Virginia posts about the stimulus package:

Now if you’re going to lavish tax money on infrastructure projects, I’ll concede it makes good sense to use trained construction workers, not random day laborers. But politically it’s still a union payoff. And there’s no public-spirited reason to overpay for materials (or, for that matter, for labor).

But the cost to taxpayers isn’t the biggest problem with the bill’s protectionism. A trade war threatens to exacerbate the single largest danger in the worldwide downturn: that a serious contraction in China will lead to domestic unrest and that that the Chinese government will engage in military aggression to focus frustration outward.

China’s precarious balance of prosperity and unrest is a relatively new problem, so I think most people can be forgiven for not realizing it needs to be factored in.

The reality that favoring American steelworkers means screwing over equally American factory workers further down the supply chain is, however, not new. Virginia cites this WaPo article:

There are early signs that nations are putting up trade barriers to protect domestic companies as the global downturn worsens. Despite promises offered during a major economic summit in November to refrain from taking such measures, countries from France to Indonesia have done so.

That, some argue, may be reason enough for the United States to follow suit. But in recent decades, the United States has stood out as the global champion of free trade; some analysts fear a move by Congress to restrict foreign companies from stimulus spending would mark an important shift away from that philosophy.

Supporters say expanded Buy American provisions could help ensure that the treasure trove of government contracts for new highways, schools, bridges and energy grids creates jobs at home instead of abroad. They note that much of the tax rebate checks that went out last year to stimulate the economy went to Chinese-made televisions and Korean-made refrigerators.

Well, yes, but the entire retail price didn’t go directly to the PRC and ROK. It also paid for the salespeople working the floor, the truckers who got the goods from port to warehouse, and the operations people who took care of the planning, ordering, and logistics here in the States. And forcing manufacturers to use more expensive materials means they pass the increases along to customers–a.k.a. the American consumers we’re supposed to be helping here.

“What we’re already seeing is that demand is going down, but imports of Chinese finished steel is going up because they are subsidizing it,” said Thomas Gibson, president of the industry-funded American Iron and Steel Institute. “What we’re saying is that this is a stimulus package to promote American jobs. We ought to maximize every dollar in that bill toward that end. If you were building a bridge in West Virginia, you wouldn’t bring in German workers to do it. Materials should be no different.”

That final comparison reveals itself as inane the moment you try to generalize away from West Virginia and German laborers (mmmmm…German laborers). Imported labor is used all the time, around the world, when local labor is too scarce or costly. The first part has a certain emotional resonance, but the tit-for-tat policies Gibson is using it to push for don’t seem to me to make much sense. The best hope that China will be convinced to loosen controls and distortionist government meddling is the increased flow of ideas and people, as well as goods, that comes with increasing trade.