These are worthy objectives, and the order is tailored to meet them. It’s clear that the rapid deindustrialization of the United States that accelerated when China was admitted to the World Trade Organization has destabilized U.S. politics and society. Research shows that China’s rise through 2007 alone dramatically affected areas of the United States that were disproportionately populated by older White people without a college degree. That likely accelerated after the 2008 financial crash that led to sudden declines in employment and closures of manufacturing plants. Other research showed that former president Donald Trump’s 2016 victory was in large part because of substantial voter gains in counties that lost jobs to China and Mexico. Deindustrialization had grave consequences.
The pandemic also exposed how much the United States depends on crucial materials produced in China or nearby nations such as Taiwan. The fact that most medical protective materials came from Chinese factories was a revelation as people scrambled to find masks, gloves and other needed supplies. The current shortage of semiconductors is largely because of manufacturing issues flowing from one Taiwan-based company, Taiwan Semiconductor Manufacturing Company. China’s insistence that Taiwan is rightly part of it, and its continuing military buildup and activity relating to Taiwan, increases U.S. vulnerability. It is simply common sense to act now to reduce that exposure, and Biden’s order will do that.
There are risks associated with this order. It’s one thing to bring truly crucial manufacturing back to the United States. It would be another to interpret that so broadly as to affect a large number of consumer goods such as flat-screen televisions or washing machines. U.S. consumers have benefited greatly from lower prices as manufacturing has moved offshore. The key should be striking a balance between the gains from low prices and the losses from people losing jobs as a result. Biden’s order should not morph over time into protectionism through the back door.
The order also should not try to micromanage the business practices of participating firms. Once companies become dependent on government orders, it would be tempting to exploit that market advantage to push them to agree to “voluntary” price-fixing arrangements, press unionization, or coerce commitments to support climate change or social objectives. In other words, make the private company a de facto government subsidiary. Government micro-direction of the economy or society has never been the American way, and legitimate social objectives should not be used as a cover to change course now.
The threat of excessive unionization is particularly acute given the close ties between most private sector unions and the Democratic Party. One can easily imagine union leaders lobbying to push Biden to use the orders to promote their narrow objectives. While unions can give powerless workers a real voice, they can also be used to calcify firms and reduce competitiveness. Workers should not be pushed into arrangements that could, in the long run, place their jobs at risk by hobbling their employers.
Our allies have always recognized that free trade works only when domestic political needs are stabilized. Germany has not let free trade threaten its core manufacturing strengths, and former Conservative Canadian Prime Minister Stephen Harper made sure that the free trade agreements he signed did not work to destroy whole economic sectors or communities. Biden’s order, like Trump’s renegotiation of the North American Free Trade Agreement, is simply a recognition that political and social objectives matter as much as economic ones for a strong and stable nation.
Conservatives are right to oppose the dangerous drift toward statism that underlies much of Biden’s agenda. “Buy American,” done right, is not part of that drift.