September 3, 2012 | Commentary on Trade
Protectionism No Path to National Security
"What material and industrial organizations are essential to war-time needs?" asked Col. W.A. McCain when lecturing at the Industrial War College. The answer: "Practically all material and industrial organizations are, directly or indirectly, essential. ... "
The lesson of this Q&A was not, however, that government should therefore control industry so that it could ensure having all it needed in time of war. Rather, McCain's point was that military officers needed to understand industry so that they could make the armed forces an informed and savvy consumer. Washington's role was not to be smarter than the marketplace, but to be a smart shopper.
McCain delivered his lecture in 1931. One of the students taking notes was a Maj. Dwight Eisenhower. Ike never forgot the lesson -- especially when he was president. He knew that government intervention makes markets less free -- and less productive. Ultimately, that in itself can threaten national security.
Government manipulation of the marketplace in the name of national security was a bad idea 80 years ago, and it's a bad idea today. But it's exactly what some folks want to do now.
The Alliance for American Manufacturing, or AAM, a high-powered lobbying group funded by mega-manufacturers and the United Steelworkers union, eagerly plays the national security card to advocate a "long-term national manufacturing policy." A recent report from them claims that "the U.S. has become dangerously reliant on foreign suppliers of products, materials, and technologies that are critical to our ability to prepare for, respond to, and recover from man-made and naturally occurring disasters."
A big part of the AAM's solution is more mandatory preferences for domestic manufacturers. But "Buy America" provisions create as many problems as they solve. Walling off U.S. manufacturing from foreign competition takes away the pressure to innovate at home and makes it difficult to tap into global innovation. Rather than "protect" U.S. manufacturers, such policies will accelerate their atrophy. And that limits government purchasers' shopping options to a handful of high-priced, second-class goods and services.
Protectionist purchasing policies also work directly against a second stated objective of the AAM report: removing barriers to the export of manufactured products. It's a real head-scratcher how the report can argue for fighting "unfair competition" even as it urges Washington to adopt practices that other nations would view as slanting the playing field.
Using national security as an excuse for more corporatism won't lead to "revitalizing America's domestic manufacturing," as the report would have it. Rather, an overzealous national security industrial policy will create more government bureaucracy, more regulation and more central control. It will also enrich a few at the expense of the many.
The greatest threat to our military-industrial base isn't a government that sometimes buys from foreign manufacturers; it's a government that doesn't buy what it needs to protect us. The arbitrary, mandatory cuts to defense required under the Budget Control Act of 2011 will deprive the armed forces of the goods and services they need to keep us safe. And the U.S. companies that competitively provide these goods and services -- particularly small and medium-size companies -- will disappear.
The national security marketplace doesn't need more regulations, corporate giveaways or trade wars. It needs a military that is a smart, responsible consumer.
Instead of embracing protectionist policies, Washington should focus on modernizing defense export controls, so U.S. industries can capture even more of its legitimate share of global markets without compromising our national security. Government should be more a facilitator of commerce and less of a roadblock.
Examiner Columnist James Jay Carafano is a senior research fellow for national security at the Heritage Foundation.
First appeared in The Washington Examiner.