Don’t call it protectionism

“Buy American” is a lousy idea.

“Buy American” is a provision of the stimulus bill that, when originally attached in the House of Representatives, banned the use of foreign iron and steel in any infrastructure projects the bill financed. After an amendment by John McCain to remove “Buy American” failed in the Senate, the restriction was made only slightly more flexible.

As this economic crisis unfolded, there were calls from all corners to learn from past mistakes, including the decision to drastically raise tariffs at the dawn of the Great Depression. Yet somehow, whether manifesting itself in the stimulus bill or through a recent row over China’s currency, the global economy is being seen as an enemy to    recovery. It is as though this bad idea is      empowered with a certain inevitability impervious to even the most well-reasoned arguments.

The “Buy American” provision, especially in its watered-down form, is hardly the equivalent of more drastic trade barriers in the past. But it does send a message. So far the EU has threatened retaliatory tariffs, meaning that “Buy American” would probably cost many more American jobs than it saves.

When we are trying to construct infrastructure that will actually be useful post-recession, it makes little sense to risk paying more for raw materials simply so a few congressmen can score political points. We should not pretend there is nothing to gain from global trade when we could be coordinating stimulus    policy with other countries.

This is the opportunity for the Obama administration to send a strong signal that it will truly stick to the center on trade policy. When money leaves the United States, it doesn’t disappear; it stimulates demand for either U.S. goods or our debt. Those who would choose to ignore this managed to pressure every Democratic senator to vote against axing “Buy American.”

In that regard, this is a test for our generation as well. If foreign firms (many of which employ Americans) are competitive and want to participate in stimulus projects, why should we be wary? Hopefully we will do better in acknowledging that trade barriers are not effective tools for fighting a recession, nor for producing equality or prosperity.