The New York Times recently editorialized that by keeping Mexican truckers off American highways, Congress risked starting a trade war, which is plausible enough. Mexico has retaliated by raising tariffs on 90 U.S. products, including Oregon Christmas trees, pears and frozen potatoes. But the Times also equated the decision to ban Mexican trucks with the stimulus law’s "buy American" provision, against which it had editorialized the week before. With that previous lead editorial, the Times joined — make that re-joined — the endless chorus of the self-consciously enlightened urging the administration not to lapse into protectionism. The Times followed the usual pattern of equating government as regulator with government as purchaser.
The two roles differ significantly, as American courts have long recognized. Jurisprudence parsing the Constitution’s commerce clause — which gives Congress, not the states, power to regulate interstate commerce — distinguishes clearly between buying and regulating.
A state acting as regulator can’t discriminate against the products of other states. (Washington could not, for example, tax salmon caught in Oregon or Alaska more than salmon caught in Puget Sound.) But a state acting as purchaser can buy whatever it wants. (If Gov. Chris Gregoire hosts a salmon dinner for visiting dignitaries, she can specify fish caught in Puget Sound.) The Supreme Court observed in 1984 (upholding a State of Alaska requirement that timber cut on state land be processed in Alaskan mills) that the Court’s previous “cases make clear that if a State is acting as a market participant, rather than as a market regulator, the dormant Commerce Clause places no limitation on its activities.”
Applied to the stimulus bill and more broadly to our current economic situation, the distinction between regulator and purchaser makes sense. No, it wouldn’t speed recovery if we passed laws that made it harder for Costco to buy Chinese textiles or Puget Sound Energy to buy Swedish windmill parts or Todd Shipyards to buy Korean steel. But if our government is using American tax dollars to buy stuff — or giving tax dollars to state governments to buy stuff — why not buy it from the people who paid those taxes?
People like New York Times editorial writers are forever raising the specter of the ruinous international trade war that followed America’s enactment of the Smoot-Hawley Tariff in 1930. (Some neo-con ideologues believe that anticipation of the tariff triggered the Great Depression. The more conventional — one might say rational — view is that the trade war set off by the tariff made the Great Depression worse.) But Smoot-Hawley wasn’t aimed at government purchases. Government didn’t buy much in those days. The tariff raised barriers to private purchases of foreign goods. Smoot, from Utah, wanted to protect his state’s beet sugar industry. Hawley, from Oregon, wanted to limit imports of forest products. Other members of Congress wanted to protect Pennsylvania textiles, Connecticut firearms, you name it.
Those protectionist impulses and political calculations haven’t gone away. We shouldn’t let them trigger another trade war. But using American tax dollars to buy American products wouldn’t trigger one. Whether or not buying American makes sense, whether or not it violates international agreements, whether or not we should alter those agreements are all legitimate questions, but they are separate questions. If you make it an absolute, "free trade" is every bit as theological a concept as "free markets." Presumably secular editorial writers don’t do their readers any favor by resorting to this theology.
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