Is Buying American Made Good for Our Economy?

by Jeremy on June 10, 2011

I recently came across an article titled “What if I had to Buy American?” The author of the article, Katherine Reynolds Lewis, makes the argument that if we were all forced to buy American, we would be missing out on a lot of products.  She writes:

“Our homes would be stripped virtually bare of telephones, televisions, toasters and other electronics, and many of our favorite foods and toys would be gone, too. Say goodbye to your coffee or tea, and forget about slicing bananas into your breakfast cereal — all three would become prohibitively expensive if we relied on only Hawaii to grow tropical crops.

We’d have to trash our beloved Apple products because the iPod, iPad and MacBook aren’t made in the U.S. Gasoline would double or triple in price, given that we now import more than 60% of our oil. And you couldn’t propose to your true love with a diamond ring: There are no working diamond mines in the U.S.”

She then goes on to argue that “a complete end to imports would actually hurt the U.S. economy, because consumers and domestic companies would lose access to cheap goods” and “it’s best for America if you buy the cheapest product you can find without sacrificing quality.”

I can certainly agree with the fact that some products just can’t be produced in the U.S particularly where we don’t have the natural resources or climate to produce the product or obtain the raw materials.  As much as I would love my morning cup of coffee to be Made in the USA, unfortunately it is not very feasible.  I can take solace in the fact that my organic fair trade beans are roasted about a half a mile from my house.

However, as someone with a company, Atayne, that manufactures our products fiber to finish in the U.S., I was a bit taken back by this article.  I cannot agree with the author in that buying the cheapest product you can find without sacrificing quality is the best thing for America.  I would call that argument the Walmart Theory.  In a recent ad campaign Walmart claimed they save the average family $2500 per year.  What is ignored though, is how much Walmart costs the average family per year.  For example, what about that retail worker making $7.25/hr at Walmart, but they used to make $12.50/hr at the local pharmacy before Walmart’s cheap pricing put them out of business?  Walmart costs that particular family $10,920 per year ($5.25 less per hour for 2080 working hours in a year).

The intent of my post is not to bash Walmart.  My intent is to address the belief that buying the cheapest product possible is best for America.

Let’s consider the most ubiquitous product from the apparel industry, a t-shirt. If given a choice to buy a $5 cotton t-shirt that is made in China or a $10 cotton t-shirt that is made in the USA, most people would take the $5 cotton t-shirt.  It would save them $5 dollars that they can use to “support the economy” in some other way.  So we lose the manufacturing job of the person making the t-shirt.  No big deal, right?

Unfortunately, it is not that simple.  One thing the article overlooked is the positive economic impacts of localized manufacturing.  For every dollar in manufacturing activity, an additional $1.43 of economic activity is created in other sectors, while service jobs add only $0.71.  On top of that, the national average job multiplier for manufacturing is 2.34.  That means for every manufacturing job, an additional 2.34 jobs is created in other sectors.

Consider again the t-shirt.  By sending that sewing job to another country, we are sending a lot of other economic activity and jobs as well.  The pattern maker’s job followed quickly behind the sewer, as well as the mechanic who kept the sewing machines running, and we can’t forget about the person who made the sewing machine.  They probably moved to the new apparel cluster in another country.

We did not just lose the sewing job; we lost a lot of other support jobs and services.  With all these people out of work, does it really matter how cheap the goods are?  We can’t afford them anyway.

I am not advocating that all our products should be made here in the U.S.  I am saying there is a major ripple effect when we choose to buy cheap goods made in developing countries, when there is a domestically produced alternative.  On the surface it may seem like it is good for our economy.  However, when you dig deeper you realize there are not only economic consequences, but plenty of social consequences (such as exploited garment factory workers), safety consequences (such as lead in children’s toys), and environmental consequences (such as dye polluted rivers that are visible from space) of outsourcing our manufacturing to other countries —many of which have less advanced regulation/enforcement and weaker citizen action groups.

P.S. Yesterday, Jun 10, I toured New Balance’s manufacturing facility in Skowhegan, ME.  It is great to see people taking such pride in crafting the shoes we wear.

{ 1 trackback }

The Dirty Baggage that Comes with Most Cheap Products — Atayne's Red Shirt Blog
July 22, 2011 at 8:43 am

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: