It Keeps Going and Going...

(Image source: http://upload.wikimedia.org/wikipedia/en/3/3a/Ebunny.jpg.)

Like the infamous Energizer Bunny, the marketing icon and mascot of Energizer batteries in North America, efforts to create new barriers to cross-border commerce keep going and going. That is despite warnings by experts about the risk of a tit-for-tat trade war, the lessons of history, and repeated claims by government officials worldwide that they are adamantly opposed to protectionism. In "US Lawmakers Push Tough New 'Buy American' Bill," Agence France-Presse details the latest such push -- right here in the old US of A:

US lawmakers have introduced legislation to tighten "Buy American" rules that often anger major US trading partners by requiring that public sector projects rely on domestic goods and services.

Representative Dan Lipinski and Senator Russ Feingold, both Democratic allies of US President Barack Obama, say their "Buy American Improvement Act of 2009" will help foster US job growth amid double-digit unemployment.

"For American taxpayer dollars to needlessly wind up in the pockets of workers in China and other foreign countries is indefensible in the best of times. During the worst recession in more than a quarter-century, it's a disgrace," Lipinski, who hails from Illinois, said in a statement.

"By purchasing American-made goods whenever possible, our federal government will send a simple message to American workers: We support you," said Feingold as they introduced the legislation on Wednesday.

Similar provisions in a nearly 800-billion-dollar economic stimulus package approved in February drew European and Canadian complaints of protectionism.

The legislation aims to curtail the use of waivers to skirt "Buy American" provisions found in many US spending bills, while making sure the requirements comply with US obligations under trade accords.

The bill, backed by several major US labor unions, would require federal agencies to make public all waiver requests, waiver decisions, and justifications for any waivers granted.

"This will put pressure on the agencies to ensure their decisions can hold up to scrutiny, allow taxpayers to determine for themselves if waivers are legitimate, and give American businesses a fighting chance to receive federal contracts," said Lipinski's office.

Products would have to be 75-percent US-made to qualify as "American," and government agencies would be required to conduct a cost analysis, including shipping costs, before invoking a waiver.

And the Government Accountability Office -- Congress's investigative arm -- would be called upon to define current waiver guidelines that allow exemptions when applying existing restrictions is "inconsistent with the public interest."

Comments

[ComputerNerd]

Yes, that's all fine and well. But I work(ed) in the software development field. I have been out of work now for over a year.

A large part of the problem of unemployed Americans in the Professional Services sector stems from the large number of H1B visas being issued to foreigners, along with the fatal practice of offshore outsourcing.

There are many people I know who have skill sets that are in demand, but the large corporations wish to use cheaper foreigners, both here in the USA, as well as offshore (think India primarily).

Of course the companies will tell you that have to remain "competitive" with their global counterparts. But this growing problem will ultimately lead to a reduced ability of US citizens to spend their scarce money to purchase the goods and services that these same companies are selling.

So in the end, I see the practice as self-defeating.

Maybe it's time for a "Hire US Citizens Only" campaign, and totally suspend the H1B visa program for a year to see how it works. Oh, and tax corporations for using offshore outsourcing to the point of labor cost equalization (tariff???).

Unfortunately, many of our leaders in the Congress only pay lip-service on this theme, knowing full well that large corporations with deep pocket campaign contributions would withdraw such support if any actual legislation were even proposed on the matter, let alone enacted.

Anyone else have thoughts on this subject?

[Omitted Kingdom]

Someone published the ten billionaires in the US: Gates, Buffet, Larry Ellison (Oracle), the Walton family, and Michael Dell (maybe one more name). Americans need to ask for clear black and white proof that the billionaires are creating small businesses, in the US, to fuel small businesses as a source of future employment. If they are not, then the ten billionaires need to have their taxes raised to confiscatory rates, in order to pay for the US workers they abandoned.

Happened recently in North Carolina. Two years ago, Dell took incentives to open a plant. This year, they tried to close it. Bev Perdue (Democrat governor) demanded the incentives be repaid. Dell suddenly chose to leave the plant open for six more months. It's doubtful a Republican governor would have made a murmur except to wave it off for "business must remain profitable."

[roger]

It used to be that only the poor economies promoted protectionism,now its the rich ones, a sure sign that
the US economic power is on the way out,I smell world wide depression in the making. Like in 1929 events are in the saddle.

[Jim]

The U.S. desperately needs a manufacturing base to endure the coming depression.
Best way to promote growth in U.S. industry is to increase cost of imported products.
With Americans earning a decent wage making stuff again, maybe we can bring back the 50's...
because the era the bubble economy is gone for a very long time.
Protectionism will promote U.S. manufacturing.

[Matt]

GDP is going back up, how can you say a depression is coming anymore. This is why I don't know who to trust on Tv and don't understand economics in the present time. The only thing happening is that once your out of work, NO ONE CARES. People are holding on to there jobs and companies are squeezing everything out of them.

Hiring US citizens only, sounds like a good start.

[Mark G.]

Japan (whose automakers benefited the most from C4C) are not allowing foreign made autos to qualify for their C4C program. Increased protectionism is inevitable. State controlled economies, socialist, democratic or the US banana republic with nukes model, none will be immune from protecting their citizens jobs.

[Gateway]

Computer nerd said- "A large part of the problem of unemployed Americans in the Professional Services sector stems from the large number of H1B visas being issued to foreigners, along with the fatal practice of offshore outsourcing."

Actually, what's worse are the student visas. They allow a foreign student to work 20 hours a week, and for one year after they graduate. Since they are students looking for experience their working hours can easily exceed the mandated cap.

Most large Universities are veritable factories of job destruction for US workers. I'm at a large university that imports many thousands of foreign engineers on student visas each year. These students pay 60 grand, max tuition, for a masters, hence their presence is a cash cows for the Universities.

All the major engineering firms set up shop here to recruit the willing, cheap, desperate to pay back their loans labor. Close to 100% become employed with American firms. Or did you think an Indian kid was going to pay back 60 grand by working in India with Rupees?

The funny thing is that these students do not put down collateral for the loans they get from the big banks. CITIBANK AND JP MORGAN know they are going to get US jobs.

The above is why Universities and their media toadies are always screaming about a skills shortage. Once again, it's simple greed by the large Universities. If you’re not getting a degree from a top school in the sciences, you might as well drop out now. All the Jobs are given away at the big schools.

As far as trade barriers? I say put them up high and strong and let the chips fall where they may. Mcdonalds can only employ so many people in this country.
The chips ..:)...are stacked against US technology and science workers.

[roger]

Matt:(GDP is going back up, how can you say a depression is coming anymore.)
Because every industrial Nation is deep in debt, and all want to export
more than they import and at the same time they erect wall of protectionism
Increasing taxes is out of the question civil chaos would follow.And the US
the # 1 economic power is deeply involved in costly wars.
Probably most important of all ,the 3 #rd. world is now a #1 competitor.
There is much more,,,but that will do.

[Bob Barber]

The U.S. still allows 1,500,000. legal immigrants and temporary workers into the country, every year.
How about a 3 year moratorium on immigration?

[Matt]

When is this depression coming? It just seems that some people on tv - not saying they are wrong about the things, these people say things to make money because the advertisers pay them to.

We can never pay back this debt, so I figure the powers above have given up. (Over 106 trillion, we cannot pay this back)

If the depression is coming soon, the market forces will make it happen, there is nothing we can do about it, just survive.

[aaron]

Matt,
Take a look at Bob Chapman's latest: http://theinternationalforecaster.com/International_Forecaster_Weekly/The_Greatest_Outpouring_Of_Money_And_Credit_In_History
for some more info