Trump's Buying and Hiring Mistake
President Donald Trump’s latest executive order calls on the U.S. to “Buy American and Hire American.” Like so many of Trump’s heroic declarations, this one may not amount to much. Yet even if it’s mere noise, its rhetoric and rationale are worth a moment’s thought.
The order has two parts -- one calling for a review of the H-1B visa program, to ensure that foreign workers in the U.S. don’t drive down wages or put Americans out of work, the other telling agencies to buy more domestically produced goods. It so happens that government policy in both areas could stand some improvement, but the basic idea guiding Trump’s approach is dangerously wrong: Economic interaction with the rest of the world isn’t bad for America; it’s good.
The H-1B visa program is the main way for U.S. companies to bring in skilled workers from abroad. The program is flawed, and as Trump rightly says, it’s been abused. But the goal shouldn’t be to reduce the inflow of skilled and needed foreigners; it should be to make sure that the U.S. admits as many workers as possible who genuinely meet that test. A smart immigration policy would aim to increase, not cut, the inflow of talented people.
This year’s H-1B quota of 85,000 was filled, as usual, within days. That number is almost certainly too low -- as any high-tech employer short of critical personnel will attest. Denying this scarce manpower to U.S. employers puts them at a competitive disadvantage; encourages them to move jobs abroad; and suppresses U.S. productivity, employment and living standards.
Trump’s thinking on “Buy American” is no smarter -- though again there’s a germ of truth. Officials point to a study by the Government Accountability Office that finds U.S. government procurement to be more open to foreign suppliers than other governments are to U.S. companies. Trump’s mistake is to see raising U.S. barriers to trade as the answer. Far better to use the leverage of the U.S. market to force down barriers abroad.
Many countries, including the U.S., are already bound by World Trade Organization rules to open government procurement to foreign suppliers. But the system allows exceptions, making it complex and open to manipulation. (That’s partly because the U.S. wanted it that way: A “Buy America” law contrary to the spirit of the WTO agreement has been on the books since 1933.) The U.S. should indeed strive to level the playing field -- by strengthening the existing rules and seeing that they are enforced. Besides which, a “Buy American” decree would make delivering government services more expensive, leaving U.S. taxpayers on the hook for the added cost.
This new executive order may well end up not mattering -- it could be just a bunch more words without supporting action. But if there is to be action, it should not be to hide from the world, but to help the U.S. prosper through competition.
--Editors: Clive Crook, Michael Newman.
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at email@example.com .