A coalition of progressive and populist Senators have reintroduced the Country-of-Origin Labeling (COOL) Online Act. Led by Illinois Sen. Tammy Baldwin (D), the bill mandates that online platforms conspicuously label “the country of origin of the product.” The goal is to influence U.S. consumers to “Buy American,” a seemingly inoffensive goal for senators to seek. In reality, the COOL Online Act is predicated on junk economics, undermines competition, lessens innovation and leaves consumers paying the difference.
There’s nothing wrong with “Buying American.” For many consumers, it’s a genuine expression of patriotism and national pride. For others, it’s about knowing that many U.S. goods come with a guarantee of great quality. Still, others want to buy local and help keep dollars in their communities by supporting small mom-and-pop retailers. All of these goals are noble and legitimate for individuals to make based on their personal values and preferences.
The problem arrives when the government starts putting its finger (in this case maybe a hand or two) on the scale. Congress’ job is to protect our free market system by allowing everyone to compete on a level playing field. When American companies compete for consumers with foreign counterparts, just like domestic competitors, it drives down costs and increases innovation, and that healthy competition empowers us all. The American economic system, much like our way of life generally, is at its foundation an optimistic one. We believe we can go up against the best of them and compete fairly. Why don’t our senators believe this?
This type of doom-and-gloom legislation from Sens. Baldwin, Vance and Hawley is the same type of failed Big Government, central-planning boondoggle that has cost Americans billions of their hard-earned dollars when enacted in other sectors of the economy. Think about airlines. Our government prevents U.S. airlines from ever having to compete domestically with other airlines from around the world. Just think how much different the service would be or how much less a cross country ticket would cost if airlines actually had to compete with each other for your business instead of treating you like their own personal ATM. Who knows, we might even get an inch or two more leg-room!
The same principles apply in areas as disparate as healthcare or infrastructure. Insurance companies don’t have to compete with each other across state lines giving them more free reign to charge what they can get out of you. President Biden’s signature infrastructure spending bill had a Buy American provision in it that will severely limit the number of companies competing to work on projects over the next decade. That means not enough people to complete jobs on time and skyrocketing costs. Do you think the senators who helped write that bill are going to cover that extra cost? Or do you think it’s going to be left to the taxpayer?
These not-so-COOL lawmakers are already trying to get out ahead of their bad idea, claiming that they are simply requiring online retailers to provide the same information that brick-and-mortar retailers are. While I have a lot of opinions about this lazy dichotomy between online and offline retail (I wrote a report about it last year), the reality is their claim is a false one. Brick-and-mortar sellers source goods that come pre-labelled with required country-of-origin information. That information is provided by the manufacturer, and the manufacturer is on the hook for providing the wrong information. What it seems Sen. Baldwin wants to do is make it easier for the government to go after particular types of businesses, not actually create parity amongst competitors in the market.
The final nail in the coffin for the unCOOL Act is that any violation of the bill would be enforced by the FTC. Reporting failures for other retailers currently resides with U.S. Customs and Border Protection. This legislation creates a competing enforcement regime that would be costly and onerous, especially considering how lawless this current FTC is behaving. The Chair of the FTC has been credibly accused of lying to Congress and mischaracterizing her professional credentials. Splitting enforcement and further empowering the FTC to kneecap fair competition is wrong.
The COOL Online Act is the worst type of legislative pandering. Senators want to wave the flag in our face and hope we will vote away our interests and values. “Buying American” shouldn’t mean that we are scared of healthy competition or want to give away new powers to federal regulators. “Buying American” should mean participating in a free market economy, confident in the truth that American businesses can compete and win on their own merits.