The "stimulus" bill contains protectionist provisions requiring purchase of American products over foreign products. These provisions would, if they are made into law, probably provoke foreign states to impose barriers to their purchase of American products; a trade war would be on. Protection of American manufacturing and labor is better achieved by making our companies more competitive through capital investment in manfacturing innovation and modernization of manufacturing technology, reform of the shop floor, training of labor, and reform of the motivational structure of investment and compensation. Furthermore, protectionism could injure US companies that are trying to innovate. For instance, steel is no longer made from scratch in Southern California, as it once was in Fontana; but steel processing and manufacturing of steel products from steel processed in Southern California is done by companies in the region that have survived competition against imported steel products through innovation and reform. To deny them the opportunity to purchase cheap imported steel and require that they buy more expensive US steel would make them less competitive and perhaps drive them out of business.
Revised. February 5, 2009.