April 06, 2004

Buy American

The ASI blog has a story on the stupidity of 'buy american' campaigns and by extension patriotic buying programs worldwide. They're mostly right but there is, I believe, one circumstance in which they are somewhat justified, when a domestic industry is taking real measures to improve quality, there is a lag time between improved products and regained customers. A patriotic buy program at that point would not be the normal boondoggle. The difficulty, of course, is that the number of people actually making improvements is usually swamped by the number of people claiming to make improvements but are actually just looking for a handout from the state. I put the following in their comments:

There is a circumstance in which 'buy american' does do some good though I doubt that the effect dominates. Some people do not investigate the quality of goods and tend to buy on reputation. The auto industry lost a lot of these customers as their reputation hit the toilet and Japan's autos grew in reputation. When US quality improved, the poor and newly monied driver tended to buy american at higher rates than the older, more afluent, more established money because the latter would buy on reputation and the former would do their homework.

A buy american campaign combined with real improvements in quality would speed up the resolution of a bad reputation that is no longer deserved. Thus a buy american campaign only makes economic sense if you have a parallel campaign to "make it worth buying american" among manufacturers and their employees.

Posted by TMLutas at April 6, 2004 12:02 PM | TrackBack