I'll leave the politics to others for now, though trying to outbid Democrats for the love of union workers seems like a losing strategy. The protectionist policy behind Buchanan's argument is what's really at fault. Buchanan would pump billions in taxpayer dollars in failing companies, bailing them out for the decades of bad decisions that have led to their decline. American consumers have turned away from "American" cars because they are more expensive, and less reliable, than comparable "foreign" cars. I use quotes because I have a hard times telling the difference between a Ford assembled in Mexico and a Honda made in the U.S.A. Which is more American?And to let the auto industry die is to write America out of much of the economic future of the planet.
In a good year, like 2005, Americans buy more than 17 million new cars, and West Europeans as many. Tens of millions in Eastern Europe, Russia, China, India and Southeast Asia are now moving into the middle class each year. These folks will all need or want one or two family cars. If we let the U.S. auto industry die, that immense and burgeoning market will be lost forever to America, and ceded to Asia.
"Who cares?" comes the free-traders' reply. Japanese and Koreans are setting up factories here. They can pick up the slack.
But that means Americans will work for and depend on foreign companies for a necessity of our national life as vital as the imported oil and gas on which our cars and trucks operate. All the profits of the mighty automobile industry in America will be sent abroad.
If taxpayers refuse to bail out the Big Three, the U.S. auto industry won't die. It will change significantly. Ford or GM might even be bought up by a foreign company, just as Daimler did to Chrysler earlier this decade. But that new owner won't start shipping immense profits overseas. It will take on the problems of the company it buys. Some labor agreements might get restructured, bringing pay and pensions back to competitive levels. Some of that pension obligation might even get shifted to taxpayers, but that's a problem with our pension system, not the auto industry. None of these details represents a decent reason to protect poorly run companies from feeling the consequences of their bad decisions.
Bailing out the Big Three is subsidizing failure. And you only subsidize something when you want more of it.
Right on. Protectionism is NOT free market capitalism. We need more free market capitalism, not less.
ReplyDeleteSaw this linked to on Cafe Hayek.
ReplyDeleteNice post, but YOUR FONT COLOUR SUCKS. ITS UNREADABLE. If you want to get read more, make sure people can read. I had to highlight it to see it. Use high contrast colours - its a pretty standard web usability practice...
Thanks. I hope we've addressed this issue, and that the posts are more readable to everyone.
ReplyDeleteI'm not sure what it looked like before but as of today, the font is easily readable.
ReplyDeleteWhy is it that so many who oppose protectionism in the auto industry support protectionism in their own communities?
ReplyDeleteThe founder's supported protectionism of American jobs and industry. "Free trade" was never meant to be free at all. In that context it meant companies being "free" to import and export products and merchandise. Not that they would enter this country tariff free. That actually was the initial way the federal government was to get most of it's revenue to it's functions. Through excises and tariffs - not taxing American workers at all directly. They felt that if an American wanted a foreign product THEY SHOULD HAVE TO PAY MORE FOR IT AS AN IMPORT. Those that were weathly and willing to pay the import tax could do so.
ReplyDeleteGlobalism and it's agendas is actually responsible for killing our industrial base. Not the unions, although years ago there was so much fraud and graft in the pensions that they were a big problem. I worked for one of the top labor attorneys in the country - the labor counsel for Walmart in the 70's.
The "trickle down" effect is not working. That is clear also. Executive greed is at unprecedented levels. So don't blame it all on the unions. The fact that or infrastructure and these foreign global factories are here also using up our land is already becoming a problem, and few countries allow foreign ownership and certainly the founder's did not intend for that to be the case in order to protect "their posterity." Government is way overinvolved in many things, but not regulating foreign commerce as it should, and taxing those imports in direct competition with American industry.
It works. It's just that greed, rather than "nationalism" seems to be the buzzword now in the economic community and those on the Hill. And we are now paying the price for it.