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How to Make Government Cost More

June 29, 2014 in Economics

By David Howden

Think the government is expensive? It’s about to cost a little more.

The Grow America Act, introduced earlier this month in the U.S. House of Representatives, contains “Buy American” language that would raise U.S. content to 100 per cent by 2018 from 60 per cent now.

The bill, which must pass both the House and Senate, is part of a resurgence of so-called Buy American rules in numerous recent federal spending bills amid angst about the weak economy.

In particular the Act will hurt Canadian manufacturers who specialize in bus and subway cars for American public transit systems.

Notwithstanding the North American Free Trade Agreement, the new Act, if passed, will effectively place a trade embargo on foreign-made goods.

Just think, what would have happened to the cars Americans drive if 30 years ago the government stopped letting foreign cars into the country. Actually, we already have a pretty good test case for this in the old Soviet bloc.

The Grow American Act might appeal to voters who think jobs will come home, but they’ll be wrong. The main result of the Act will be a less trade and a more expensive government.

(Originally posted at Mises Canada.)

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