The Instigator
Adamant1
Pro (for)
Losing
2 Points
The Contender
J.Kenyon
Con (against)
Winning
17 Points

As an American, One should Only purchase American cars to preserve and encourage American Business

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Post Voting Period
The voting period for this debate has ended.
after 3 votes the winner is...
J.Kenyon
Voting Style: Open Point System: 7 Point
Started: 2/27/2011 Category: Economics
Updated: 6 years ago Status: Post Voting Period
Viewed: 1,934 times Debate No: 14902
Debate Rounds (3)
Comments (3)
Votes (3)

 

Adamant1

Pro

I take the position of Pro/For this due to prolonged thought and an eventual conclusion that the continued purchasing of foreign cars dramatically increases the trade deficit in America today. This sends money to foreign countries decreasing the worth of American currency internationally and also disadvantages domestic car companies by limiting their income, decreasing staff, decreasing budget for research and sales promotion, and ultimately driving them out of business. This is a major factor of the bankruptcy of all domestic auto brands (besides Ford) and will continue to be a problem until they are either ultimately driven out of business for good, or begin to sell better than foreign brands. Americans should recognize this and consider it when purchasing a new vehicle rather than the government placing tariffs for that would discourage international business for these domestic companies.
J.Kenyon

Con

Thanks Pro, for instigating. Protection is an extremely harmful policy. I'm always baffled when I hear conservatives who support it. It's essentially based on the same argument that all trade is exploitative which drives many liberal policies. The "buy American" fad is basically a ploy by American manufacturers to exploit the patriotism of the economically illiterate.

1. Pro is a xenophobe

Why should I support American businesses? What difference does it make to me whether some random guy from Arizona I've never met or some random guy from Tokyo I've never met benefits from my purchase? By implying that we should care more about Americans than foreigners, Pro is basically advocating racism and xenophobia.

2. Buying foreign can be economically beneficial

In a satirical letter to the French government, Frederic Bastiat famously petitioned on behalf of the domestic candlemakers for legislation protecting them from a foreign competitor. By inundating the market with cheap light, this foreign competitor was running the french candlemakers out of business! The "foreign competitor" he was referring to, of course, was the sun. His mock proposal was that people be required to close their window blinds during the day so they would have to use candles.

Obviously, Bastiat's "argument" is completely ridiculous. By saving money on candles, everyone has more to spend elsewhere. The same is true if I buy an inexpensive foreign car instead of a costly, inferior American alternative.

3. Buying foreign doesn't necessarily hurt American workers

Many foreign cars are actually built in America. In 2005, 3.7 million "foreign" cars were actually produced here, compared to 3.4 million that were imported.[1] According to the Boston Globe, "Toyotas, Hondas, Subarus, BMWs, Mercedes-Benzes, Hyundais and others – more than 40 models of foreign cars, minivans, SUVS and pickup trucks – are rolling off assembly lines at 15 plants in the United States."[2]

Conversely, many "American" cars are actually produced abroad. The Ford Fusion is built in Mexico and only half of its parts are produced in the US. The same is true of GM's Suburban, the Cadillac Escalade, and the Dodge Ram Mega Cab. The Ford Flex is built in Canada.[3] A 35% share of Chrysler is owned by Fiat, an Italian company.[4]

4. Comparative advantage

The law of comparative advantage explains how one entity can produce a particular good or service at a lower opportunity cost than another, even if the second entity has a greater absolute advantage. For example, let's say Mises Land and Marx Land are two countries of equal size that produce and consume two types of goods: wheat and potatoes. If both countries produced wheat, the output of Mises Land would be 200 tons per month, while Marx Land would produce 100 tons per month. If both countries produced only potatoes, their outputs would be 200 tons per month and 50 tons per month, respectively. Now, Mises Land has an absolute advantage in the production of both wheat and potatoes. However, Marx Land has a comparative advantage in the production of wheat.

Let's say both societies require both wheat and potatoes. So Mises Land produces 100 tons of potatoes and 100 tons of wheat. Meanwhile, Marx Land produces 50 tons of wheat and 25 tons of potatoes. Together, the two countries produce a total of 150 tons of wheat and 125 tons of potatoes -- 275 tons in all. Now, what if Mises Land and Marx Land decide to specialize in the production of potatoes and wheat, respectively? Instead of Mises Land producing 100 tons of potatoes and 100 tons of wheat, Mises land can produce 150 tons of potatoes and 50 tons of wheat. Marx Land could produce 100 tons of wheat and the two countries would engage in trade. Now, Mises Land has 100 tons of potatoes and 100 tons of wheat. Marx Land has 50 tons of potatoes and 50 tons of wheat, for a total of 300 tons in all.

The same principle applies to all areas of the economy. If foreign companies can produce better cars at a lower price, erecting trade barriers only prevents us from achieving the optimal outcome. The capital currently allocated toward the automotive industry could be put toward other, more efficient uses.

5. Protectionism stifles competition and innovation

By isolating domestic companies form competition, protectionism allows them to sell inferior products at higher prices. It's basically a form of corporate welfare that hurts lower and middle-class consumers. Not only this, but in the long term, it tends to hurt corporations as well. Harvard economist Robert Lawrence contends that the 40-year, 25% "chicken tax" on foreign light trucks crippled the US auto industry.[5] The absence of competition allowed American auto companies to comfortably reap ridiculously high profits from the sale of pick-up trucks while neglecting their other product lines. The result has been that foreign manufacturers have gradually taken over much of the market.

References:

1. http://www.signonsandiego.com...
2. http://www.azcentral.com...
3. http://www.usatoday.com...
4. http://online.wsj.com...
5. http://www.greencarreports.com...
Debate Round No. 1
Adamant1

Pro

Thank you for taking this debate. This is something I feel strongly about and have discussed it with my peers numerous times. It's better however to do it here, in an intellectual environment with more opportunity for each side to gather facts. However I do not believe that this is a bad economic decision.

In answer to our points:

1. The reason you should support American businesses is because you live here. By purchasing America goods you keep money in the United States rather than sending it to foreign companies, further devaluing the dollar.

2. As mentioned in the point above the dollar is becoming less and less valuable. Although you may have the short term gain of a less expensive car, in the long run this will cause you to have to spend more ad more money on these cars each time while if you had stayed with a domestic company this would happen at a much slower rate (because purchase of foreign cars is not the only reason for the devaluation of the dollar).

3. No matter where the car is actually made, the real money goes to the company headquarters, and the leaders of these companies. Foreign companies are based in foreign countries with foreign leaders who will most likely not use that money to buy American goods.

4. To start off with these American companies will not quit, and we will not be able to change that. Currently our country is being faced by a lack of jobs and they create a lot. Most of the people working in this field are already too far specialized in their fields to just drop it and pursue another career. So no, "The capital currently allocated toward the automotive industry could be put toward other, more efficient uses", they couldn't be.

Also, we have nothing to sell to these foreign companies, most Americans are in services rather than production. When we trade with outside companies we almost always end up importing much more than we export creating a trade deficit. So in your example this would be Mises Land producing 100 tons of potatoes and 100 tons of wheat and Marx Land producing the same, but the people in Marx Land have been convinced that Mises products are better and deciding to buy those in stead of those domestically produced.

5. I am not suggesting we place a tariff on foreign goods, I am suggesting that we, as Americans, stop and consider the economic damage we are doing before we immediately go out and buy a foreign car rather than an American one.
J.Kenyon

Con

Thanks Pro, for your quick response.

1. Pro is still a xenophobe

"The reason you should support American businesses is because you live here."

Non-sequitur. Geopolitical boundaries are totally arbitrary. There is absolutely no reason why I should care more about John Smith than Juan Sanchez just because they live on opposite sides of an imaginary line drawn in the sand.

Point stands: vote Pro if you hate brown people.

"By purchasing America goods you keep money in the United States rather than sending it to foreign companies, further devaluing the dollar."

Why should I care if the dollar gets devalued? I'm invested in gold, Chinese stocks, and various commodities. It won't hurt me.

In fact, buying foreign won't necessarily hurt the dollar either. Let's say Country A deals only in currency unit X. Country B deals only in currency Y. If Bob Jones living in Country A purchases goods or services from Country B using currency X, the good folks in Country B are faced with three options: make X legal tender so people can use it domestically, sit on currency X and invest it or do nothing with it, or use currency X to buy more stuff from Country A. If Country B chooses the first option, increased demand for X will raise its value. If Country B chooses the second option, decreased supply of X will raise its value.

2. Buying foreign can be economically beneficial

"As mentioned in the point above the dollar is becoming less and less valuable."

As I already explained, buying foreign doesn't hurt the dollar. Even if it did hurt the dollar, I still don't care.

"In the long run this will cause you to have to spend more ad more money on these cars each time."

If that's the case, the whole point is a non-issue. As foreign cars become more and more expensive, people will be less and less inclined to purchase them. Even if Pro is right, I can take the money I saved from buying foreign, invest it elsewhere, and reap the benefits from the falling dollar. Alternately, if I'm feeling patriotic, I can take that same money and invest it in America, benefiting my country. I get to have my cake and eat it too!

3. Buying foreign doesn't necessarily hurt American workers

"No matter where the car is actually made, the real money goes to the company headquarters, and the leaders of these companies."

Not true. The workers have to be paid, right? Some of it will go to the company headquarters, but not all of it. In fact, not even a majority of it.[1]

"Foreign companies are based in foreign countries with foreign leaders who will most likely not use that money to buy American goods."

What will they use it for then? As I explained in contention 1, no matter what they do, it will benefit America in one way or another.

4. Comparative advantage

"To start off with these American companies will not quit, and we will not be able to change that."

Oh yeah? They will if they go bankrupt as a result of their inability to successfully compete.

"Most of the people working in this field are already too far specialized in their fields to just drop it and pursue another career."

Working on the production line doesn't require a great deal of education. It's unskilled labor.[2] Everyone on the business end -- the accountants, the executives, the financial analysts, etc. -- would be able adapt just as easily to other sectors. It's not only the workers that could be more productively employed, but the machinery as well.

"When we trade with outside companies we almost always end up importing much more than we export creating a trade deficit."

So what if it increases the trade deficit? As Murray Rothbard explains: "More nonsense has been written about balances of payments than about virtually any other aspect of economics. This has been caused by the failure of economists to ground and build their analysis on individual balances of payments. Instead they have employed such cloudy, holistic concepts as the 'national' balance of payment without basing them on individual actions and balances."[3]

If China owns more of America's debt (that is, if it has invested it in bonds), this poses no threat to our economic stability. As I explained previously, having less currency in circulation increases its value. Moreover, an investment is essentially a deferment of present interests in favor of future satisfaction. Once the bonds come to fruition, foreign companies or governments can either re-invest the money or use it to purchase American goods.

5. Protectionism stifles competition and innovation

"I am not suggesting we place a tariff on foreign goods, I am suggesting that we, as Americans, stop and consider the economic damage we are doing before we immediately go out and buy a foreign car rather than an American one."

It doesn't make any difference. If enough people are suckered into the "buy American" boondoggle, it will have the same economic effect of isolating domestic companies from competition. If only a few people do it, it won't have any impact either way.

References:

1. http://biz.yahoo.com...
2. http://www.socialstudieshelp.com...
3. Murray N. Rothbard, Man, Economy, and State (Nash Publishing), p. 720.
Debate Round No. 2
Adamant1

Pro

1. No, I am not.
Buying within ones own country no matter what the race of those who live there supports further trade within their own country. this increases the probability of the money you spending on that car being used to support your business.

Also, not everyone, or even a majority of Americans is invested in these items, putting them at great financial risk due to the purchase of these foreign vehicles. Also when we trade with a foreign country we are essentially dealing in the gold of our national treasury, reducing the stocks in there decreases the value of every unit of currency printed by the United States Government.

2. You may not care about a waning dollar, but a majority of United States citizens will.

3. Nevertheless, a great deal of money leaves our country with nothing that comes in return but a car which will eventually end up in a land fill bearing no value, ultimately bad.

They will use it to support their own business within their own country using goods that more often than not will have anything to do with our country.

4. They have gone bankrupt, and yet, they are still here.

I'm reffering to the engineers who actually design all of these vehicles for you and me (well maybe not you).

"Once the bonds come to fruition, foreign companies or governments can either re-invest the money or use it to purchase American goods."


Maybe, or they could invest it in their own or other countries leaving American business in the dust due to their lack of funds which leads to a lack of ability to modernize and eventually even compete at all.

5. Or it could hapen at a degree in between where American companies are stimulated into succuss and the foreign companies have honest competition again.

J.Kenyon

Con

Pro still hasn't addressed the most important tenet of my case, that being comparative advantage. Additionally, I've argued that buying foreign doesn't actually devalue the dollar, rendering Pro's entire case moot. His rebuttals in the previous round demonstrate a fundamental misunderstanding of monetary policy and international trade.

1. Despite his fervent protestations, Pro is most assuredly still a xenophobe

"Buying within ones own country no matter what the race of those who live there supports further trade within their own country."

Xenoobia is not prejudice against any particular race, xenophobia is prejudice against foreigners.[1] So yes, even if Pro is not a racist, he is still a xenophobe. Has utterly failed to convince me of the intrinsic worth of magical, imaginary lines in the sand.

"Not everyone, or even a majority of Americans is invested in these items, putting them at great financial risk due to the purchase of these foreign vehicles."

So? Then they should get invested in gold, commodities, and foreign stocks. Moreover, Pro still hasn't explained how buying foreign actually hurts the dollar in the first place. I have also argued that consumers could simply take their savings from buying foreign and use it to purchase other domestic products, or invest in American businesses. This objection has gone unanswered.

Also when we trade with a foreign country we are essentially dealing in the gold of our national treasury.

No we're not. We've been off the gold standard for 40 years, brah.[2]

2. Buying foreign can be economically beneficial

"You may not care about a waning dollar, but a majority of United States citizens will."

That's all fine and good, but as I already explained, buying foreign doesn't actually hurt the dollar. Even if it did, there are better ways to benefit one's country.

3. Buying foreign doesn't necessarily hurt American workers

"Nevertheless, a great deal of money leaves our country."

Just like a great deal of money leaves our country when we buy "American" cars built in Mexico?

"They will use it to support their own business within their own country."

Irrelevant. This won't devalue the dollar. If they're using the money for something, they're increasing its value. Even if they're just sitting on it, or investing it, they're increasing its value. Going back to my analogy from the second round, if Currency X is only accepted in Country A, Country B will have no choice but to use X to buy more goods from A. This is basic economics.

"They have gone bankrupt, and yet, they are still here."

So basically what you're saying is that whether we buy American or not, the government is still going to make sure these businesses don't fail. The total losses they suffer at the hands of their competitors will be proportional to the amount that we save by buying foreign. In other words, Pro has undermined his entire case.

"I'm reffering to the engineers who actually design all of these vehicles.

Automotive engineering basically incorporates elements of mechanical, electrical, electronic, software, and safety engineering. In other words, it's a highly adaptable skill set.[3]

Even if capital isn't perfectly mobile, Pro's argument still doesn't work. If we were to apply it consistently, all industry would have to remain static in order to prevent people with specific skill sets from ever being unemployed due to technological advancements, market fluctuations, business cycles, etc.

Pro is basically nitpicking. He hasn't raised any real, substantive objections to the major tenets of comparative advantage.

"Maybe, or they could invest it in their own or other countries leaving American business in the dust due to their lack of funds.

Money has no intrinsic value. It's just paper. It has instrumental value insofar as it acts as an intermediate we use to purchase other goods or to act as a store of value, but in order to fulfill this role, no set quantity is necessary. Money is only valuable in relation to the things we can purchase with it. If the money supply was cut in half, what was left would double in value due to supply and demand. When foreign countries take and invest it, they are increasing it's value. Wealth accumulation is not a zero sum game.

5. Protectionism stifles competition and innovation

"Or it could hapen at a degree in between where American companies are stimulated into succuss and the foreign companies have honest competition again."

This isn't even coherent. Learn to speak English.

References:

1. http://dictionary.reference.com...
2. http://en.wikipedia.org...
3. http://en.wikipedia.org...
Debate Round No. 3
3 comments have been posted on this debate. Showing 1 through 3 records.
Posted by J.Kenyon 6 years ago
J.Kenyon
Oops, I forgot my fourth tag in the last round. "4. Comparative advantage" should go between "This is basic economics." and "They have gone bankrupt, and yet, they are still here."
Posted by mongeese 6 years ago
mongeese
Comparative advantage, anyone?
Posted by wjmelements 6 years ago
wjmelements
"The voting period will last indefinitely."

Fix to between 1 month and a year and I'll accept.
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by Scyrone 6 years ago
Scyrone
Adamant1J.KenyonTied
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Total points awarded:16 
Reasons for voting decision: I agreed with CON before and after the debate. CON had slightly better spelling and grammar. He had more convincing arguments and more reliable sources. PRO had better conduct. Part of CONs arguments involved claiming PRO was a xenophobe and racist. These are ad Hominem attacks meant to signify the lack of character that PRO has. While he did attack PROs arguments, he also attacked him as a person, attempting to devalue him. It did not work on me.
Vote Placed by wjmelements 6 years ago
wjmelements
Adamant1J.KenyonTied
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Total points awarded:15 
Reasons for voting decision: Con asked Pro to learn to speak English. Con misspelled a word, and that's all. Con ended ahead in all of his points, which refuted the resolution. Con had sources; Pro did not.
Vote Placed by Cliff.Stamp 6 years ago
Cliff.Stamp
Adamant1J.KenyonTied
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Total points awarded:06 
Reasons for voting decision: This was not a debate, it was the argument exchange equivalent of "hulk smash"