The Make in America to Sell in America Act is a messaging bill, and the message is simple: Josh Hawley is not to be taken too seriously.
The Make in America to Sell in America Act is a messaging bill, and the message is simple: Josh Hawley is not to be taken too seriously.
S enator Josh Hawley is making the public case for his “Make in America to Sell in America Act.” What the bill lacks in a catchy acronym, it also lacks in intellectual rigor and chances of becoming law.
The junior senator from Missouri is dissatisfied with the ongoing supply-chain crisis, as many Americans are, and believes that he has a solution — namely, “making things in America again.” It sounds straightforward: Because we are currently struggling to get things from other countries, we should just make them here instead. “At its core, our crisis of scarcity is a crisis of production,” Hawley writes in the New York Times. The Make in America to Sell in America Act, then, would solve this crisis by requiring certain goods to be made in America.
Hawley adds that
under this plan, officials at the Department of Commerce and the Department of Defense will identify goods and inputs they determine to be critical for our national security and essential for the protection of our industrial base. These goods would then become subject to a new local content requirement: If companies want access to the American market for these critical and essential goods, then over 50 percent of the value of those goods they sell in America must be made in America.
Two things stand out. First, measuring goods by percentage of value doesn’t make very much sense. The value of a manufactured good is as a completed product, and it’s not just the sum of its parts. For example, if a pair of shoes costs $60, you wouldn’t pay $30 for only one of them. The shoes are only valuable to you as a pair; nobody walks around with one shoe. Producers face a similar dynamic. If it’s prohibitively expensive to make half of a manufactured good, there’s often no use making the good at all.
Second, for a senator who is skeptical of “the deep state,” Hawley seems to put great trust in the career bureaucrats at the Department of Commerce and the Department of Defense. He apparently believes they have the knowledge and authority to decide for everyone which goods and inputs are essential and which ones are not.
We’ve seen how this essential–nonessential distinction plays out with services throughout the pandemic. When drafting stay-at-home orders, state-level government bureaucrats got to decide which workers were essential and which were not. It just so happened, too, that some interest groups had these bureaucrats’ ears more than others did. Take teachers’ unions, which were effectively able to convince the government that teachers should not be forced to go to work, even as a whole host of other businesses had been. As Michael Brendan Dougherty wrote in June, “many parents who struggled to simultaneously work and proctor Zoom school from home concluded that teachers are in fact more essential than the pizza-delivery guy.” Such mistakes are inevitable when you let the government decide what’s essential.
Nevertheless, Hawley wants to extend that arbitrary and special-interest-influenced process from services to goods and from state governments to the federal government. Though some goods are more essential than others, every good is essential to someone. Under Hawley’s plan, the Department of Commerce and the Department of Defense would have to draw a line somewhere along that gradient of essentialness — and every trade group, lobbying firm, and member of Congress in America would be making the case why their preferred companies should be on one side of that line. Marco Rubio, for example, has argued that domestic sugar production needs subsidies because foreign sugar is a threat to national security — advocacy that, in all likelihood, has something to do with his close relationship with major sugar producers in his home state of Florida.
But don’t worry, Hawley assures readers that “companies will have three years to comply, and can receive targeted, temporary waivers if they need more time to reshore production.” The way I read the Bible, the Tribulation is supposed to last seven years; Hawley, however, seems to think that he can squeeze its economic equivalent into three. If you think stuff is expensive and hard to find now, wait until entire industries are scrambling to replace their supplier networks with domestic ones that do not currently exist in three years’ time.
It’s not just that they currently don’t exist. In many cases, they can’t exist because they’re dependent on natural resources that aren’t located in the United States. For example, platinum group metals (PGM) are vital to electronics and automobile production, and since they’re extremely expensive, they contribute a significant portion of the input value in production. If Hawley’s bill had a chance of becoming law, a company called Sibanye-Stillwater would be banging on the door of every member of Congress. That’s because Sibanye-Stillwater owns the only PGM mine in the United States. The government could not order the creation of a new mine because there are no other known PGM deposits in the United States. In the absence of foreign competition, Sibanye-Stillwater would be a monopoly — in which case, Hawley would be calling for them to be broken up.
Later in the piece, Hawley goes on to explain how the law would be enforced: “Domestic producers can petition the U.S. International Trade Commission if they suspect that corporations or importers have violated the local content requirement, and the secretary of commerce can take enforcement actions such as civil penalties following an investigation to ensure the new standards are met.” Just what we need: a new way for incumbent firms to sic the federal government on their competitors.
Recall, too, that Hawley was one of only 15 senators who voted against the confirmation of the current commerce secretary, Gina Raimondo. Has his opinion of her changed now that he wants to give her new power to punish Americans?
Hawley adds, “In effect, the legislation applies the domestic sourcing principles of the Buy American Act — a law that governs federal government procurement — to the entire commercial market.” I kid you not: He says that as if it’s a good thing. As if the people are crying out with one voice, “Please, expand the federal procurement process to every part of my life!”
The one good thing about the “buy American” requirements in the federal procurement process is that we can observe their effects. According to a 2017 Heritage Foundation report, those effects are: huge compliance costs, inflated prices, and no job growth. The report finds that scrapping every “buy American” requirement currently on the books would add 300,000 American jobs. That’s because the money that companies currently spend on compliance with the federal procurement process would be spent on something productive instead, which would include hiring more workers.
Hawley’s Make in America to Sell in America Act is a Rube Goldberg machine of stupid; worse yet, he thinks you will buy it. As Isaac Schorr wrote in these pages earlier this year, “your presumed ignorance and gullibility are the driving forces behind his every move.” Right now, he sees countless Americans upset with the supply-chain crisis. There are plenty of ways to improve our supply-chain resilience, such as loosening the environmental regulations that stand in the way of improving our port infrastructure, reforming our labor-relations laws to prevent unions from holding our logistics industry in the past, and pursuing a comprehensive supply-side agenda to mobilize America’s vast resources.
But never mind any of that. Hawley thinks that you’re frustrated and gullible enough to believe that the government could pass a law saying things should be made in America and our supply-chain problems would go away. His bill will never see the Senate floor, of course. It’s a messaging bill, and the message is simple: Josh Hawley is not to be taken too seriously.