Does “Buy American” expand USA jobs or manufacturing?

Today, I received a chain letter from a relative and very close friend. She rarely forwards mail that ends with an urgent and passionate demand to “pass it along”. That’s just one step above the ones that tell you about the misfortune that will visit those who fail to pass it along.

But this individual is wiser than me and always speaks the truth. She is not given to scams, and so I carefully read the chain letter. You may have seen this one. It has already caught fire…

In a spasm of patriotism and economic self-determination, the letter implores every American to Buy American. It doesn’t go into the reason. After all, it’s self evident that buying goods made in your own country will expand jobs and manufacturing in your country. Right? Instead of justifying the urgent advice, it describes how consumers can find the origin of consumer products by inspecting the UPC code. The author includes a small table. It shows the relationship between the first digit of a UPC code and the country that manufactured the product.

I won’t include the original email in this post. It’s not that I don’t respect my friend. Rather, my decision is based on these things:

  • Reposting it here does not help to explain my point of view
  • It’s a chain letter! A reliable indicator that it must be wrong
  • I don’t want to attract search engines based on the content of a chain letter

__________________________

Hi Ruth. There are two issues here:

  1. Do UPC product codes really tell the buyer about the country of origin.
  2. Is “Buy USA” a solution to unbalanced trade and a shrinking manufacturing base?

1.  Do UPC codes show origin ?   Answer: “Not at all !”

I own a block of UPC codes to use on computer products (or whatever I choose to sell). Blocks of unused codes, or more precisely, the manufacturer code prefix is sold without asking about the products that I intend to assign or where they are manufactured. Quite simply, no one ever asked me about the things that I make. I only know that when I began selling network gear and software on Amazon, I needed to buy UPC codes and they told me how to do this.

If a manufacturer or bundler does not need thousands of codes, but needs only a few, the unused subsets are sold between previously authorized parties. Although the issuing organization discourages this practice, it is perfectly legal and there is an active market for codes issued to small vendors. Here too, the story is the same. You can by the code from owners in any country and they don’t ask for what products you intend to use the code.

This may seem contrary to the UPC purpose. If the product and country are not registered, how can the cash register/lookup mechanism know about the product and its value at the point of sale. The answer is simple. That information exchanged between the wholesaler (or mfg) and the retailer whenever a new stock item is contracted.

One final note: You may have seen some internet sites that tell you what product is associated with a specific UPC code. Yet, there is no international registry of code relationships! This information is compiled after the fact from consumers and from sites that advertise the products. It’s easy to do, because many retailers use the UPC code number as their own SKU (the inventory stock number).

2.  Does “Buy American” expand US jobs or manufacturing?

Unbalanced trade and a shrinking US manufacturing base is a very serious threat to our way of life. On this, we agree…

To many, it would seem that the way of re-balancing trade and expanding our own manufacturing base is to persuade consumers to Buy American. Presumably, this argument says that it is more important to be patriotic than to base a purchasing decision on quality, features, value, safety, design, or other aspects.

I am not sure that I agree. While I am very concerned about saving US jobs (including my own!), I see a terrible conflict between this logic and basic economic principles…

In the 70s, the US was caught off guard by expansion in Japan, a strict adherence to quality standards, a very close relationship between vendors and manufacturers, and a just-in-time manufacturing. If Americans had stuck to the principle of buying American, we would have had overpriced cars that fall apart quickly. More importantly, our autos would be rejected by European and emerging nations, because of an artificially inflated demand and very poor quality.  But this didn’t happen. The market turned to Japanese cars (especially new upscale brands, Lexus and Acura. What was the result of the flight from Michigan? In the  80s & 90s, the US rebounded in both quality and cost because of two things: Competition and Free trade.

I am not fully convinced of my own argument, and like many people, I look for products sourced and made in America. But I haven’t found fault with the logic in free and open trade. There are some persuasive argument that claim that we lack a “level playing field” with our trading partners. They pollute, use slave labor, subsidize domestic industries or erect Tariffs to deter our goods from selling into their markets. Some of this reasoning makes sense, but not all of it. It’s rare for me to admit that the “jury is still out” on this one, but in fact, I have not yet formed a bull-nosed, WildDuck opinion about these issues. Perhaps this is why I am more carefully buying American.

Dear reader: What do you think? Might the Buy American campaign have unintended consequences that dilute or contradict the economic goal? I invite your comment.

1 thought on “Does “Buy American” expand USA jobs or manufacturing?

  1. I agree wholeheartedly with your view that foreign competition and free trade are hallmarks of a vital and successful capitalist system and of great importance to consumers and business alike. In my opinion it is not foreign imports that are the problem but rather tariff and non-tariff barriers to US exports at a number of our major trading partners.

    While our large US market remains relatively open to foreign exports the same cannot be said of many foreign markets which continue to employ undervalued exchange rates, export growth strategies and protectionism, among other strategies, to funnel goods into US markets while simultaneously restricting US goods.

    The US has lost millions of high skilled, high wage jobs over the past two decades and this trend continues to this day. As factories are located out of the US more and more US workers are relegated to low level, low paying service sector jobs if they can find a job at all.

    I’m certainly not championing a protectionist stance as that would only ignite a trade war, but something has to be done to level the field so that US corporations can compete on a level playing field.

    It’s unfortunate but unless we “wake up” and institute a “tit for tat” policy we’ll all soon be asking the same question; “Can I supersize that for you?”

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