Following the Lead of Iran and North Korea?

Would it help our "economy" if we forced each other via the coercive monopoly of the government to only buy products "we've" made in "our" country?  If so, then shouldn't we also restrict sales to only those things made within our own state?  Why not our own county? 

This plan has worked well for Iran and North Korea - I mena, it has worked well for keeping the masters of these nations weathy and relatively unchallenged in their tyranny. 

That aside - assuming we only got coercion in who we could buy and sell from and not in other arenas - would "buying American" help or hurt?
"If we restricted trade to just the 50 states, what would happen immediately -- and would increase over time -- would be a huge reduction in our standard of living, because we wouldn't have access to the cheap goods we get from other countries," Perry said. "We also wouldn't have any export markets, so companies like Caterpillar and Microsoft would have a huge reduction in sales and workforce." (Microsoft is the publisher of MSN Money.)
what do we make of heartfelt pleas to save U.S. manufacturing by buying American, or the many websites (see one here) that catalog U.S. sources for an array of products? Or the Buy American Act, which curbs government purchases of products that are made overseas?
Do such efforts actually hurt the country they're trying to help?
Marc Kruskol, 53, a publicist based in Palmdale, Calif., goes out of his way to purchase products that are made in the U.S. because of his concern over the decline in manufacturing employment.
"I truly believe that we could go a long way towards fixing the economy if we would just put people to work making things in this country that are made in other places," said Kruskol, who spends hours scouring made-in-America websites or visiting brick-and-mortar stores in search of U.S. products.
He recently spent $10 on a pair of salad tongs made in America, which he tracked down in a restaurant supply store, after rejecting 99-cent foreign-made tongs. And he was happy to spend $650 on a domestically produced barbecue grill rather than a $450 imported one, just to support his countrymen.
http://money.msn.com/how-to-budget/what-if-you-had-to-buy-american.aspx
It might be argued that over time "we" would develop domestic manufacturing capacity that "we" don't have now.  But it leads to the question of why it's so expensive to make things in "our" country that someone else can make things thousands of miles away, pay to export them, pay to ship them, and still get the products to market at a price "our" manufacturers cannot match?  OSHA, a sluggish, expensive, over-regulated, unresponsive to consumer needs power system, artificially high labor costs including the costs of Medicare, Medicaid, and Social Security, expensive and ineffective public schools, a remarkably foolish tax system for a nation which states it wants more manufacturers making more products with "US" workers, and a psychotic regulatory scheme that meets politicians needs to be re-elected while repressing business activity and confusing good intentions with environmental care.  Much of the political landscape is schizophrenic as it on the one hand decries tax subsidies for those who "off shore" manufacturing, while claiming to be outraged when a "wealthy" corporation makes money and doesn't pay massive taxes, and then arguing for hokey nonsense like "cap and trade" which will do nothing for carbon emissions but will again ratchet up the incentives to hire folks elsewhere to build things for our markets. 
In short - the "buy American" argument is as economically illiterate as the rest to the discussions taking place in our political gestalt.  We have a literal case of the economically blind leading the economically blind.

Trade Balance

Tonelson and Kearns Peddle Ptolemaic Economics
Posted: 10 Sep 2010 01:24 PM PDT www.cafehayek.com
Here's a letter to the New York Times:
Alan Tonelson's and Kevin Kearns's case for taxing or otherwise throwing obstacles in the way of American consumers who seek to buy foreign-made products is a string of errors and misconceptions ("Trading Away the Stimulus" ;http://www.nytimes.com/2010/09/10/opinion/10Tonelson.html?ref=opinion  Sept. 10).
For example, these authors assert that America's trade deficit is "a central reason why American growth has lagged and President Obama's stimulus hasn't led to a robust recovery." Nonsense. While it's true that the 2010 trade deficit is higher than it was at the same time in 2009, the 2009 trade deficit was less than half the size of the trade deficit in 2007. Research by Cato Institute economist Dan Griswold reveals that trade deficits grow when the U.S. economy booms and shrink when it slows http://madabouttrade.wordpress.com/2010/08/12/more-nonsense-about-the-trade-deficit/.
Tonelson and Kearns allege that those of us who would repair the economy with tax cuts are naively out-of-touch because we rely on a theory "rooted in" the 1980s. Perhaps. But the thoroughly discredited theory that Tonelson and Kearns rely on - mercantilism http://www.econlib.org/library/Enc/Mercantilism.html - is rooted in the seventeenth century.
Sincerely,
Donald J. Boudreaux

Thank Goodness for Krugman

I feel grateful for his unique ability to stimulate an easy economics lesson with almost every column he publishes.

Obsessed With Aggregate Demand, Posted: 25 Jun 2010 08:03 PM PDT
Here's a letter to the New York Times:
If Beijing doesn't further raise the value of the renminbi, Paul Krugman wants Uncle Sam to impose trade sanctions on Chinese producers ("The Renminbi Runaround <http://www.nytimes.com/2010/06/25/opinion/25krugman.html?adxnnl=1&ref=opinion&adxnnlx=1277521277-Zv9PxouL+YbwH0TW23oA8A> ," June 25). Mr. Krugman justifies his embrace of protectionism by pointing to today's high unemployment rate: by making Chinese goods less costly for Americans to buy, Beijing's monetary policy allegedly reduces "demand for goods and services to generate the jobs we need."
If Mr. Krugman is correct that access to inexpensive goods and services from abroad causes unemployment by reducing demand for domestically produced outputs (and, hence, for workers who produce those outputs), it must also be true that access to inexpensive goods and services from labor-saving technology causes unemployment. In both cases, fewer domestic workers than before are required to make outputs available to consumers.
So here's a question for Mr. Krugman: does today's high unemployment rate also justify Uncle Sam imposing punitive tariffs on R&D teams, inventors, and other sources of labor-saving technologies?
Sincerely,
Donald J. Boudreaux
http://www.cafehayek.com/

Says a Lot with a Few Words

Protectionist Poison
Posted: 07 Jun 2010 05:29 PM PDT
Here's a letter to the Wall Street Journal:
Clyde Prestowitz asserts that "A decline in U.S. imports from China would lead to an increase in U.S. domestic output and thus an increase in employment and wage gains both as a result of unemployed workers starting to work again and as a result of upward pressure on wages generated by increasing labor scarcity" (Letters <http://online.wsj.com/article/SB10001424052748703561604575282801343000896.html?KEYWORDS=Prestowitz> , June 7).
If Mr. Prestowitz were unemployed, would he practice the protectionism that he preaches? Specifically, would he impose restrictions on imports from outside of the Prestowitz household? By no longer buying food from Safeway and clothing from The Gap, Mr. Prestowitz would have to produce these things himself. So the formerly unemploymed Mr. Prestowitz would find himself occupied with all sorts of jobs, each of which (according to his theory) would compensate him lavishly.
In reality, of course, protectionism is poison. The Prestowitz household would suffer immeasurably were it to practice the faulty economics peddled by Mr. Prestowitz. The fact that this poison is diluted when ingested on a national scale - thus making its ill-consequences less readily seen than in the case of a single household - doesn't transform this poison into a magical economic elixir.
Sincerely,
Donald J. Boudreaux
http://www.cafehayek.com/

"Fair Trade" Nudge Nudge Wink Wink Say No More

Question: Hey you libertarians, what's your beef with Fair Trade? It is voluntary!!

Answer: "They're right that Fair Trade is just another form of voluntary free trade and that the hostility some libertarians express toward the idea of paying more for coffee to help poor farmers is distasteful at times. However at the risk of being one of those smug contrarians Henley dislikes so much, I'm going to defend the libertarians on this one. Partially, anyway.

The simplest reason to object to Fair Trade coffee is that it's just a stupid name. It suggests that all other coffee is unfair and exploitative. As a sign at one coffee shop I visited put it, "Fair or Unfair? It's that simple." Well, it's not that simple. And if, as I do, you think the insights of Adam Smith, David Ricardo, and other economists are hard-won intellectual achievements, then a label that implicitly opposes those ideas is going to rub you the wrong way. This could have been avoided if we labeled Fair Trade as something like "Charity Coffee" instead, which would be more accurate and avoid disparaging any economic theories. But then it might not have caught on as well because buying it wouldn't let people signal their opposition to globalization, which brings us back to why so many libertarians dislike Fair Trade in the first place."
http://www.jacobgrier.com/blog/archives/3773.html

Protectionism and Trade Imbalance Illusions

Writing to an author critiquing Paul Krugman (which I view as Krugman's best function in the world - provides real economists with softball home run fodder), Dr. Boudreaux lays it out clear and simple:
"You write as if the alleged trade imbalances between the U.S. and China are real. They are not. The Chinese sell Americans goods; we pay with dollars; the Chinese then use many of these dollars to buy IOUs issued by Uncle Sam. Although the result is a measured U.S. current-account deficit with China, there's no more any economically meaningful "imbalance" in such a result than there would be if, say, Texans lent a lot more of their dollars to Uncle Sam.
Talk of imbalances in trade diverts attention from the real problem: Uncle Sam's gargantuan debt. That fast-accumulating debt is a huge problem. It is caused, though, not by trade with China but, rather, by Washington's lack of fiscal discipline. Unless you believe that protectionism (and only protectionism) would induce Congress to be more fiscally disciplined, you should avoid all talk of imbalances in trade and instead talk of imbalances in political institutions that encourage politicians to give disproportionate weight to the demands of current voters and to ignore the resulting ill-consequences that will curse future generations."
http://www.cafehayek.com/