ABC’s ‘Made in America’ campaign: a closer look

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Diane Sawyer recently announced on national TV the discovery of a “roadmap to building nearly a quarter of a million American jobs”. The concept seems straightforward enough: if every American builder used 5% more American materials, 220,000 jobs would be created (right now). The idea that concerted efforts – which focus buying-power on goods and services made in the USA – can generate wealth, jobs and prosperity for America’s dwindling middle class isn’t new. But, the latest revival of marketing consumerism-through-patriotism comes at a pivotal time and is targeted in such a way that it could, in the long-run, play a role in diminishing the United States’ status on the worldwide economic stage.

Don’t take this author’s word for it. Instead, listen to some of the criticisms that foreign diplomats leveled against the Obama administration after it enacted the Buy American provision of the American Recovery and Reinvestment Act of 2009 (ARRA), which for the first time in our country’s history imposed a 100 percent content requirement for components procured for the “construction, alteration, maintenance or repair of a public building or public work [unless all of the iron, steel and manufactured goods used in the project are produced in the United States].”

In July of 2009, five months after the passage of ARRA, Director-General of the World Trade Organization Pascal Lamy warned,

“At a time when the global economy is still fragile worldwide and in face of the unprecedented decline in trade flows, we must send a clear and credible message that protectionism is not the answer.”

Before ARRA’s passage, the universally negative reception of the Buy American proposal by the international community caused additional language to be inserted into the bill that promised harmony with existing international agreements. Even so, global strategists like Susan Schmidt, a partner with Manatt Phelps & Phillips and managing director in ManattJones Global Strategies, saw the potential for the provision to weaken U.S. credibility, dichotomize the president’s words and actions, and ultimately “hamstring negotiation of commitments that promise major economic benefits.”

Indeed, as John Bruton, the European Union’s Ambassador to the U.S., stressed in an open letter to State Department officials:

“The European Commission is particularly concerned about the message such measures would send to the world, at a time when most countries are faced with the same situation of looking for the best means to tackle the crisis. The United States and the European Union should take the lead in keeping the commitments not to introduce protectionist measures taken by the G20 in November 2008.”

The stakes don’t just include current regional and bilateral trade agreements. The U.S. has to be forward-looking enough to incorporate the good pleasure of the growing economic powers of the BRICs (Brazil, Russia, India and China). According to Schmidt,

“Buy American offers the ‘glass houses’ adage, as it allows other countries to resist U.S. market access efforts by questioning U.S. interpretations of its trade commitments. It also may be a catalyst for alliances of convenience among other countries.”

I understand that ABC news isn’t the same thing as the U.S. government (though some would argue the two aren’t that far removed). However, the lack of an official platform that informs the establishment media and/or their captive audience about a constitutional requirement to uphold foreign trade agreements is tantamount to a trade policy – one that sends mixed signals to trading partners, which Middle America must continue to rely upon for some of its sustenance and most of its luxuries, at least until real incentives for keeping manufacturing jobs within U.S. borders can be put into place.

As for the question of feasibility, let’s ask ourselves a few pertinent questions about ABC’s Made in America campaign: How will the hypothetically-created manufacturing jobs be sustained if no one can buy those new homes, of which there are already too many on the market? How many commercial spaces could this country possibly hope to construct with its new jobs when there are few entrepreneurial enterprises with enough capital to inhabit them?

America’s productive industries didn’t flee the country because of competition from a rapidly growing service industry.  No, the service sector is just a counter balance. They fled because it was the smart business decision, because abroad, they are taxed and regulated less. Ironically, the only industries that stand to truly benefit by buying only from a limited list of American raw and construction materials manufacturers (besides the manufacturers themselves who will quickly run afoul the law of diminishing returns) are in the service sector. In this context, the only jobs that could possibly be created are temporary. Go figure.