"Made in America." Those 3 words on a product label make people feel good, as if their money will magically grow jobs for their unemployed neighbors. But that's nonsense.
I try to set the record straight in my syndicated column this week:
Anytime we can use fewer resources and less labor to produce one thing, that leaves more for other things we can't afford. If we save money buying abroad, we can make and buy other products.
The nonsense of "Buy American" can be seen if you trace out the logic.
"If it's good to Buy American," [economist David Henderson] said, "why isn't it good to have Buy Alabaman? And if it's good to have Buy Alabaman, why isn't it good to have Buy Montgomery, Ala.? And if it's good to have Buy Montgomery, Ala. ..."
You get the idea. You wouldn't get very good stuff if everything you bought came Montgomery, Ala.
"A huge part of the history of mankind is an increase in the division of labor. And that division of labor goes across national boundaries."
Which creates wealth -- and jobs.
On my Fox Business show last week, we also dispelled the notion that you should only buy sweatshop-free products:
I'm for free trade, but trade means you get the lowest price, and that might mean you buy something from what some people call a sweatshop. The name itself conveys abuse.
Henderson says that's wrong. The workers aren't abused.
"In fact, they're better off taking those jobs. ... The mistake Americans make is they think they would never work in a sweatshop and therefore they say these people shouldn't. Well, no one's offering those people green cards. Those people are stuck in those countries. They're choosing their best of a bunch of bad options. And when you take away someone's best of a bad option, they're worse off."
That happened after Sen. Tom Harkin of Iowa complained about sweatshops in Bangladesh. Some shops closed. Then Oxfam discovered that kids who were laid off often turned to prostitution to support themselves.
Read the rest of my column here.