Logic is often missing in debates over economic policy. The NYT tells us that Canadian manufacturers are being hurt by the "buy America" provisions in the stimulus package. Okay, so let's help them. We'll get rid of the Buy America provisions, but we'll also get rid of the stimulus. Now, they will all go out and celebrate, right? They no longer will have to worry about protectionist policies throwing us into another Great Depression. They will just have to get by with fewer orders. This may be news to the NYT, but political interest groups often have an impact on the structure of legislation. For example, the reason that we pay twice as much as everyone else in the world for prescription drugs is that the drug industry is powerful enough to get stronger patent monopolies in the United States than elsewhere. In the case of the stimulus package, unions and some domestic manufacturers insisted on buy America provisions as a condition of their support. The bill would not have passed without it. The stimulus has boosted demand in the U.S. including the demand for imports from Canada. Therefore, Canadian manufacturers were actually helped, not hurt, by the stimulus, even if they may have been helped more if it did not include buy America provisions.
--Dean Baker
