Read The Economist’s articles,”The return of economic nationalism” “The battle of smoot-Hawley and Business Week’s article, “jobs and protectionism in the stimulus package.”

Do you believe the provision of “Buy America” placed in the $787 billion stimulus package by Congress was necessary during the recession to ensure American jobs and strengthen the American Economy?

Or was this Congressional provision a form of protectionism similar to the Smoot-Hawley bill passed in 1930?

 

 

first classmate respose 

I do not think that the “Buy American” provision was necessary to save American jobs. First, if it meant that the government had to pay higher prices, then the government would have to do fewer infrastructure jobs as part of the stimulus package, so it would cost some jobs. The government could have built more infrastructure at the same cost if it imported products from countries that can produce them at a lower cost. Furthermore, protection from trade is not necessary to protect American jobs. If we import more products from other countries, then those countries will use the dollars they receive to buy more American exports, which supports jobs in the US. Free trade will not reduce the number of jobs available, it will just change the types of jobs that are available as each country specializes according comparative advantage.

 

 

second classmate response

 

Personally speaking, I think the provision “Buy America” placed in the $787 billion stimulus package by Congress was necessary during the recession to ensure American jobs and strengthen the American Economy, and I think this provision is different from that of the Smoot-Hawley bill passed in 1930. Generally speaking, the main goal of the provision of “Buy American” is trying to stimulate the development of the American economy by increasing the purchasing abilities of Americans during the recession. The government tries to use the $787 billion package to improve the current regressed condition of American Economy, trying to stimulate the development of the material industry and the development of infrastructure. It seems that such method is always used by the other countries when the national economy is not developing well in a duration, such as China which has also proposed such as stimulus package in 2012 when the increasing rate of Chinese economy fell down. The government tries to increase more job opportunities by investing some infrastructure industry. This is different from the Smoot-Hawley bill which was trying to use tariffs to protect the domestic products. In fact, the provision of “Buy American” is not trying to protect the domestic products. In contrast, this provision is trying to increase the governmental adjustment of the market to increase the strengths of the market, forming a better and healthier market to increase the competitiveness when the domestic market begins to regress. In other words, the provision of “Buy American” and the Smoot-Hawley bill are two completely different governmental economy policies, and their effects will also be different from each other.