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National Security Should Not Be an Excuse for Protectionism

Posted By David Inserra On September 4, 2012 @ 11:14 am In Economics | Comments Disabled

The Alliance for American Manufacturing has been busy advocating the idea [1] that the U.S government needs to do more to promote domestic manufacturing, as it is critical to repairing and maintaining our critical infrastructure.

Maintaining critical infrastructure is important for homeland security and disaster response, but that does not mean we should just throw more federal money at the problem or subsidize an entire industry. Instead, we need to take a different approach [2] to infrastructure that better leverages the abilities of local and state governments, as well as private sector.

States are ideally situated to deal with transportation infrastructure. But the federal government tries to support this decentralized system by focusing power in Washington.

For example, the U.S. highway trust fund distributes funding disproportionately, leaving faster growing regions underfunded while slower growing regions are awash in cash. Transportation needs would be better met by giving states more flexibility and fair access to funds.

Similarly, in areas such as power infrastructure [3], the federal government is standing in the way of greater power generation and transmission. The federal government has deemed certain sources of power legitimate and others worthy of gross regulation, making expansion and modernization of power infrastructure difficult. Similarly, transmission infrastructure needs to be freed from red tape so power can be distributed efficiently and securely.

Improving the preparedness of our private sector and state governments requires that the federal government do less, not more [4]. The number of major disaster declarations has skyrocketed [5] in the past decade, especially for smaller disasters. If we want the states and private sector to be ready to help, they must be able to stand on their own. This ensures that the federal government is focused on the truly catastrophic events and is not stretched too thin.

To improve our manufacturing sector, the federal government should refrain from practices that select certain industries to be successful and create a general incentive for various other industries to move practices to other countries. A top-down approach in which government puts forth directives, regulates industries, taxes imports, and forces additional taxation on overseas corporations is a contribution to the problem, not a solution [6]. Instead, the federal government should work with the private sector and formulate approaches that do not systematically choose winners and losers but allow private industry to flourish within the U.S.

Additionally, Washington should continue to be a consumer of diverse goods on the global market and encourage policies that promote free trade [7]. Diversifying consumption in imported goods provides protection from specific geographic disasters. Like a diversified stock portfolio, being a consumer of diverse global goods promotes stability in the face of many circumstances.

Instead of thinly veiled protectionism [8], the U.S. should focus on private sector and local government solutions to our infrastructure needs.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/09/04/national-security-should-not-be-an-excuse-for-protectionism/

URLs in this post:

[1] advocating the idea: http://americanmanufacturing.org/homeland

[2] a different approach: http://www.heritage.org/research/reports/2012/04/one-year-later-lessons-from-recovery-after-the-great-eastern-japan-earthquake

[3] power infrastructure: http://www.heritage.org/research/reports/2010/08/meeting-america-s-energy-and-environmental-needs

[4] federal government do less, not more: http://blog.heritage.org/2010/12/02/forget-earmarks-fema-declarations-show-federalization-run-amok/?query=Forget+Earmarks+FEMA+Declarations+Show+Federalization+Run+Amok

[5] has skyrocketed: http://blog.heritage.org/2012/02/05/chart-of-the-week-obamas-abuse-of-fema-declarations/

[6] problem, not a solution: http://www.heritage.org/research/reports/2009/06/energy-cap-and-trade-threatens-american-prosperity

[7] free trade: http://www.heritage.org/research/reports/2011/10/global-trade-freedom-needs-a-boost

[8] thinly veiled protectionism: http://washingtonexaminer.com/protectionism-no-path-to-national-security/article/2506512

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