"Buy American?": Buyer Beware!

Economic nationalism is back and that is not a good sign for working people. “Buy American” or “Buy French” or “Buy [add your country here]” campaigns are often presented as a way to protect workers and undo the damage done to workers by 30 years of corporate-dominated globalization."  But such efforts are out of touch with today’s realities; they can backfire on the workers they claim to support and could even push the global economy deeper into the abyss.  Workers desperately need an alternative to the economic practices, frequently but misleadingly referred to as "free trade," that let corporations promote a worldwide "race to the bottom."  But economic nationalism provides only the illusion of such an alternative.

In the US, economic nationalism has recently emerged around the "Buy American" provision requiring that U.S.-made products, in particular steel, be used in projects funded by the recent $790 billion stimulus bill.  One of the most vocal corporate supporters of the legislation has been Dan DiMicco, CEO of Nukor, the largest steel producer in the US. He recently told CBS’s 60 Minutes that the goal of the stimulus package “is to stop the bleeding of jobs and to create jobs here in American, not overseas, not in China, not in Europe."

Some Americans who have seen DiMicco's TV interviews may feel reassured that an American businessman is finally willing to act in the interest of American, rather than moving American jobs abroad. What DiMicco forgot to mention is that Nukor has also been partnering with Chinese steel maker Shougang Corporation to build a new steel plant in Australia.

Corporate led globalization has produced a global economy in which goods, services, and capital are like a global ball of yarn which has become so tangled that it can only be untangled with great care. US corporations produce or buy goods in China employing Chinese workers; Chinese money finances the US debt keeping the US economy afloat; complex manufactured goods produced almost anywhere in the world are assembled from parts produced in the global supply chain; and we all now know how toxic financial instruments assembled from loans made to poor and working class Americans spread from the US to infect economies everywhere. If we start untangling the global ball of yarn without considering the consequences for people throughout the world we will accelerate and deepen the crises we find out selves in.

This is not an argument for perpetuating the kind of globalization that just means the right of corporations to roam the world doing anything they want without restraint by democratic governments and institutions.  That kind of globalization, fortunately, is currently collapsing. But it needs to be replaced, not by an economic war of all against all, but by democratic decision making that is as decentralized as it can be while still being effective.

The task for the world’s labor movements, global justice activists, progressive political forces, and NGO’s is to demand that a new order be based on mutual consultation and mutual gain and not on beggar-thy-neighbor policies. That means “re-localizing” a great deal of the global economy, but in ways that benefit, rather than harm, the interests and living standards of ordinary people and helps restore a more sustainable environment.

In this post we open a thread on ways to avoid both destructive economic nationalism and failed corporate globalization.  We start with a little known history -- the reactionary history of Buy America campaigns in the US, which are driven by the same impulses that pushed for Buy American provisions in the stimulus package.  This history, as revealed Dana Frank’s book Buy American: The Untold Story of Economic Nationalism (Beacon Press, 1999), teaches us that steel magnate Dan DiMicco represents a great American tradition: the very business leaders who have demanded that American workers Buy American have often secretly sought foreign assets and played workers around the world off against each other in a never ending race to the bottom.

The Boston Tea Party
Buy American campaigns are as American as the Boston Tea Party. On the night of December 16, 1773, between fifty and a hundred colonists, with faces blackened, climbed onboard three ships moored in Boston harbor to dump 90,000 pounds of tea into the ocean. The nation’s first Buy American protest was attended by an audience of 2,000 or 3,000, watching silently from the harbor docks.

Organized by the radical intellectual Samuel Adams and the rich merchant John Hancock, the Boston Tea Party represented the climax of the decade-long “nonimportation” movement protesting British control of the colonial economy. The campaign boasted thousands of supporters, ranging from carpenters and sailors to merchants and politicians. All pledged to support only “domestic manufacturers.” Groups of Yale students swore off foreign liquors, workers purchased only American made clothes, and high taxes were mandated on a long list of imported goods by the passage of the Townshend Duties Act of 1767. Groups were formed to “Expose and shame and Contempt all persons” trafficking in British goods. Founding fathers George Washington, Thomas Jefferson, and John Hancock were the self-appointed leaders of the campaign, each publicly swearing off imported products with a pledge to buy only American.

But while the working classes were pumped into frenzied, patriotic mobs who threatened, and sometimes killed, violators of the campaign, many of the businessmen and politicians who funded and organized the British boycott benefited financially by covertly selling British goods. John Hancock’s violations, for example, were exposed by an editorial in the Newport Mercury newspaper, stating that Hancock “would perhaps shine more conspicuously . . . if he did not keep a number of ships running to London and back, full freighted, getting rich, by receiving freight on goods made contraband by the Colonies.” Even George Washington, one of the most prominent promoters of the boycott, ordered from his London agent a long list of banned imports, including “hardware and equipment” for his carriage. As average citizens hunted down violators of the Buy American movement, the wealthy elite gained politically by rhetorically defending worker interests while at the same time lining their own pockets.

Hearst and the Yellow Peril
At the start of the Great Depression, with one-third of all wage earners unemployed, newspaper mogul William Randolph Hearst announced that he was going to provide the solution to the problems of the American economy: Buy American.

Hoping the campaign would dovetail with his relentless political aspirations, Hearst called on all patriotic Americans to pull the economy out of recession by rejecting foreign products. Each day his twenty-seven newspapers printed several Buy American stories. In movie theaters, Hearst ran newsreels like the one entitled “Children Enlist to Aid Buy American,” in which a little blonde girl recites, “My mother and dad say that everybody should buy American so lots of people will get jobs.” And Hearst’s campaign was enormously successful. By 1933, the New York Times reported that the Buy American campaign could be credited for a 25 percent drop in purchases of “Paris styles.”

Where did Hearst get the idea for his campaign? It seems he discovered it on a trip through England where a major “Buy British” campaign was being waged. As the depression devastated Europe, economic nationalism surged through the continent, replicating itself in Buy French campaigns, which in turn spurred fifty pro- Hitler business leaders to launch a parallel Buy German campaign.

Hearst’s adoption of a buy-national program points toward one of the fundamental flaws of economic nationalism: It is a device that any country can deploy. “We’re Americans and we are only going to buy American goods so we keep our jobs at home” is the battle charge of an ideology rooted in the belief that the world is at economic war—a war that must be fought and won at the expense of other nations. The promised bounty is that America will have the jobs and other countries will not. But, as history as shown, this inevitably leads to a “beggar your neighbor” trade policy, igniting large-scale trade wars, with each country in turn using the same trade policies to “win the war.” The Great Depression is a case in point, as country after country raised tariffs and initiated buy-national campaigns. No nation could “win” as each gained its domestic market but lost its foreign ones. As was the case in the depression, economic nationalism becomes essentially self-defeating, characterized by the escalation of identical tactics by each country.

History also reveals a long lineage of powerful men, like Hearst, who followed in the footsteps of Washington and Hancock, demanding that all true patriots Buy American, while they secretly sought foreign assets.

Hearst owned a castle in Wales and a 900-acre cattle ranch in Mexico. He shelled out millions of dollars for European antiques and owned part of a lucrative copper mine in Peru. Any guesses on where Hearst bought the paper for his newspapers? Canada. Hearst, and the men before him, were not about to risk their personal wealth by actually practicing economic nationalism. Such a policy was meant for the worker, not for the businessman.

With the nation beginning to take notice, Hearst increasingly directed his Buy American charge against foreigners both outside and inside the United States. His papers were aflame with warnings of the “yellow peril.” Typical headlines in his papers read “Japan Sounds Our Coast” or “The Dear Little Brown Men.” Hearst warned that the United States “must be protected from invasion, and both alike must be defended from within.” Imports were to be avoided, whether produced by “foreigners” abroad or by “infiltrating” immigrants who took jobs and resources away from “Americans.”

Such racist scapegoating is yet another unfortunate component of economic nationalism. A policy of searching for a group to blame for a nation’s economic problems simplifies the complex economic realities facing workers. Blaming “foreigners” remains a much easier task than demanding a responsible corporate sector or building viable economic alternatives insulated from the global economy.

Perhaps the most tragic aspect of Hearst’s Buy American campaign was that the American labor movement was sucked into aiding one of the greatest enemies of labor. During the San Francisco general strike in 1934, Hearst pushed his papers to denounce the strike, and even cabled in a story from London offering tactical information as to how the British government crushed the general strike of 1926. And, of course, when it came to his own newspaper shops, Hearst fired any journalists who hinted at joining or organizing a trade union.

Unfortunately, none of this impeded Hearst’s ability to line up Buy American labor endorsements from around the country, including one from Matthew Woll, the vice president of the American Federation of Labor (AFL). Woll encouraged workers to fight the depression by getting involved in the Buy American campaign. In July 1938, the American Flint Glass Workers passed a resolution at their convention demanding that the government “Buy American to keep American factories going.” Soon the AFL press began to modify its “Union Made” message to include “American Made,” claiming that “there is no better method through which better times can be brought to America.”

But was buying American going to ensure workers safe passage through the insecurity and rampant unemployment of the depression? The argument was based on the logic that there was a compact with business: If workers buy American products, then companies will keep jobs in the United States. The problem was that men like Hearst, Washington, and Hancock had no interest in keeping their end of the bargain. As Frank explains, “Unions have operated on the misperception that buying American would reinforce a prosperous national circuit between producers and consumers, thereby protecting American jobs. It rests on the idea of the nation as an economic team, with consumers and manufacturers working together as partners.” Big business had no intention of playing by the rules. Instead, Hearst pitted his workers in the mines of Peru against mine workers in the United States, seeing who would work the longest hours for the lowest wages.

Foreign Competition: Made in the USA
During the economic turmoil of the 1970s, corporations attempted to remain competitive in an increasingly global marketplace by laying off hundreds of thousands of workers. By the late 1970s and early 1980s, 900,000 jobs a year were eliminated, with steel industry employment shrinking by 40 percent.

This time economic nationalism began with the labor movement. In 1971, after imports began to devastate the garment industry, the International Ladies’ Garment Workers’ Union (ILGWU) launched a national advertising campaign, spending millions of dollars on print and television ads. In one such ad, a union member solemnly declares, “There used to be more of us . . . but a lot of our jobs disappeared because a lot of clothes Americans are buying . . . are being made in foreign places.”

As in Hearst’s campaign, the ILGWU ads revived the “yellow peril,” taking aim at Asian workers. In August 1972, posters were plastered throughout the New York subway system simply showing a gigantic American flag with an inscription reading, “Made in Japan.” Underneath was printed in a smaller typeface, “Has your job been exported to Japan yet? If not, it soon will be unless you buy the products of American workers who buy from you.”

Again during the 1980s, as U.S. manufacturers deliberately disinvested in U.S. industry and moved their operations “offshore,” many U.S. workers directed their hostility to Japanese workers: “Toyota-bashing” became a highly publicized national sport. Corporations cannily exploited this attitude. At the very time it was abandoning steel plants instead of modernizing them, the U.S. Steel Corporation showed its workers a movie called Where’s Joe? blaming job loss on Japanese competition and asking for protection against Japanese steel imports.

Playing right into the hands of the corporations and the right wing, unions scapegoated Japan rather than identifying the real problems confronting the American economy. While corporate leaders supported and funded the Buy American campaigns in the 1970s and 1980s, these same U.S.-based manufacturers were transferring their production facilities overseas as fast as they could. As one critic of the ILGWU “Made in Japan” poster correctly stated, “Unemployment is not made in Japan; it’s made in America.”

At the same time, unions like the ILGWU were asking its membership, many of them Asian and Latina immigrants, to reject garments being produced by their family members abroad. Frank correctly notes, “Rather than pursue a policy of transnational solidarity with garment workers all over the globe, as it does today, the union insisted on a Buy American partnership with domestic garment manufacturers— who were laughing all the way to the bank.” Indeed, this strategy pits workers in different countries against each other, allowing companies to accelerate the competition of the global economy. According to one ILGWU supporter, “To reduce complicated international economic issues to the simple level of a campaign against the working-class people of other countries is sloganeering unworthy of your union.”

Buy American campaigns and economic nationalism have become even more problematic in the era of globalization. What does it even mean to “Buy American” in a global economy? In today’s economy, it is increasingly difficult to identify an American product. An “American” car may come off the same assembly line and include exactly the same parts as a “Japanese” car—except for the label. By the end of the 1980s, Ford owned 25 percent of Mazda, and Chrysler owned 24 percent of Mitsubishi. The confusing realities of the global economy were well illustrated on January 25, 1992, when UAW members mounted a Buy American protest at a Mazda assembly plant near Detroit, in which the workers were their fellow union members.

An exclusive focus on national economies distorts people’s understandings of what is really going on with the global economy. Buy American campaigns—and economic nationalism— do not grapple with the underlying problems of international capital mobility and race-to-the-bottom competition. As history shows Buy American campaigns play right into the hands of the corporate agenda, helping business to market Buy American campaigns to sell their products, while blaming foreigners as a diversion from their globally competitive strategies.

Workers Helping Workers
The challenges of the global economy demand alternatives that address the real economic problems people face—not the marketing tools of Buy American campaigns.

Economic nationalism pits workers against workers, allowing national symbols to trump international solidarity. It lures people into scapegoating China. It misleads workers into supporting corporate marketing campaigns in the name of patriotism instead of demanding an economy that represents their needs and interests. But then what can we do to stop the race to the bottom?

One possible solution has been labor's recent efforts in the West to reach out to Chinese workers on the basis of mutual solidarity. Rather than blaming Chinese workers for American job losses, labor's properly targeted global corporations. After all, over 60% of all goods exported from China were exported by non-Chinese corporations. That's why when Teamster President Hoffa traveled to China last year he told the press: "Who do we blame for that? We blame American industries….Ford Motor, General Electric, people that are here. You can’t blame the Chinese government for that. I blame, you know, the Fortune 500 that wants to make money be moving here and laying off Americans and I think that’s terribly wrong.” 

What separates the labor movement from economic nationalists is that it realizes the value and necessity of cooperating with workers in other countries.  Global solidarity requires the rejection of policies that are in opposition to the material interests of workers outside of our national borders.  Labor's response to the global race to the bottom requires forging common ground and formulating alternatives to corporate-led globalization. b.s.

Comments

[Lucas Hartmann]

I think that union made would make a lot more sense also. href="http://shopprogress.com

[Lucas Hartmann]

I think that union made would make a lot more sense also. href="http://shopprogress.com

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It makes absolutely no sense to me to use taxpayer money to buy steel for public projects from non-USA producers.

[Daniel Cardozo]

First of all, great post!

Second, I want to emphasize Trina's point that Made in USA is not always safe for workers, especially considering the bustling underground economy that has developed here.

Third, I'm excited by the growing cooperation between the movements for Fair Trade, Union Made in USA, Green and "Sweatshop Free" products.

Our company is trying to further cement these ties by bringing many different organizations into the conversation by offering custom-printed merchandise sorted and categorized by various ethical standards.

http://ethixmerch.com

The author of the post is correct - we can't afford to take sound-byte-sized arguments at face value. There is too much at stake.

[Trina Tocco]

In my humble opinion, it might be better to talk about the need for "union made" rather than continuing to frame our issues under "Buy America". After all we don't want the U.S. supporting the many union busting companies that operate in the U.S. One piece that talks about this is at http://laborrightsblog.typepad.com/international_labor_right/2009/02/economic-crisis-buy-american-and-sweatfree-organizing.html.

Thanks for bringing up this very important issue that needs to be debated widely within the labor movement.

[Todd Tucker]

If you're against xenophobia (hey, me too), what not just say that? Or call for an internationalist re-branding of the phrase "Buy America"?

It's in the planet interest for procurement policies to have a pro-local bias, and in any case, procurement is not a legitimate area for trade policy to infringe upon, or the debate over protectionism.

The real "corporate marketing campaigns" was the one led by multinational companies that were trying to further undo 70 years of policy precedent, one of the few New Deal legacies we have left.

[Chris Crowther]

First off, I agree with underlying message here that we must focus on worker solidarity and we can't trust the corporate sector.

However, I have been very suprised by how fast the protectionist label was slapped on the Buy American policy.

I fail to see how mandating that US taxpayer funded projects use US made steel is protectionist or how it would lead to trade wars of any kind. A trade war really could only be ignited if the USA reneged on a trade deal, which it hasn't done in this case.

Protectionism, as the article points out, means tariffs and restrictions on private sector investment and consumption.

The Buy American clause is strictly related to the spending of the extraordinary public stimulus money. In no way does it put restrictions on private spending. Therefore, it is not protectionist.

I do not understand how stimulating the American economy with this extraordinary spending could be better accomplished with steel purchased outside the USA. It makes absolutely no sense to me to use taxpayer money to buy steel for public projects from non-USA producers.

Follow the money: the government takes on debt to finance stimulus money. This money will largely flow to the corporate sector who will pay workers to provide a service/product to the government. The public money should be used to employ as many Americans as possible as the intent of the spending is to mitigate the social costs of this depression. This goal is best accomplished if the maximum number of Americans are employed, and buying American steel is one hell of an easy way to accomplish that because steel is a highly unionized, well paying industry.

To me, this Buy American thing is a big red herring. It is amazing to me that as soon as a proposal that is designed to benenfit well paid union jobs gets floated, the intense rhetoric about protectionism is trotted out. Meanwhile, unprecedented subsidies (aka bailouts) are being granted to giant banking institutions. How the banking subsidies are not labelled protectionist is beyond me. The bailouts have forced other countries to follow the same path as large US banks now have access to subsidized funding from the treasury and Federal Reserve, giving them a competitive advantage in the global market despite being insolvent. Now that is protectionist. It is perverse to me that we are even debating this issue in light of the measures that have been taken to keep these banks afloat.

But god forbid we keep some unionized steel workers employed with public money! I mean, honestly, do we really believe that the Buy American clause will cause the global ball of yarn to collapse? I don't think so. Nor do I resent any US steel worker who keeps his or her job in light of this policy. I would want my government (Canadian) to do the same thing as it pisses me off to no end when government money is used to buy products from foreigners that could be made right here in my home town.

As for other ideas: we need to invest in cooperatives. We need to build a real network of fair trade businesses that are worker and consumer owned and operated.