Having My Way

18

BUY AMERICAN

He that hath a trade hath an estate; and he that hath a calling hath a place of profit and honor. A plowman on his legs is higher than a gentleman on his knees.

—FRANKLIN

The admonition to “Buy American” has two diametrically opposed meanings. The first is its popular and mischievous meaning—shun goods produced in foreign countries. The second, and loftier meaning embodied in these words, is rarely mentioned or thought of—shun principles and practices alien to the American dream of limited government and personal freedom.

Producers who plead with consumers to “Buy American” are appealing to blind patriotism. Buy my product because it is made here; heed not its price or quality. This is sheer chauvinism. Suppose I were to urge your acceptance of my ideas, rather than those of Marx or Machiavelli, merely because of our differing nationalities. The absurdity of such an appeal is obvious: neither goods nor ideas are properly judged in this fashion; geographical origin has nothing to do with the matter.

While the plea, “Buy American,” is less frequently heard in these words than formerly, the notion persists, however subtle and varied its phrasing. All obstacles to competition, be they foreign or domestic, are but variants of this theme. For instance, barriers exist by the thousands between states and even cities. A few examples will suffice to make my point.

Try to buy Florida oranges and grapefruit in California!

I recall when General Manager of the Los Angeles Chamber of Commerce the trouble we had in defeating a resolution that would impose a restriction on the entry of Kansas beef. After all, there is quite a cattle industry in Southern California!

How many times have we heard the local chamber of commerce plea: “Buy at home; protect our merchants and industries.” Here we have the “Buy American” nonsense brought from the international to the Main Street level.

Don’t get caught bringing cigarettes into New York which you bought in New Jersey, or the booze you purchased in Illinois into Indiana. A tariff? No! But it amounts to the same thing: a “fair trade” law in one and not the other or higher state taxes in one than the other. Goods will tend to move illegally from the lower priced to the higher area—via black marketeers!

Frankly, we should not assess this trend as nation, state, or city control. Call it by its right name: People control! What’s the difference between the plea, “Buy American,” and the demand from union bosses that all union members—and everyone else—buy only goods produced under union label?

All wage and price controls, whether rent control in New York City, freezes by the Federal government, minimum wage laws, or above-market wages and below-market hours coercively exacted by labor unions, are people control. These rigidities are not to be distinguished from the “Buy American” or “Buy at home” notion. When prices, for instance, are fixed below the market, producers are threatened with loss or bankruptcy. The political remedy? Impose tariffs, quotas, embargoes against foreign competition in order to relieve domestic producers. In a word, force consumers to “Buy American!”

Enough of this mischievous notion. Let us try instead to appreciate and “buy” the American ideal of freedom.

In what respect was the American idea unique? Wrote Daniel Webster:

[America] holds out an example a thousand times more encouraging than ever was presented before to those nine-tenths of the human race who are born without hereditary fortune or hereditary rank.

Ralph Waldo Emerson had this to say:

America is another name for opportunity. Our whole history appears like a last effort of divine Providence in behalf of the human race.

While numerous individuals might be singled out, Benjamin Franklin qualifies as well as anyone as an exemplar of the unique political structure known as America. “As American as apple pie.”1 My explanation later.

As to the best in political economy, consider the Constitution of the United States. Regardless of its several flaws, no other nation’s charter has equalled it in an economic sense.

In what respect is this distinctively American? Here is the answer:

No state shall without the consent of the Congress, lay any imposts on imports and exports. . . .

In a nutshell, no tariffs, quotas, embargoes between the several states. While the British Empire in its heyday had a larger free trade area when measured in square miles, the world has never known a free trade area as large as the U.S.A. when measured in value of goods and services produced and exchanged. Never perfectly free, but the nearest approximation to freedom!

Take Western Europe with all of its contiguous nations, each country walled off from the others by many trade barriers, custom houses, border guards. Then reflect on the U.S.A. which has more states than Europe has nations. Unless watching the map or the road signs, rarely can one tell when crossing from one state to another. Compare the wealthiest European nation with the least wealthy state in our Union and the latter has it by a mile. Why? The free market here more than there!

One of the flaws in early America was a moderate tariff. There were two excuses: (1) revenue and (2) to protect our “infant industries” against the competition of European giants. Here are three questions and their answers:

1. What nation in all the world and in all history has had the most infant industrial starts? The U.S.A.

2. In what nation has there been the greatest number of infant industries growing into giants? In the U.S.A.

3. In what nation has this little-to-bigness development faced the greatest competition? In the U.S.A. where there have been and are now more industrial giants than have ever existed elsewhere.

In reality, it is competition which protects “infant industries”; it protects them from stagnation and persuades them to grow.

In the absence of competition and freedom of transactions, producers stagnate. It is only when others are doing better that one attempts to overcome, to gain strength. Competition, combined with free exchange, makes strong giants out of weak infants; this is the password to economic opportunity and well-being—an American idea well worth buying.

Regardless of all the noisy arguments to the contrary, everyone known to me favors both competition and free trade. Name one who does not favor competition among those from whom he buys. Logically, then, how can one favor competition among millions of others and be against it for himself! This is irrationality, not disagreement.

Precisely the same can be said for free trade—domestic or foreign. Name one who would not welcome an order for his products from another country or county. Everyone favors exports. Imports? Favoring exports and objecting to imports is the same as favoring selling and objecting to being paid. This is an absurdity, not disagreement.

To conclude this examination of the Americanism worth buying, I return to Franklin whom I consider the first great American economist.

Prior to the more or less simultaneous discoveries by the Austrian, Menger, the Englishman, Jevons, and the Swiss, Walras—around 1870—nearly everyone, economists included, agreed with the Frenchman, Montaigne, that one man’s gain had to be someone else’s loss.

The reason for this economic blindness was a failure to understand value. The false idea was that the value of a good was the cost of its production or, as it is called, the labor theory of value. Menger, Jevons, and Walras, by observing how people behave when free, reputedly discovered the subjective theory of value, perhaps the most important discovery in economic history. It was simply this: the value of any good or service is whatever anyone will offer in willing exchange. Rather than one gaining and another losing, each gains, according to his own subjective judgment. Otherwise, there would be no swap.

And now I learn of Franklin’s prescience. “The First Great American,” a century earlier than Menger, made this observation:

In transactions of trade it is not to be supposed that, as in gaming, what one party gains the other must necessarily lose. The gain to each may be equal. If A. has more corn than he can consume, but wants cattle; and B. has more cattle, but wants corn; exchange is gain to each; thereby the common stock of comforts in life is increased. (Italics added)

How much Franklin’s insight—ahead of his time—had to do with early America cannot be determined; doubtless, it was substantial. For our forefathers freely traded; they were as anxious to buy as to sell. What perturbed them greatly was a tax on tea.

Combining the Constitution’s establishment of free trade among the states and Franklin’s correct theory of value, what then is meant by “Buy American” in its proper sense?

Let willing exchange prevail among all people, locally and worldwide. Let each buyer or seller be guided by his own scale of values. Sell the American way and buy the American way—not as presently practiced, but as once prevailed and ought to be reinstituted. Keep ours the land of opportunity for everyone. “A plowman on his legs is higher than a gentleman on his knees.”

• 1See “The New Science and The New Faith” by Dr. Donald Hatch Andrews, The Freeman, April 1961.