On CNBC and in Washington, they’re debating whether or not the stimulus bill ought to have a “Buy American” clause in it. The debate is pretty predictable:
Protectionism is bad!
But the stimulus is designed to create jobs and buying tractors from Japan will only create jobs in Japan!
But protectionism is bad and history tells us that!
And on and on and on and on it goes. It’s an intractable debate because actually both sides are right. Protectionism does have a sorry history and the stimulus is designed to create jobs domestically, not in Japan.
This dispute, unfortunately, exposes the whole problem. In order for it to work, it has to be wasteful — because the point is to be wasteful. A lean, efficient and productive stimulus wouldn’t fit into anyone’s traditional idea of stimulus. If you could build a bridge with a crew of 2,000 or a crew of 5,000, under stimulus logic the latter is superior, even though under any notions of economics the former is the better choice.
It’s a different story if the stimulus spending actually has a real investment purpose. For example, as part of the plan we’re supposed to be rebuilding the national electricity grid. That in itself might be a good thing, so we wouldn’t be undermining it by using foreign-made equipment. Again, because the project is an end in itself; it’s about more than just the jobs created in its creation. But where the goal is makework — and when you hear that job creation is the top goal, you know it is makework — then outsourcing or offshoring really does defeat the purpose.