no cheaper when they went over seas. I can't find a good link to explain the tarrifs in place or break down what I'm now paying for.

[PeterMP]

A few of you have told me you'de like to set me straight about this, here is your chance. Why is there no more reason to buy American?

Buying American is fine if you are getting a similar product for a similar price. Otherwise you are just encouraging American companies to produce an inferior product at a greater or equal price. Long term that is bad for the American company. Look at the car industry. At first, a lot of people stayed w/ the American companies even though the Japanese companies were producing a better buy. The result was that the American car companies didn't fix the problems they had, and eventually the difference in quality/price became so great that any intelligent person had to realize the Japanese car was the better buy, and the American car industry wasn't prepared to deal with. If the American car companies would have more slowly lost costumers as the Japanese companies became more competitive, things would have been better. As is, Americans artificially created a competition and in the end, it hurt the American car industry.

How is outsourcing helping Americans now and in the future?

The key here is to understand the importance of the ownership of the company. Again, let's look at the car industry. What would have happened if in the late 60's early 70's the American car companies would have looked at Japan and said 'Wow there's a lot of cheap labor over there, and they do pretty good work. We should start making parts/cars over there.' The American car companies could have paid their employees in Japan more than the Japanese car companies that were in exsistance and still saved substantial money. These would have at least economoically damaged the Japanese car companies and would have slowed their growth. The American car companies would still have benefited from the cheaper/better labor and would have made more money or the price of cars would have been lower (either way a good thing for Americans).

The fact of the matter is the American car industry would have done some outsourcing to Japan in the late 60's and early 70's, the probably would still be #1 in the industry. Not allowing other companies to out source, is just asking those countries that the outsourcing is going to or someother country to come into those countries and develope competitors for the American companies.

How is NAFTA and CAFTA good for you and I?

Generally, it is considered good to have strong economic neighbors to trade with. This really isn't much of an issue w/ Canada, but certainly is for Central and South America. In addition, better economies there mean more stability, which means less imigration, safer vacation spots, less ability for our enemies to forment hate of us there (e.g. what the Soviets did in the 80's in Central America). The benefits of having successfull happy neighbors is unmeasurable.

In addition, if those jobs go to "democracies" like Mexico, then they aren't going to authoritarian goverments like China.

Why is it beneficial to import billions more then we export?

It isn't, but NAFTA and CAFTA contribute very little to our trade defeciet. The biggest (and at this time really only) issue is China. They are an authoritarian goverment. They use price controls, slave labor, and price controlled labor to under cut not just our industries, but any competitors industries. In addition, it isn't difficult to look at some of their recent actions and conclude that they see us as more of a competitor and not just economically, but diplomatically and militarily than an ally. I would encourage not buying Chinese where possible. Unfortunately, in many cases it is impossible. I would encourage contacting Congressmen/Seneators and telling them not to allow the Chinese to sell cars here. It is important to realize in selling cars here they would substantially damage the economies of two nations in Asia that are important in containing China and two real American allies (i.e. Japan and S. Korea).

Why is it benificial for small business to be closing more than they are opening?

It isn't, but do you have something to back that up. Many internet companies are small businesses. The role of small businesses are changing, but I don't know that they are decreasing. Beyond that, I'm not sure there is much that the goverment or even people can do about it. Modern technology and transportation means that it is easier to ship and track things. That makes larger companies that can buy and volume more effecient than smaller companies, which puts them at a disadvantage. Artificially supporting a system that is less effecient, rarely is a good idea long term (see my answer to your first question).

I know we have a global economy, but what about our local one. Why is it so much less important. The products get more expensive when they are made overseas and imported, so whats the point?

I'm sorry, but that's just not true or companies wouldn't do it. Labor and other cost are much less in places over seas even excluding China, which means I can make it over seas and ship it here for less than making it here.

[PeterMP]

Okay, so if thing are cheaper, why do goods cost me more. Dickeys, Carhart, Vans, or any clothing for that matter has gotten no cheaper when they went over seas. I can't find a good link to explain the tarrifs in place or break down what I'm now paying for.

Because the company that makes them pockets more money. They don't pass the saving on to you. They just keep more of it, which if it is an American company (owned mostly by Americans) that is a good thing because, while you are still losing the money, it is going to other Americans that are hopefully spending most of it here (e.g. eating in restaraunts).

[Koolblue13]

No such thing as buying American anymore

http://www.howtobuyamerican.com/content/form-ba-reserve.shtml

This is a list of companies that outsource.

http://www.ebstrategy.com/outsourcing/basics/companies.htm

It's hard, but it's possible ASF.

[SkinsOrlando]

Detroit is already in enough trouble and can barely make ends meet. If you are willing to have a massive corporate tax cut in America, you will see jobs flood back here

Detroits problem rest in the hands of the auto unions, the unions have stangled that industry, thats why Toyota and Honda build plants out in the midwest, no unions equal less overhead, greater profits, and flexibility in pricing.

[zoony]

SHF is absolutely correct.

What the isolationist crowd fails to realize is that by outsourcing, the pie is getting bigger. If you're unsure the repurcussions of NOT outsourcing, look at Japanese economic growth over the past decade.

I would recommend that the two of you (ASF and Koolblue) read this book, if you're interested in learning about this.

[Koolblue13]

Because the company that makes them pockets more money. They don't pass the saving on to you. They just keep more of it, which if it is an American company (owned mostly by Americans) that is a good thing because, while you are still losing the money, it is going to other Americans that are hopefully spending most of it here (e.g. eating in restaraunts).

Which backs up my point about buying from an American company, even if it's not made here, like my F-150 thats made in Canada.

[OVCChairman]

A few of you have told me you'de like to set me straight about this, here is your chance. Why is there no more reason to buy American?

How is outsourcing helping Americans now and in the future?

Why is it beneficial to import billions more then we export?

Why is it benificial for small business to be closing more than they are opening?

I'm a car salsman so i will answer some of these speakin from an automotive standpoint.

1. Outsourcing is helping Americans because, like i've said in another thread, it's cheaper to get stuff from other places, which CAN drive the prices down, but you also have to factor in human error. ANY time there is a language translation, things can get left out, quality can go down.

IN TURN, american cars have a negative perception that they are low in quality. Reason being, we need to outsource a lot of parts from other countries, which can have problems due to the "human error." When a plan/design is made up in english, translating it to a foreign language can change the way it comes out.

Positive and Negative.

2. Read above

3. Small Business is the foundation of the economy. When there are a lot of small businesses, the economy floureshis due to tax income/competitive pricing/money flow. There is no benefit to all of them closing down, that just flows money into big corporations. Competition drives the wallet.

I know this might SOUND contradictive to my earlier response but i will say that if we have this competition and purchase from other countries, the money leaves the economy, if we have competition within our economy it will make EVERYONE a lot happier

[Chump Bailey]

Looks like good info - to me anyways...

http://www.iie.com/publications/papers/paper.cfm?ResearchID=611

Speeches, Testimony, Papers

China's Trade Surplus with the United States

Attachment to "The US Trade Deficit and China," testimony by C. Fred Bergsten before the

Hearing on US-China Economic Relations Revisited, Committee on Finance,

United States Senate, March 29, 2006

Background

China has run a bilateral trade surplus with the United States since the late 1980s. These surpluses increased steadily in the 1990s, and China became the largest single source of the US global deficit in 2003. In 2005, the US bilateral trade deficit with China exceeded $200 billion—over one-fourth of its total imbalance. US imports from China are now almost six times as large as US exports to China, so its future exports would have to grow almost six times as fast as its imports grow just to keep the bilateral imbalance from increasing further.

Bilateral imbalances should not be a focus of national policies because of the multilateral nature of international trade. The China-US bilateral position, however, reflects both countries’ large worldwide imbalances. The United States is by far the world’s largest deficit and debtor country, and its global current account deficit hit an annual rate of $900 billion in the final quarter of 2005 (7 percent of GDP). China’s global current account surplus, after averaging only 1.6 percent of its GDP during 1993–2002, soared to about $150 billion (almost 7 percent of GDP) in 2005. These global disequilibria are a major source of concern: They could lead at virtually any time to a large and disorderly fall in the exchange rate of the dollar, pushing up US inflation and interest rates with very negative effects on the US and world economies, and/or to a sharp outbreak of trade protectionism in the Congress.

Why Is China’s Surplus So Large?

1. Chinese officials frequently assert that the imbalance would be much smaller if the United States would approve more high technology exports to China. However, the Department of Commerce rejected only $12.5 million in potential sales in FY2005, and it returned applications, including for incompleteness, of only $550 million more. Approval of all these licenses would have cut the bilateral deficit by only 0.3 percent.

2. A common explanation, especially in the United States, is that China blocks access to its market for US (and other foreign) products. But the effective tariff ratio in China, import tariff revenue collected as a share of the value of imports, was only 2.2 percent in 2004. Even China’s average level of announced tariffs, at 10.4 percent in 2004, is among the lowest of any developing country. China eliminated all import licensing requirements and virtually all import quotas by 2005.

More broadly, China’s ratio of imports to GDP has soared from 5 percent in 1978 to 30 percent in 2005. By that measure, China is now twice as open to trade as the United States and three times as open as Japan. China has in fact been the most rapidly growing market for US exports for the last 15 years: During 2000–2005, for example, US exports to China grew by 160 percent while its exports to the rest of the world rose by only 10 percent. China needs to further open its markets for a number of products, but its import regime does not explain much of the imbalance.

3. Another explanation for the imbalance is that the United States (and other high-income countries) cannot compete with China’s low-wage labor, which earns only about one-thirtieth that of its American counterparts. However, Chinese productivity is also only about one-thirtieth that of the United States. Moreover, wages account for only 5 percent of the total cost of producing semiconductors and no more than 20 percent of the costs for apparel. More broadly, many developing countries have lower wages than China but are not large exporters, and the United States, with wages among the highest of any country, is the world’s second largest exporter. “Low wages” cannot explain the large trade imbalance.

4. The most persuasive explanation of the growing bilateral deficit is the increasing role of China as the final assembler in Asia-wide production networks. Over the past two decades, the production process for a growing range of manufactured goods has become increasingly disaggregated on a geographical basis. Each country serves as the location for the portion of the process in which it has the strongest comparative advantage. Higher-income, more technologically advanced countries like the United States have come to specialize in producing high value-added parts and components. China, with its large pool of workers available for unskilled labor-intensive operations, has increasingly become the location of choice for the final assembly of a broad range of goods, especially electronic and information technology products.

Goods that are assembled from imported parts and components now account for about 55 percent of China’s total exports and about 65 percent of the goods China exports to the United States. When these goods are exported from China to the United States, their entire value is counted by US Customs as imports from China. On average, however, about two-thirds of the value of these so-called processed exports in fact originate outside China, mostly in other Asian countries.

China’s rise as the point of final assembly of a broad range of manufactured goods is reflected in the sharp decline over the past two decades in the share of the US bilateral trade imbalance that originates in other Asian countries (especially Hong Kong, Taiwan, Korea, and Japan). As these countries have moved manufacturing capacity to China—and, in the case of Japanese autos, to the United States—the share of the US trade deficit that they account for has fallen by two-thirds, from more than 50 percent in 1985 to only 16 percent in 2004, while China’s share has risen from nothing to about one quarter. The United States must understand that it will continue to run a sizable bilateral deficit with China, as recorded in the conventional statistics, largely because of the growing internationalization of production with China as the final assembly point for many products.

5. This structural source of China’s burgeoning trade surpluses, especially its global imbalance, has been intensified in recent years by the growing undervaluation of China’s currency, the renminbi. This issue has become a central point of debate between the two countries and is addressed in a separate attachment.

It is clear that the average exchange rate of the renminbi is now undervalued by 20 to 40 percent (and that its bilateral rate against the dollar is undervalued by even more). China has intervened massively in the foreign exchange markets for several years to keep the renminbi from rising in value, resisting market pressures for a much stronger currency, by selling renminbi for dollars. As a result, its foreign exchange reserves are rising rapidly toward $1 trillion, by far the largest in the world. By maintaining its dollar peg as the dollar declined against most other currencies over the past few years, the renminbi has in fact recorded a cumulative depreciation that has made China even more competitive. Its minor currency reform of July 2005 had no appreciable impact on the situation. A revaluation of the renminbi by 20 percent, if accompanied by an equal appreciation of the other major Asian currencies, should reduce the US global current account deficit by $60 billion to $80 billion per year.

[PeterMP]

Which backs up my point about buying from an American company, even if it's not made here, like my F-150 thats made in Canada.

Yes, but did you read my first post in this thread. If you are buying a product that is not a better buy simply because it is American, then you are creating artificial competition, and in the long run hurting that company. If the company is creating an inferior product or charging to much for it, they are best off learning that in the market place right away and adjusting their practices.

[Koolblue13]

Buying American is fine if you are getting a similar product for a similar price. Otherwise you are just encouraging American companies to produce an inferior product at a greater or equal price. Long term that is bad for the American company. Look at the car industry. At first, a lot of people stayed w/ the American companies even though the Japanese companies were producing a better buy. The result was that the American car companies didn't fix the problems they had, and eventually the difference in quality/price became so great that any intelligent person had to realize the Japanese car was the better buy, and the American car industry wasn't prepared to deal with. If the American car companies would have more slowly lost costumers as the Japanese companies became more competitive, things would have been better. As is, Americans artificially created a competition and in the end, it hurt the American car industry.

The key here is to understand the importance of the ownership of the company. Again, let's look at the car industry. What would have happened if in the late 60's early 70's the American car companies would have looked at Japan and said 'Wow there's a lot of cheap labor over there, and they do pretty good work. We should start making parts/cars over there.' The American car companies could have paid their employees in Japan more than the Japanese car companies that were in exsistance and still saved substantial money. These would have at least economoically damaged the Japanese car companies and would have slowed their growth. The American car companies would still have benefited from the cheaper/better labor and would have made more money or the price of cars would have been lower (either way a good thing for Americans).

The fact of the matter is the American car industry would have done some outsourcing to Japan in the late 60's and early 70's, the probably would still be #1 in the industry. Not allowing other companies to out source, is just asking those countries that the outsourcing is going to or someother country to come into those countries and develope competitors for the American companies.

Generally, it is considered good to have strong economic neighbors to trade with. This really isn't much of an issue w/ Canada, but certainly is for Central and South America. In addition, better economies there mean more stability, which means less imigration, safer vacation spots, less ability for our enemies to forment hate of us there (e.g. what the Soviets did in the 80's in Central America). The benefits of having successfull happy neighbors is unmeasurable.

In addition, if those jobs go to "democracies" like Mexico, then they aren't going to authoritarian goverments like China.

It isn't, but NAFTA and CAFTA contribute very little to our trade defeciet. The biggest (and at this time really only) issue is China. They are an authoritarian goverment. They use price controls, slave labor, and price controlled labor to under cut not just our industries, but any competitors industries. In addition, it isn't difficult to look at some of their recent actions and conclude that they see us as more of a competitor and not just economically, but diplomatically and militarily than an ally. I would encourage not buying Chinese where possible. Unfortunately, in many cases it is impossible. I would encourage contacting Congressmen/Seneators and telling them not to allow the Chinese to sell cars here. It is important to realize in selling cars here they would substantially damage the economies of two nations in Asia that are important in containing China and two real American allies (i.e. Japan and S. Korea).

It isn't, but do you have something to back that up. Many internet companies are small businesses. The role of small businesses are changing, but I don't know that they are decreasing. Beyond that, I'm not sure there is much that the goverment or even people can do about it. Modern technology and transportation means that it is easier to ship and track things. That makes larger companies that can buy and volume more effecient than smaller companies, which puts them at a disadvantage. Artificially supporting a system that is less effecient, rarely is a good idea long term (see my answer to your first question).

I'm sorry, but that's just not true or companies wouldn't do it. Labor and other cost are much less in places over seas even excluding China, which means I can make it over seas and ship it here for less than making it here.

I agree we dropped the ball and let Jap cars, that were better built and more economic take down our industry. I don't know that I would say we would be better off if we outsourced earlier though.

I do try and buy Continental if I can't do US. A stronger Mexico would mean a stronger US.

I'm sure you've noticed small businesses going away with every Wall mart built. They are Chinas 8th largest exporter, over Brittan and other countries.

[Koolblue13]

Yes, but did you read my first post in this thread. If you are buying a product that is not a better buy simply because it is American, then you are creating artificial competition, and in the long run hurting that company. If the company is creating an inferior product or charging to much for it, they are best off learning that in the market place right away and adjusting their practices.

I wouldn't buy an inferrior product from anybody, regardless who makes it. Are you making a point or showing a bias that is most appearent in the auto industry.

[SkinsHokieFan]

SHF is absolutely correct.

What the isolationist crowd fails to realize is that by outsourcing, the pie is getting bigger. If you're unsure the repurcussions of NOT outsourcing, look at Japanese economic growth over the past decade.

I would recommend that the two of you (ASF and Koolblue) read this book, if you're interested in learning about this.

Thank you for suggesting the World is Flat

A great book and easy read which really breaks down the benifits of the global economy

[PeterMP]

I wouldn't buy an inferrior product from anybody, regardless who makes it. Are you making a point or showing a bias that is most appearent in the auto industry.

Just making a point.

[TMK9973]

Shout amount of time this morning - So I will be breif. But wanted to add my 2 cents.

1) Buying American is not real any more. Toyata has so many Americans working for them (Plant workers, Car Dealerships, Repair people, marketing, Sales, etc..) they put so much more money in the American Econmoy then take out AND increase our purchase power since they help keep the price of a new car down. Same is true with a ton of products.

2) I once went to a Bill Clinton speach in 1992 when he was running. It was basicly all on outsourcing. He described it as something that was going to happen. And we shold be ready. He talked about how well this will help. It discussed how Americans would move from Blue Coller to White coller jobs in droves (Basicly - Picture a manfracting plant being sent to China for cheap labor. You loose 500 of those jobs, but now you need to create a American division in charge of overseeing the imports to Americans, the marketing, the distrubiting, etc...). He talked about how companies wouldn't really spend less, but that dollars they were spending on those jobs would now be spent on management jobs. This would increase wages.

He went on to discuss how this would hold inflation in check. Create more buying power for the Avergae American and encourge More Americans to invest as well as create their own busniess. Their own companies.

He discussed how this might be painfull for some, and we needed to invest in re-training. But that at the end, we could do nothing but fight it, loose, and be left behind.

Or we could encourge this shift and watches as American increased the middle class, raised wages, created new investments, new companies, and inflation would stay the same.

That was in 1992.

Anyone would to guess what happen to wages, Unemployment, Stock market, and the middle class between 1993 and 2000?

[Midnight Judges]

Guess I'm part of the problem and so is my entire family because we always buy American cars. Personally, I like a big rear-drive cars with unnecessarily powerful V-8s.