It worked great in '29

This week the Manteca City Council will debate it's own version of "Buy American" protectionism. Under consideration is a new policy that cut bidders for government projects "a break" if they are "local."

I know that some consider this a "no brainer" and if that's the case, you might be surprised if you do some research on what economists say (and most importantly, understand the reasons). Most economists pretty much agree that any attempt at protectionism, which is the proposed Manteca policy, will actually increase unemployment, lower wages, cost more in taxes -- make us poorer in any way you can measure it.

I know this isn't a "popular" idea and I'm sure some are ready to boycott companies that "outsource" and complain bitterly: But the economics are clear, if we try to give special breaks to "local" people and "keep money local" we are chasing a false idea.

Well don't just take my word for it. If you have some time, you can listen to this talk and read more from two very smart economists. If there are any questions feel free to ask.

The Manteca plan sounds harmless enough. The "local guy" is allowed to try to match the lower bid of some "outsider" under some circumstances. Well unintended consequences abound! If you haven't listened to the podcast just think of what will happen when the guy who won the contract by entering the low bid suddenly has his contract ripped away from him? After all that work to prepare a bid? How likely will he be to jump into the next contract the city offers? The result? Only the "local favored guy" bids and knowing there's likely to be less competition and he can later snatch away the contract even if his bid is too high; his incentive will be to enter a high bid (rip off the taxpayer). And this is just one possible consequence. There are many others we don't have to go into.

The U.S. government tried this kind of policy very similar to what Manteca is considering to "help the economy" in the '30's. You know, keep the jobs here, keep out those foreign competitors, what could possibly go wrong? The result was something we now call "The Great Depression" that lasted more than a decade.

Manteca should keep the current bid policy and not enter into the dangerous realm of protectionism.

(The issue will be discussed Tuesday at 7 pm at city hall)