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Buying (Un) American

By Gordon Lederman

AMERICAN BUSINESS, reacting to President Bush's recent failure to open Japanese markets to American goods, has reignited its "Buy American" campaign. As the argument goes, Americans should buy American products to save American jobs. At least in theory.

In reality, the "Buy American" campaign accomplishes little--and probably causes more problems than it solves. In its attempt to use feelings of patriotism (with lots of superimposed red, white and blue) to encourage Americans to purchase domestically made products, the Buy American campaign sidetracks Americans from the fundamental economic problems that are the root cause of our trade deficit.

The oppressiveness of the Buy American campaign is best seen by recent events in Los Angeles. Last December, the Los Angeles County Transportation Commission voted to buy $122 million in rail cars from Sumitomo, a large Japanese conglomerate. Following the President's trip, the Commission bowed to enormous public pressure to Buy American and reneged on the contract.

They decided instead that contractors must keep 70 percent of labor within the United States and 60 percent within Los Angeles itself. The Los Angeles Commission determined that protecting the rail car industry--and saving only 89 jobs in Los Angeles County, according to The Economist--was a higher goal than wisely spending taxpayer money.

The embarrassing reversal of the Los Angeles Commission illustrates a new form of McCarthyism that has emerged across the country. Many U.S. companies have begun to offer rewards to employees who buy American-made products. Monsanto, an American chemical company, currently offers $1,000 to every employee who buys a car made in America. The sad part is that the extra $1,000 will probably be spent on servicing an American car that is vastly inferior to its foreign competition.

THE BUY AMERICAN campaign also goes beyond bad economics--it is a not-so-subtle attempt to stir anti-Japanese sentiment. An underlying Japan-bashing theme surfaces in many Buy American advertisements.

Deutsch Incorporated, an advertising agency, recently ran television ads for New York City Pontiac dealers featuring the words of Yoshio Sakurauchi, a Japanese politican who made disparaging remarks about the quality and motivation of American workers. Sakurauchi's comments were set against the menacing background of a rising sun--hardly a subtle allusion.

Print ads for a Chrysler-Plymouth dealer in Anchorage feature photographs from America's battle against Japan in World War II. The message is clear: the Japan that Americans fought against in World War II is still the enemy. In retaliation for their military defeat, Japan is waging economic warfare against the United States.

"Buy American" thus means "Don't Buy Japanese," an appeal that comes dangerously close to racism. Japan is not alone in refusing to buy American cars. Few countries World-Wide import automobiles in significant quantities from the U.S. So why are advertisements so heavily concentrated on Japan? Why is the target of Buy American merely Japan, when most of Europe also shuns American products?

Because Europeans look like Americans a racist appeal toward England or France would be much less effective than bashing the Japanese--an easily identified race. And attacks on Japan are especially hypocritical in Los Angeles, Since nearly 85,000 Californians work for Japanese companies and 968,000 Californians are involved in foreign trade.

Even if the average consumer truly wanted to Buy American, he or she would have a tough time distinguishing between what's American and what's foreign. Most American cars, for example, are built with parts supplied by Japanese and other foreign companies.

American cars themselves may be assembled outside the United States. Many American companies operate huge factories in Mexico, a practice that will increase when a North American free trade agreement is finally negotiated.

To add to the confusion, many products with Japanese names are actually made in America. According to The New York Times, nearly 40 percent of Honda, Toyota and Nissan cars are assembled inside the United States, in American factories, by American workers. Are the 4,850 American jobs at the $1.2 billion Nissan plant in Sparta, Tennessee, worth less than jobs of General Motors workers in Detroit?

In Greece, N.Y., the town council voted to buy a more expensive John Deere excavator instead of a cheaper Japanese Komatsu, until it was discovered that the John Deere was assembled in Japan while the Komatsu was put together in Illinois.

SO WHO GETS the benefits of Buy American? Channeling economic frustrations against Japan deceives Americans into thinking that the real problems with their economy are caused by Japan. The incompetence of U.S. management has a lot to do with the low quality of American products.

And the outrageous multi-million-dollar salaries of corporate executives illustrate that their concern lies with short-term corporate takeovers and golden parachutes--not with restructuring their faltering industries.

Although Sakurauchi's comment that 30 percent of the American workforce cannot read it surely outrageous, it does contain an element of truth. As Time magazine pointed out recently, nearly 15 percent of American workers are functionally illiterate. And many high school graduates go into the job market without adequate training in math, science and communications--skills critical to today's economy.

If American workers are not properly educated, there will nothing left to Buy American except Desert Storm trading cards and McDonald's hamburgers.

Americans also conveniently forget that, in addition to the cars and electronics that Japan exports, Japan is also a significant investor in U.S. Treasury bonds that finance debt on our spiraling budget deficit. By holding so many U.S. assets, Japan allows Americans--at least in the short-run--to get away with not saving or investing nearly as much as we should. Our economy would grind to a halt if the Japanese subscribed to "Buy Japanese."

Japan isn't the reason for our recessing economy and trade deficit. We are. Until the American people and their politicians acknowledge this fact--and abandon lame efforts to encourage Buying American--our economy will continue to struggle.

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