Why is that every time Congress starts talking stimulus, I start feeling more stabby? (stabbier?) This time it’s the inclusion of the “Buy American” clause for infrastructure projects. You’ve probably heard pundits discuss it on the news. Here’s the scoop on why “Buy American” is bad for America and bad for the world.

Buy American Has Been Tried – and Failed
In fact, not only has it failed, but it’s credited with worsening the Great Depression. It’s called “protectionism,” and often has the reverse of the intended effect, especially in a bad economy. When we insist on buying American goods during bad economic times, the countries we stop buying from refuse to buy our goods. Depressed trade only serves to worsen the economic situation. It also weakens international goodwill, which is something we’re desperately in need of.

I think all Congresspeople should be required to read a history book right now. Specifically, a history of the Great Depression. More specifically than that, the chapter on the Smoot-Hawley Act of 1930. Although it wasn’t a specific mandate to “buy American,” it had the same effect. You’ll note that the Depression didn’t end in 1930, or even 1931.

Buy American Will Increase Infrastructure Costs
A commentator on NPR pointed out that U.S. steel costs more than foreign steel, often more than 20% more. If we have to spend more on materials, then we’ll be able to complete fewer infrastructure projects. That could mean the creation of fewer jobs, which would produce less income tax revenue. Some would argue that it would require increased production of U.S. steel, which would require hiring more steelworkers, but the total number of jobs created may be lower.

We’ll Have to Give the Money to Foreign Entities Anyway
As most people know, these stimulus packages are being paid for with borrowed money. Most of that money is borrowed from foreign entities. So would you rather spend $3 billion on Chinese steel now, or pay $4 billion for US steel, which would result in an additional $1 billion in borrowed money that we’d have to pay interest on (most likely to China). Basic math tells me that $3 billion plus interest is cheaper in both the short term and the long run.

Buy American May Be Illegal
According to the Washington Post, the provision may actually violate various trade deals we’ve made through the WTO, the G20, and other treaties and agreements. Given our current image around the globe, do we really want to start violating trade deals?

Now I’m not saying that we shouldn’t buy anything from US companies and manufacturers. We have a massive trade deficit, and it’s only getting worse. We certainly should buy from US companies when there will be a net savings. We just shouldn’t codify it in US law at a time when the rest of the world is struggling as well. We need to maintain all of the foreign goodwill that we possibly can. Buy American will only make the situation worse in the long-run. If we want to put the country on a better long-term footing, short-term, crowd-pleasing measures aren’t the way to go.

Do you disagree? Do you think I’m full of it? Do you think I’m unpatriotic? Do you agree? Do you think Congress is being reactionary, again? Whatever your opinion, share it in the comments. That’s what stabby posts are for.

I don’t recommend products often. In fact, other than books or free software, I don’t think I’ve recommended you buy anything. Today, all of that changes. If you’ve decided that you’re going to start cooking more as part of a new frugality kick, then you may be realizing that you need some extra pieces of cookware. If you’ve been cooking a while, you may be lusting for a large enameled cast iron Dutch oven. Unfortunately, the best of them – Le Creuset – are very pricey.

Tramontina/Chefmate Cast Iron Dutch Oven
Enter the enameled cast iron Dutch oven from Tramontina/Chefmate. It was recommended two years ago by Cook’s Illustrated as the best bargain alternative to Le Creuset (which was rated the absolute best if money is no object.) The 5 quart pot they recommended promptly sold out – and why wouldn’t it at around $40?

I requested the $60 6.5 quart cast iron Dutch oven for Christmas, and now I hear it will soon be vanishing, too. It’s currently available at Target, Amazon, and Wal-Mart. If the pot becomes unavailable, the Lodge Logic 6 quart is a good alternative.

How to Make It Completely Oven-Safe
There are two minor disadvantages of the Tramontina. First, you do need to season the edge. It will take an hour, so it’s not a huge issue, and it will prevent rust. Second, the label says it’s only oven safe to 400 degrees. In actual fact, it’s the plastic knob that causes the problem. You can choose one of two fixes: remove the knob completely (but good luck getting the hot lid off the pot), or go to the hardware store to buy a metal drawer knob and a shorter screw. I needed a 1-inch screw to replace the one the knob came with. Now you’re set for up to 500 degrees. You can also buy a stainless steel Le Creuset knob.

What’s It Good For?
A good cast iron Dutch oven can be used for many wondrous things. Here are just a few of them:
French onion soup (It calls for a 7 qt oven. I plan to halve the recipe instead.)
No-knead bread
Soup stock
Pot roast
Mac and cheese
Anything that cooks slowly
Keeping food warm

Cast iron retains its heat for a long time and heats more evenly, but it also heats more slowly than your typical cast household stock pot. That’s why it’s best for winter comfort foods, and not so good for summer saut├ęs. However, if you’re making 4th of July chili, this pot is your best friend.

I’m making the French onion soup this weekend, and then I’m thinking it might be time for another batch of chicken pot pie. Mmm, I can’t taste the deliciousness now.

Each day, we hear the dire reports that people have closed their wallets, retail sales are down, and stores are closing. Could it be that the problem isn’t negative retail sales growth, but excessive store growth? I tackle that topic in today’s That Makes Me Stabby.

Happy Times at Some Malls?
This Sunday I went to a local outdoor mall to meet a friend for coffee. I was surprised to see that it was packed at around 11 AM. I probably shouldn’t have been: it was about 75 degrees outside, the mall is well-landscaped, and it’s in an affluent area. Not one store was out of business and the restaurants were all packed. I didn’t see as many shopping bags as usual, but there were some.

That started me thinking: why are some areas seeing multiple store closures while others aren’t really seeing the pinch?

Too Many Years of Too Much Growth
My theory is that stores got too accustomed to year-over-year growth. They got used to people living beyond their means and buying anything the stores offered. The stores, in turn, decided they should open more locations to bring in more people to encourage continued sales growth. How many Starbuck’s can one street support? How many Macy’s can one area support? Apparently, not as many as the executives thought.

A slight wobble in sales growth is enough to send those over-built chains scrambling. A store that saw minimal growth from year to year in the past is now seeing sales drop sharply. Stores that were doing robust sales are seeing sales slow, but they’re probably still making sales.

Can Retail Sales Grow Forever?
My feeling? No, they can’t. The US population isn’t growing as quickly anymore, at least not among the segments with money. People’s incomes aren’t growing as fast, either. And frankly, we can’t continue to rely on rampant consumerism to be the backbone of the economy. I think stores need to be prepared for flat sales, or maybe even “negative growth.” If a store can survive that, then it’s a store that should be in that location. If three months of bad sales are enough to close a store, then it’s a store that shouldn’t be there in the first place.

I also heard, anecdotally, that some stores saw flat sales this past Christmas, but they had 50% less inventory. Some people would say that means they could have sold more stuff in a good year. I say that means they didn’t need all that stuff last year, either.

From my perspective, this recession will serve as a shakeout for the stores and production levels that weren’t necessary. It will hurt, but the strong will survive. Hopefully it will encourage manufacturers to produce an appropriate amount of goods, instead of using the “if we built it, they will buy it” method of production.

So, these calls for more buying, more buying, more buying make me very angry. People have stopped buying because they don’t need all this stuff, and they don’t need the stores that sell them. As I said, the shift to a less consumerist economy will hurt, but eventually we’ll find a new way to be. Maybe some of those mini-malls will be turned into parks or playgrounds. I’m not seeing that as a bad thing, even if the pundits do.

At the beginning of January, I set new financial goals for 2009. These goals aren’t quite as grand as our 2008 goals, but they’re still an important step toward our financial future. Though it’s only been a month, we’ve made some progress on several of them:

Goal 1: Buy a House
We haven’t bought a house yet, but we have started visiting open houses and received a loan estimate from a broker.

Goal 2: Pay Off That Little Debt
While we do actually have the money in the bank to pay off that little debt, we’re delaying on that for now. Instead we’re socking away money for our 2008 tax bill (sigh) and more money for our closing costs/down payment.

Goal 3: Boost Our Emergency Fund
Right now, all of our savings is for taxes. But we should have the tax money saved up fairly soon. I’ll know the total amount due just as soon as our various 1099s arrive so that we can actually fill out our taxes. We’re socking away about $2500 a month right now, so anything leftover after taxes will go toward an emergency fund, until it gets used for closing costs. Then we’ll start over saving money.

Goal 4: Increase Retirement Savings
This is on hold until the tax/closing costs/emergency fund issues are dealt with. I’m not concerned, though. I checked my year-end statement and learned that my savings did increase by $100, but only because I contributed $500!

Goal 5: Buy a New Car
I’ve got my options narrowed down, but the car comes after the house. No new debts until then!

Goal 6: Save for a Vacation
Also on hold. The house and the car and everything else are definitely bigger priorities. We did take one step towards accruing the miles, though. We upgraded our Amex so we now get more bonus miles than before. With this new card, we should have enough miles for two tickets to Australia by late 2010. If we don’t, the new card also gives us the option of paying with miles, which will at least reduce the cost of the tickets significantly.

It looks like we may have more goals than we can manage this year, but I’m still hopeful that we can pull them all off! How’s your progress on your financial goals? Tell me in the comments.

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