Michael Giberson
“Buy American sounds great—until you think about it,” said Marc Gunther in “Buy American: Bad for America.”
(Gunther begins by writing: “Congress should have known better,” but I think the truth is that Congress did know better. It just didn’t matter.)
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We have a massive agency problem with Congress. It’s more important for them to appear to be doing what we (voters) think we want than to actually pursue (as opposed to appear to be pursuing) the greatest benefit for voters.
Reminds me a bit of the restrictions placed upon TARP-recipient firms, who are now effectively barred from hiring workers on H1-B visas. Most people don’t know this, and when I inform them, the usual response is a gob-smacked “WTF?”
The direct (and rather foreseeable) result: banks moving large parts of their quant analytics function from places like Jersey City to Mumbai and Shanghai.
Brilliant. I bet New Jersey is reaping the benefits of shipping bucketloads of $200K+ jobs (with 50% marginal tax rates) offshore.
Comparative advantage is a powerful and under appreciated force. There must have been an evolutionary advantage regarding in-group and out-of-group interactions to ignore this simple truth. The buy local meme is strong (but probably not useful).