Inflation Another Reason to Rethink Buy American Protectionism

Colin GrabowGovernment data released last week placed inflation at8.5 percent over the previous 12 months —the largest such increase since December 1981—withfresh reports noting particularly pronounced price hikes for building materials and supplies. Oddly, the Biden administration decided this was an opportune time to double down on its support for protectionist “Buy American” policies that limit the federal government’s ability to purchase cheaper imported goods when spending taxpayer dollars—and thusraise prices.During a speech last Thursday President Biden highlighted his administration ’s efforts to make Buy American rules evenmore restrictive while a White Housememo released earlier this week praised the Build America, Buy America Act that includesprotectionist provisions limiting infrastructure projects funded by the law to only those that use U.S.-made manufactured products as well as iron, steel, and other construction materials produced in the United States.Responding to the memo, the Associated General Contractors of Americapointed out that restrictions and the attendant red tape point undermine efforts to improve infrastructure. The lowered competition and increased costs, meanwhile, serve to further raise prices.This is precisely the opposite of what a White House laser ‐​focused on inflation would do. As former Treasury Secretary Lawrence Summers noted in a recentinterview, one way of easing inflation is to conduct public pr...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs