Is buying American a "protectionist" stance or good business?

2010-08-18T11:23:00.001-04:00

I have heard two versions of what buying American will do to the American economy.

I hear from some sources that it can only mean more capitol circulating through the US and this will only help improve the US economy. The other side of the argument is, this will only start a trade war with countries that buy goods from and sell goods to the US. I often hear the Smoot-Hawley tariff referred to and how it may have prolonged the great depression. Is buying American not necessarily a good thing? Is it good for some US manufacturers and bad for others?

I have referenced a couple of articles from The New York Times showing some opinions and would like to get some local opinions from our readers as well.

What Trade Treaty Violation?

Robert E. Scott is the senior international economist at the Economic Policy Institute.
The buy-American rule in the stimulus bill is smart policy that won’t run afoul of any of our trade treaties.
When the government buys steel for a bridge, for example, it has several objectives. Minimizing costs is one, but when the economy is in recession, there is added incentive to stimulate domestic employment. And when steel is purchased from a domestic producer the workers’ wages generate further spending, which supports yet more jobs in the domestic economy.

Although the United States and 38 other countries have signed World Trade Organization procurement codes prohibiting restrictions on government purchases between member countries, the act does not violate these commitments. Indeed, the House version of the act implicitly exempts these countries from the buy-American clause, and the Senate version does so explicitly.
Some of the loudest protests about buy-American provisions have come from self-interested American companies like Caterpillar and General Electric that manufacture overseas. Foreign ministers from China and Russia, which haven’t signed the procurement codes, have also complained, but these countries simply want something for nothing. Giving them access to stimulus spending will dilute the impact of the recovery bill and eliminate all incentives for them to sign the codes.
When domestic industries have been injured by unfair trade practices, protecting them is good policy. For example, China spent more than $15 billion on energy subsidies for its steel industry in 2007 alone. These subsidies were illegal under World Trade Organization rules, and the United States has an obligation to protect domestic steel producers in such cases.

Buy American, While We Can

Roger Simmermaker, an electronics technician for a large defense contractor and the vice president of his local machinists union, is the author of “How Americans Can Buy American.”
It’s simply not necessary to buy the steel, iron and other manufactured materials we need to build and repair our roads and bridges from other countries when we can supply it ourselves.
The buy-American provision in the economic stimulus bill isn’t as much about a return to protectionism as it is about a return to the American virtues and values — self-sufficiency, self-reliance and independence — that this country was founded on.

Workers in foreign countries don’t pay taxes to America. Only American workers pay taxes to America. We need to employ American steelworkers, ironworkers and autoworkers so we need to not only keep and create American jobs, but we also need to keep our huge and growing national debt from getting hopelessly out of control.

When we borrow money from China to pay for the stimulus bill, we’ll be borrowing — and paying interest on — money that used to be ours before we sent it there in the belief that free trade and cheap foreign imports were the answers to a prosperous economy.

At best, the buy-American provision of the stimulus bill will help balance world trade. As Americans, we seek balance in virtually every aspect of our lives. We strive to balance our work life and our family life. We strive to balance our commitments to our communities and our commitments at home. There’s nothing wrong with achieving a balance of trade if we have to restrict imports to do it.
The answer to America’s economic problems is right in our own backyard: buy American while there is still American left to buy.

Disaster Lesson From the 1930s

Burton Folsom Jr., a professor of history and management at Hillsdale College and a senior historian at the Foundation for Economic Education, is the author of the “Myth of the Robber Barons” and “New Deal or Raw Deal?”

“Slap a tariff on China and save American jobs,” the protectionists say.

This tempting line of reasoning is flawed for two reasons. First, if Americans pay more for, say, American-made shoes or shirts, then they have less to spend for other things they might need — they are simply subsidizing inefficient local producers. And those American manufacturers, who are protected from foreign competitors, have little incentive to innovate and cut prices.

Second, if we refuse to buy China’s imports, China will refuse to buy our exports, including our first-rate computers and iPods. Our export market collapses. We saw this happen during the Great Depression when Congress passed, and President Herbert Hoover signed, the Smoot-Hawley Tariff in 1930. That tariff, the highest in United States history, foisted high import duties on more than 3,000 foreign items. The Europeans immediately retaliated, and this deepened the Depression throughout the world. When we refused to buy Swiss watches, for example, the Swiss refused to buy American wheat and Chevrolets.

The collapsing export market after 1930 helped to set off a decline in American industry. United States automakers sold more than five million cars and trucks in 1929, but only about 1.8 million in 1933. Other causes (including tax increases under both Hoover and Franklin D. Roosevelt) also made the Great Depression worse, but the Smoot-Hawley Tariff was a significant reason the Depression was as severe as it was — 25 percent unemployment at its worst. Free trade benefits buyers and sellers. Tariffs benefit certain sellers at the expense of all buyers.

Trade Wars Kill Jobs

Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics, is the co-author of a recent policy brief on the buy-American proposal.
The buy-American proposal in the stimulus package makes no sense — not for United States employment, and certainly not for spurring recovery from the world’s worst downturn since the Great Depression.

The positive impact of the provision drafted in the Senate bill in terms of jobs and trade would be trivial: fewer than 9,000 American jobs and only a few billion dollars of American imports. But the negative impact — coming as it does from the United States — would be a disaster. Essentially this measure says to the world: “Go ahead and put on new protection, just so long as you obey the letter of your commitments in the World Trade Organization.”

Other countries have plenty of room, within their legal commitments, to raise tariffs on imports from the United States or in less visible ways to punish leading American exporters, like FedEx, Microsoft, TimeWarner, United Technologies, Boeing, Caterpillar and General Electric. Indeed, in a tit-for-tat trade war, the United States could easily lose far more than 9,000 American jobs. The fact that France is asking its auto firms to cut down production in the Czech Republic, or that British banks are pulling money out of South America does not mean the United States should follow them down the protectionist path. It’s not our habit to imitate the worst behavior of Europe or anyplace else.

Supporters of the buy-American provision correctly state that other countries already impose higher barriers on their industrial imports than the United States does — that’s certainly true for Argentina, Brazil, China, India, Indonesia and South Africa. But world recovery will be long delayed if countries decide that “leveling up” to the highest barriers is the right way to go.

Tips and information about buying recycled furniture.

2010-08-09T11:27:00.003-04:00

Buying recycled furniture is an increasingly popular option for small and midsize firms for one main reason: It's good for a business's bottom line.

Recycled office furniture, which currently accounts for $1.2 billion of the $13.6 billion commercial office-furniture industry, typically costs 40 percent to 50 percent less than new furniture. Once you figure out how much money you can save, buying another company's recycled furniture sounds like a pretty good idea.

And you won't just be saving money; you'll also be helping the environment. Three million tons of office furniture — most of which is not biodegradable — ends up in landfills each year, so you'll be doing your part to reduce waste. Studies show that remanufacturing just 40 stations will keep the equivalent of 1 tractor trailer load of materials out of a landfill.

Recycled Furniture Offerings
In the office furniture industry, "recycled" is the catchall that describes any postconsumer furniture that goes back into the market. Furniture dealers recycle all kind of furniture: cubicles, task seating, filing cabinets, mail room furniture, reception chairs, and more. Products sold by recycled furniture dealers generally fall into one of three categories: remanufactured, refurbished, and reused.

Remanufactured furniture has been restored to its original condition. Purchasing remanufactured furniture is similar to purchasing new furniture because you can choose the colors, fabrics, and surfaces. Often times the color selection has a wider range than when it was purchased new.

Refurbished furniture has been cleaned, repaired, and touched up with fresh paint and new fabrics.

Pre-Owned furniture describes furniture that hasn't been altered or repaired. Reused furniture usually ships directly from the seller to the buyer. This option offers you the largest cost savings. When purchased in good condition can save you up to 70% of the cost of new furnishings.

Buying Tips

As with any major purchase make sure you have a good understanding of what you're buying and whom you're buying from. Follow these five basic guidelines to ensure you make a smart purchase:

Know your products. Understand the difference between remanufactured, refurbished, and reused furniture.
Comparison shop. Compare new and used furniture prices, warranties, and service options. Never assume you're saving money just because you're buying used goods.
Check the dealer's reputation. Make sure the dealer has solid references. Ask to see their finished products in another customer's environment.
Work with experienced dealers. Look for a vendor who works with the product lines that interest you. If you want to purchase a particular brand of furniture, find a remanufacturer that has experience working with those product lines.
Get a warranty. There are no industry wide standards, but many furniture remanufacturers will match the original warranty.

Popular Misunderstandings of Buying Remanufactured Furniture

You will sacrifice style and design flexibility because you will have to take whatever the dealer has in stock.

Larger, more experienced dealers have the ability to adapt to most layout needs with many options available because they are have experience in adapting and changing existing products as well as a large inventory pool. However, you may be offered additional cost savings if you can be flexible with your layout.

The biggest cost savings in buying used furniture is accomplished by buying straight from the original owner.

This can be a very expensive lesson to learn. When purchasing from the original owner there are a list of problems that can occur. Does the layout work for my space, as you may not be able to get the parts to make changes? Does the owner have working knowledge of the product and will I be sure to get all of the parts and hardware I need? Will all of the product be cleaned and ready for use? Who will set up the product in my space?

The money spent on quality inventories from trained professionals can save you money in the long run. If you do buy direct invest in a designer from a local remanufacturer. In most cases they have working knowledge of many different types of furniture and we be a great asset.