Wednesday, November 9, 2011

Can't you come up with a better question?

"Under a Republican governor, the state of California hired a company in China to build major portions of the new San Francisco Oakland Bay Bridge. Created thousands of jobs in China, and California did that because it was cheaper. Is that smart purchasing by government in a global economy or is there something wrong with that?" CNBC's John Harwood asked the Republican candidates during last night's debate...

Directed first at Herman Cain, who of course responded with how the panacea 999 Plan cures all ills... Then to Mitt Romney who, after railing at China's stealing of our intellectual property (I sympathize) and promising to label it a currency manipulator (I don't sympathize), threw up the T word... Gingrich intelligently yielded to Huntsman, the one candidate with real world [direct] experience with China (Newt did touch briefly on cracking down on intellectual property theft and the fact that our burdensome regs hinder our global competitiveness)... Huntsman (re; tariffs) was right on the money; "you start a trade war if you start slapping tariffs randomly on Chinese products based upon currency manipulation, that's not a good idea". Oh andMichelle Bachman chimed in with more on counterfeiting (again, I sympathize) and a chilling, spy-novelish account of the digging of thousands of miles of nuclear-weapon-housing underground tunnels in China - that we're paying for... Implying that China is readying itself to become the next North Korea and essentially destroy all the economic gains its realized over the past thirty years...

Now what would you think of a candidate who would offer the following?

"John, you said "because it was cheaper", well of course that's "smart purchasing by government" - global economy or not... In fact I would hope that every taxpaying Californian would insist that his/her state get the quality it requires at the cheapest possible price from wherever on the planet it can find it... Don't we compromise job creation in the industries we compete well in (tech for just one example) when we operate inefficiently; essentially requiring more (higher taxes) from the private sector?

Now let's look at this in the context of a truly foreign concept to the state of California; a budget... Let's assume that California allocated only so many dollars toward the project... And that U.S. labor costs simply didn't allow for its completion within the budget's limits... Then what? Should they have recalculated what was needed, perhaps in terms of quality? Should they have used cheaper materials? Maybe skimped on the number of support beams?

And when you say "jobs in China", are you not implying that we're sending our taxpayer money overseas, as opposed to keeping it here at home? Now tell me John, in what currency did California pay this Chinese contractor? That's right, U.S. Dollars... Or let's say, they were paid with little green claims on U.S. goods and services... You see John, U.S. dollars never ultimately leave home; they're only good for U.S. stuff. I.e., U.S. dollars spent on non-U.S. labor, goods and services can be every bit as stimulating to the economy as when they're spent on domestic goods and services... Particularly when, as a result, we have leftover capital to invest elsewhere...

Now John, you're not suggesting that, for political favor, California's Governor should've jeopardized the quality of the bridge, are you? Or in any way minimized the gains to the U.S. producers of the goods and services aimed at capturing those dollars we paid the Chinese contractor? Or denied the beneficiaries of the investments we'd have made with the money we saved by hiring the Chinese contractor? Or denied the Californian the future prosperity that comes from living in a state that is finally doing the right thing with his/her taxpayer money?

John, can't you come up with a better question?"

Now I'd call that candidate a true blue American patriot!

If you struggle with this, here's Part 1 of my 3 part video series on International Trade...

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