Some Interesting Thoughts From Edward Zachary Graham:

I was watching Fox News this morning when I heard a story that made me nearly choke on my cheerios. The Mayor of Warren Michigan, Jim Fouts issued an executive order to his appointees to buy from the “Big Three” if they would like to keep their jobs.

He was also encouraging other city leaders including 116 other mayors from across the state to follow suit and “buy American” citing reasons such as massive unemployment in the state of Michigan and patriotic duty.

While this is technically legal because they are “at will” employees, this is a strange paradox that again displays terrible ignorance in the field of economics and which is a stepping stone to an executive order or maybe a bill to congress that orders average Americans to buy from the failing “big-three.”

The esteemed mayor cites that the auto companies are responsible for 1/3 of his fiscal budget.  So if I am following his rationale he wants people to buy American cars, so he can collect his much needed tax revenue.  He needs this tax revenue to continue government programs that are needed to help the people in his city and state.  Seems logical right?

But why is the mayor seemingly unconcerned with Detroit’s failing banana industry?

The answer is simple.  It is cheaper and generally more economical for Americans to import bananas from Latin America or the Caribbean.  Our climate isn’t ideal for banana growth and when we realize division of labor on a worldwide scale it is easily seen that these countries have an absolute advantage in the banana industry. Simply meaning they are able to provide for consumers best.  A banana farm in Detroit would never be able to compete in the free market with imported bananas and thus to buy American in this case would actually make Americans poorer.  This is because they would have to buy the same goods for more money.  But the ideas of division of labor within the profit and loss matrix do not only apply to the banana industry.

American auto companies are failing when compared to foreign made vehicles because they simply haven’t been able to provide for Americans better than foreign companies.  To forcibly divert resources to these failing companies makes America poorer, just as in the case with the banana industry.  Propping these companies up does not change this.  Yes, people will lose their jobs and this is difficult but unless you let failing companies fail, we are all the worse off.

This brings me to the paradox of Mayor Fouts and how naive he is even in regards to his own self-interest.  If it is his fiscal budget he wishes to protect, then he is going at it with exactly the WRONG set of ideas.  If tax dollars is his ultimate goal then he should be urging the “big three” to file for bankruptcy ASAP so they can begin selling off their assets to businesses that wish to turn a profit in a competitive marketplace.  This would be the fastest way to get people back to work and earning tax dollars.  Obviously I would never advocate free-market principles as better means to government’s ends- hence these are “poor means to unjust ends.”