By on February 5, 2009

Ever since bailout measures for the auto industry were first mooted, free market detractors whispered “WTO.” Nobody took it seriously. True, according to the World Trade Organization’s rules, direct subsidies are not allowed. But it’s equally important to note that the 153-member quango has never put a single issue to a vote since its birth in 1995. Consensus governance means that as long as nobody complains, and especially, as long as everybody plays the same game, the WTO hangs fire on principle. Auto industry loans? They’re all doing it. Still, there is a line a WTO member mustn’t cross. And America almost crossed it.

Recent amendments to Uncle Sugar’s near-as-dammit trillion dollar economic stimulus package would require US firms to use local steel and other components in state-funded projects. The provision kicked sand in the face of the WTO’s raison d’être: the most favored nation (MFN) rule.

Under the terms of the MFN rule, a WTO member must apply the same conditions on all trade with other WTO members. The provision also applies to trade within and without a given nation. “Imported and locally-produced goods should be treated equally (at least after the foreign goods have entered the market).” To do otherwise constitutes blatant protectionism.

Similar buy local protectionist measures have been adopted or considered in Argentina, China, Indonesia, Ecuador, India, Russia (re: imported used cars) and Vietnam. All seven WTO member nations have landed on a WTO ­surveillance list.

The Guardian writes that the European Union (EU) is pissed with the “buy American” bailout provision. They’ve threatened legal action and retaliatory measures against the US if the Obama administration enshrines this clause in its multibillion-dollar economic stimulus package. Brussels said it could take the US to the World Trade Organization for breaching treaty rules.

The warning came just a day after Joaquín Almunia, EU economic and monetary affairs commissioner, pointed to “clearly protectionist measures” emanating from Washington. The EU ambassador to Washington has expressed similar concerns. A spokesman for Lady Ashton, EU trade commissioner, said: “If the provisions that are finally passed by the US Senate and approved by President Obama infringe the provisions of the GPA [general procurement agreement], to which the US is a signatory, then this is something we will have to consider taking them to the WTO over.”

Compared to previous hints and “concerns,” this amounts to a barrage of warning shots. Amid fears that the US and other countries could trigger a disastrous 1930s-style “Great Depression” trade war through protectionist blocks on trade, the European commission highlighted similar moves in Europe.

A French €10b aid program requires firms to source components solely from France, keep only the French plants open and scrap plans to “de-localize” jobs to elsewhere in the EU. Neelie Kroes, EU competition commissioner, will warn French ministers in talks in Brussels that state aid must not only comply with competition rules but also with EU laws on freedom of movement and capital. “They have to realize that once they start down that protectionist path it’s a descent into chaos,” her aides said.

On Tuesday, U.S. President Barack Obama signaled fear that Buy American provisions—supported by Democrats in steel-producing and economically distressed states—would trigger a trade war at a time when the global economy is in dire straits.

On Wednesday, lawmakers voted to soften the controversial “Buy American” provisions in the proposed U.S. economic stimulus package. The amendment, approved by the Senate, requires the Buy American provisions be “applied in a manner consistent with U.S. obligations under international agreements.” Which is like saying you can burgle a house as long as you don’t break the law.

The bottom line for carmakers: even if America’s avoided a trade war (for now), they can’t win.

If the feds restrict the bailout buffet to The Big 2.8 and domestic production, they run the risk of retaliatory measures from neighbors—and markets—around the globe.

And don’t forget it’s a small world after all. In the run-up to the meltdown, Motown’s automaker practically demanded that its suppliers outsource abroad. By now, keeping the suppliers’ share of the domestics’ business within U.S. borders will be more about spin than compliance. Especially if those suppliers receive their requested $20.5b bailout.

On the other hand, if the feds don’t limit their largess to domestic producers, they run the very real risk of alienating whatever voter and/or union support exists for the pork barrel parade. A billion dollars of TARP money for Brazil? Esqueça-se.

On a practical basis, a truly “fair” bailout would put the domestics at a disadvantage.

Think of it this way: the existing Chrysler loans are equivalent to a current subsidy of $10k per vehicle sold. If, instead, you offered American car buyers $10k off a car, they wouldn’t buy a Chrysler. Clearly, you couldn’t offer the discount certificate just to Chrysler buyers. What kind of country would that be? Welcome to Bailout Nation.

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63 Comments on “Editorial: Bailout Watch 374: Trade War Looms Large in Bailout Nation...”


  • avatar
    Brett Woods

    Yea, that ‘follow existing trade agreements’ clause was a good one. Let’s not go nuts here!

  • avatar
    Matt51

    Does anyone else get tired of prissy Europeans lecturing Americans? I say lets trade with Asia, and go ahead and let the Euros launch a trade war. The French can subsidize their car industry, but the US cannot? I think the UK is tired of all the rules the EU imposes on them. Maybe time for a revolt here.

  • avatar
    crackers

    I believe in fair trade between partners with similar trade practices, laws, environmental conditions and living standards. Anything else, like trade with China, is a serious problem that does not benefit society as a whole but only small sections of society.

  • avatar
    KatiePuckrik

    I’m actually looking forward to the EU and the US going to war over this one. Because I’d like to know that if the EU imposed sanctions against US exports and vice versa, then what would be the effect? I can’t think of anything that the US exports, that you can’t get in the EU. Staples like food won’t be an issue (The UK, France and The Netherlands are HUGE farming countries), oil comes from the middle east and North Sea, mainly and consumer goods on sale in the shops mostly come from EU factories. Likewise, when I was in the US, most of the stuff in US shops were made in the US.

    Apart from a few annoyed rich, american folk who can’t get their supply of Foie Gras and truffles, there will be little impact.

    Detroit won’t even see much benefit from it as the amount of cars which comes direct from Europe (Land Rovers, Jaguars, Volvos, SAABs, some Hondas a few VW’s and some super cars), will be neglible.

    Personally, I buy British all the time. I don’t believe in globalisation.

  • avatar
    dgduris

    Katie,

    Our Foie Gras comes from the Hudson Valley (New York State) and from Sonoma County (California). We’ll forgo the truffles.

  • avatar
    magoo

    “It’s blatant protectionism, and it was blatant protectionism that caused the Great Depression, we are being reminded.”

    Protectionism was not the cause the Great Depression. Measures such as the Smoot-Hawley Tariff Act were reactions to the depression.

    It can be reasonably arguably that such measures deepened or prolonged the economic misery, but they could not have caused it. The timeline is backward for one thing. It would be rather like claiming the current problem was caused by the collapse of auto sales.

    The interesting thing about the Great Depression: To this day, reputable economists of various schools still debate its actual cause. So when commentators say the Depression was caused by X or Y they are not making a statement of academic consensus, let alone established fact.

  • avatar
    Robstar

    Isn’t the US one of the primary processor (AMD/Intel) makers? I think the fabs are elsewhere though.

  • avatar
    tom

    A trade war would bring down the global economy, make no mistake there.

    In the short term, the US would profit of course, because they’re a net-importing nation. However, this also means that they’re exporting not goods but money. That’s what the US economy is based on. Without that, get ready for massive inflation and a devaluation of the Dollar.

    Also, keep in mind that it’s not just Europe vs. USA. The Asian countries are protesting the buy American clause as well. Such a policy would isolate the US.

    I certainly don’t want to see this happen, as that would drag every country down together with the US.

  • avatar
    AKM

    Personally, I buy British all the time. I don’t believe in globalisation.

    Your X-type is based on a Ford Mondeo platform, that was originally developed in Germany ( I think), by an American company, with components from all over the world. Jaguar now belongs to an Indian company.

    Oh, and the British Empire ushered the first modern era of globalization…

  • avatar
    gsp

    The USA must strike a balance here. Obama was right to tone things down. Remember it was mostly the USA that caused this mess.

    The USA also has a history of being a bully on trade issues. (eg. softwood lumber, beef, potatoes to give examples of trade with Canada alone).

    It amazes me to read about “average” Americans touting protectionism when their trade with the world (partly in exchange for paper of dubious value) has created wealth way beyond the imagination of any 18th or 19th century American. Current problems must be put into perspective. Americans enjoy an envious standard of living. Protectionism is a distraction from the hard work that will be required to correct these problems.

    Every country has flaws. As a Canadian I will tell you two of ours. One is that we think that we are more environmentally responsible than most countries when in fact we have one of the worst records of any country in the world. We also think that we have perfect health care. Our health care is good but it has serious flaws brought on by the fact that we can’t admit to ourselves that it is in reality rationed health care.

    Without bashing Americans here, I can say that a serious shift of thinking/understanding by ordinary Americans is required. In this sense I hope Obama leads. The ruling class don’t seem to want to get their hands dirty by speaking some ugly truths. There is no free lunch this time.

  • avatar
    rpol35

    Matt51 – I do and thanks for your comment as I entirely agree. My response is “So What?”

    Every nation is going to favor its own industries when times are as extremely difficult as they are now. And I don’t blame any of them, least of all the U.S., for trying to incent domestic industries that employ its citizens. That’s the primary goal of the $825 BB incentive package working its way through the Senate right now.

    We can worry about the WTO when some sembelance of economic balance returns.

  • avatar
    no_slushbox

    The EU will be lucky to survive this economic crisis.

    The rich EU countries are going to get very concerned about their high wage, easily exportable assembly jobs going to the poor EU countries.

    The poor EU countries are not going to be able to afford to borrow and repay their debt in Euros.

    And trade with the EU doesn’t matter much anyway:

    http://www.census.gov/foreign-trade/top/dst/current/balance.html

    dgduris:

    We do make them if anyone want’s them.

    http://www.chow.com/stories/10352

    KatiePuckrik:

    You mentioned European cars in order of least importance. Jaguar and Land Rover are non-entities in the US. The most popular SAAB is built in Indiana. No current US Hondas are built in Europe (maybe an Acura, but nobody buys those anyway). The Germans are the only auto exporters.

    “Personally, I buy British all the time. I don’t believe in globalisation.”

    Come on, as others have said, not really. The highest volume truly British car is the Lynx. Morgan is British owned, designed and assembled, with German drivetrains. So, you can buy a Morgan or a Lynx and be buying British, not much else counts. Actually, maybe an AC, I heard they have come back as a cottage manufacturer.

    Your Jag is a product of India, which, I regret to inform you, is no longer part of the empire.

    gsp:

    Thank you for correcting Canada’s environmental record. Nobody pushes asbestos on poor countries like Cananda. It is the big money export that Cananda does not like to mention, but does like to profit from. Cananda’s court fight is also why the US does not have a complete ban on the product.

  • avatar

    rpol35 :

    I never cease to be amazed by people who are willing to sacrifice principle on the altar of expediency.

    The fact that they’re willing to admit it in public is… well… awesome.

  • avatar
    mikey

    As a Canadian,the last thing in the world we need is a pissing contest with America.I agree 100% with crackers,we all need to adhere to the same standards.

    @GSP rationed health care?well put.Our health care is woderfull,unless you get sick or you break a leg or need a bypass. God forbid your doctor should retire.Or worse yet,you live outside of a major city.OK its a car site time, to shutup.

  • avatar
    PeteMoran

    So US infrastructure business isn’t smart enough to work out that if they’re given a bridge contract (for arguments sake) that they ought to buy US steel or that no-one would notice if they didn’t?

    Better put it right there in the Bill because US business “leaders” are prize dummies don’t you know… That’s why we’re all in this mess with you.

  • avatar
    akear

    Things have gotten so bad maybe a little protectionism would be good. The problem is the US produces so little now. Ok, we are not as bad as the UK, but we are getting there.

  • avatar
    KatiePuckrik

    AKM,

    Unlike the Ford Mondeo (Which is built in Ghenk, Belgium), the X-Type was built in the UK, supporting UK jobs (including my own) and made with British Steel and British parts. Buying British doesn’t necessarily mean 100%. The most patriotic car ‘merkins can buy is the Crown Victoria and that assembled in Canada. Pretty much the same reason I bought my Yaris, too. It may have been built in France, but the majority of the parts came from the UK (one of which, I built). I could have bought a Honda Jazz, but that supported very few (if any) British jobs.

    P.S The British may have ushered in globalisation, but that doesn’t mean I should like the idea. The US government invaded Iraq, but I could show you many ‘merkins who didn’t like the idea…..

  • avatar
    mikey

    Could pete or katie explain how it is that the US
    is somehow responsible for this mess?I’m not American either,but I can’t justify pointing the finger south,and blaming the whole mess on them.

  • avatar
    bunkie

    The silliness of this is that, as a result of the stimulus, foreign-owned companies are going to invest in plants here in the US. That’s one of the main resons that Obama warned about protectionism. There are, as Katie pointed out, very, very few modern products that do not have components made in multiple countries.

    The real issue with much of international trade is the notion of hidden costs. Western countries with their environmental protection and worker protection laws and safety standards have imposed a higher cost structure on manufacturers. Nations such as China don’t bear these costs. One can look at this two ways, one being that we pay an excessive cost or that China effectively cheats, pushing the costs into the future and on to the backs of others. Sorting out these issues is incredibly tricky.

  • avatar
    KatiePuckrik

    no_slushbox

    You mentioned that the cars which come to the US from the EU is practically nothing and won’t affect the US. Well, if people had bothered to read my comment properly, they’d have seen, that was my point!

    I also forgot to put “Mini” in that list.

    I don’t just “buy british” when it comes to cars (i.e stuff built in the UK), I also apply that principle to other stuff (i.e toothpaste, foods, etc).

  • avatar
    BuzzDog

    @KatiePuckrik: Likewise, when I was in the US, most of the stuff in US shops were made in the US.

    I’m not sure where you shopped, Katie, but as a lifelong resident of the U.S. living in middle of the country, I find that – apart from food and larger durable goods (appliances and such) – most consumer goods and textiles are made in Asia, and in particular China. I have a closet full of suits and dress shirts with British-sounding labels (Austin Reed, Burberry…and yes, I bought them at a reputable retailer), but most have labels stating they were made in Taiwan and Thailand.

    The “China syndrome” leads us down another path that we have traveled many times, and we probably wouldn’t benefit from making that trip once again. There are, of course, two sides to this issue: While there is no doubt that these inexpensive imports have gutted the United States’ textile and manufacturing industries, some point to evidence that the resulting lower prices have kept inflation in check. Which leads one to believe that economic markets tend to behave and react to stimuli much like living organisms.

  • avatar
    tom

    “Could pete or katie explain how it is that the US
    is somehow responsible for this mess?”

    Well, I’m neither Katie nor Pete, and I don’t like to point fingers either. Everybody participated in this American credit default swap scam.

    However, the underlying reason was a negative savings rate of the average US citizen. Ususally, in a healthy economy, the average savings rate it around 10%. In the US it has been below zero for a long time, which means that people have been spending money they didn’t have…ON AVERAGE mind you.
    This inevitably leads to a big bubble that has to burst at some point…which it just did.

    However, I’m also not the one to argue with moral obligation. I mean we all know that when it comes to money, morale doesn’t count.

    However, protectionist measure will definitely hurt the US economy. As I’ve said before, it’s just asking for the Dollar bubble to burst. Plus, even in a best case scenario, the effects are minimal.
    Let’s say you want to build bridges. Then usually, the government has the obligation to get the cheapest steel available, because they’re spending your tax Dollars after all and also in order to prevent corruption.
    With this Buy American clause, it’s no longer about saving money. So while you might creat new jobs in the steel industry, you crate less jobs in construction because you can build less bridges with the same amount of money.

    If other countries react to this, then even though the US doesn’t export as much as itimports, jobs would be lost and these would soon outnumber those created by the buy American clause (which as I explained aren’t even that many).

    And that’s all without the collapse of the Dollar which would come about quickly, should a full scale trade war break out.

  • avatar
    tom

    @Katie

    It’s one thing if you as a consumer make the conscious decision to buy British/American/etc.

    It means that you are willing to pay the extra price for domestic production. Even though I personally believe this to be ultimately harmful to the economy, it’s your right to do so.

    However, it becomes problematic when the government makes that decision for you.

  • avatar
    cdotson

    gsp:

    Never underestimate the idiocy or short-sightedness of “average Americans.” I generally agree with your apparently unfavorable attitude toward protectionism but “perspective” is something sorely lacking among average Americans. That is in fact why websites such as TTAC exist: to provide perspective (said with the aristocratic emphasis of Ego in Ratatouille).

    Protectionism seems to have been a key plank in generally populist platforms since before the Great Depression. It is one of the reasons that Populism irritates me as it heavily favors measures which incite individuals least capable of making reason-based decisions and implements them, long-term and unintended consequences be damned.

  • avatar
    KatiePuckrik

    @Mikey,

    “Could pete or katie explain how it is that the US
    is somehow responsible for this mess?”

    Why?

    Where in my posts did I blame the US for these problems?

  • avatar
    PeteMoran

    @ Big Mikey

    I endorse Tom’s comments.

  • avatar
    dwford

    “The USA also has a history of being a bully on trade issues. (eg. softwood lumber, beef, potatoes to give examples of trade with Canada alone).”

    On the contrary. The US is the biggest patsy in the world on trade. We let everything in, yet don’t demand equal access to foreign markets. Foreign governments have all kinds of trade barriers on US goods, all kinds of subsidies.

    I can’t believe we are sitting on our hands waiting for the Chinese cars to arrive, while the Chinese restrict our companies’ ownership in their Chinese subsidiaries and prevent US auto exports to China. We all know there will come a time when China repatriates the ownership stakes our companies have in their Chinese arms, and our government will do nothing about it.

  • avatar
    rpol35

    Robert:

    It has nothing to do with sacrificing principles
    and everything to do with trying to put people back to work!

    And I certainly don’t see any “expediency” resulting in an attempt to resolve a financial crisis by incenting domestic industry. This is going to be a long drawn out affair and anything that can be done to get people back to work, regardless of where they live, will hopefully have value.

  • avatar
    Robstar

    About a year ago, I was in Katie’s shoes, and I went to a shoe store to buy shoes “MADE IN USA” for my wife.

    I found _one_ pair in a rather large store. I asked the clerk if they had any more shoes that were “MADE IN USA” and the clerk told me she didn’t know they had _ANY_ shoes “MADE IN USA”.

    So….if you have 0 choices, what do you buy?

    I was very very close to 0 choices in that case — if I had gone to a smaller store, I’m sure my choices would have been 0.

    And it’s not just shoes, but how about TV’s? What tv is actually completely made in the USA? Clothes? Toys?

  • avatar
    no_slushbox

    Tariffs, unfair trade practices and closed markets have made China an economic powerhouse, maybe it is time that the US and EU try the same strategy. But only with respect to China.

    The US, EU and Japan should become much closer trading partners.

    As countries that don’t pay labor $1 and hour and that don’t dump raw sewage and indiscriminate chemicals into the nearest water supplies, and that do generally allow for the free flow of people and capital, the US, EU and Japan could actually manage to have fair trade. Not one-directional “free” trade.

    High paying jobs doing simple tasks are dead. Sorry UAW.

    But that doesn’t mean we need to have massive trade imbalances importing poorly regulated, dangerous Chinese goods.

    There’s nothing a Chinese peasant can do that a robot or other automated machine, designed by American, European or Japanese engineers, and maintained by American, European or Japanese technicians, cannot do better.

  • avatar
    psarhjinian

    The US is the biggest patsy in the world on trade.

    I think that depends on who the other party is. If it’s an effective client state like Canada or Mexico or most of Latin America, the US will apply the screws. If it’s Cuba, well, you know. If it’s China, Japan, Russia or the EU (where the US doesn’t have weight to throw around) this is very much not the case.

    You’ll have to forgive me and my fellow Canadians if we seem bitter about the US’ attitudes about trade: we’ve been conditioned to feel that, because we’re a higher-cost producer, we’ve suffered from a drain of talent and native industry, an influx of cheap goods (the Walmartization of Canada would be much harder without NAFTA) and general abuse on trade conflicts where the US has slapped down tarrifs and subsequently ignored WTO judgements.

    The US is a patsy when it comes to China, true. So is the rest of the world. We (the industrialized West) spent the last ten years treating China like the new-age Klondike and ignoring the problems this would eventually create.

  • avatar
    PeteMoran

    @ no_slushy

    There’s nothing a Chinese peasant can do that a robot or other automated machine, designed by American, European or Japanese engineers, and maintained by American, European or Japanese technicians, cannot do better.

    Yes there is unfortunately. How would you pay for all the energy such robots use and what about Cyberdyne’s Skynet?

  • avatar
    psarhjinian

    Your Jag is a product of India, which, I regret to inform you, is no longer part of the empire.

    Katie is correct. The Jaguar is made in Britain using a lot of British content (so is the Civic hatch, I think). I don’t have an issue with this, and neither should anyone unless one subscribes to the “Profits go to ______” logical fallacy.

    Until Tata is assembling Jaguars in India from Indian-sourced parts, it’s still a British car.

    And yes, by this logic the Impala, Corolla, Civic sedan, Crown Vic, Flex, 300/Charger/Challenger and Caravan are Canadian cars, the degree of which depends upon their contents’ country of origin. Were I to buy one of these cars, the bulk of every dollar in the purchase pays a worker or supplier, and only a few cents feed back as profit to some suit-ridden office in a heathen land.

  • avatar
    bluecon

    The real problem is that there is so much taxes and regulation only a fool would invest money in starting an industry in Canada or the USA. Much better and easier ways to make money than kissing the Bureacrats and unions butts.

  • avatar
    no_slushbox

    PeteMoran:

    Robots are most likely more energy efficient than people.

    The US military is doing things that I know of with robots and unmanned technology that are incredibly impressive yet scary. And that is the stuff I know of.

    Increasing the automation of manufacturing and services won’t be the tipping point to Terminator/iRobot, etc., not that something else might be.

    psarhjinian:

    Ownership matters. It shouldn’t be overrated or underrated, but it matters. If you feel that the US bosses Canada around it may be because the US owns many of the companies operating there.

    And while you’re at it, will you stop forcing your asbestos on every poor country that you can.

    I doubt you support that policy, but Canada is hardly the victim/force of good in the world that it likes to pretend to be.

  • avatar
    dilbert

    Protectionism is for a nation that can’t compete and have given up trying. And I’m honestly taken by surprise that America is leaning that way, it’s just not us.

    Generally when I think protectionist, EU countries come to mind, France in particular wants everyone to play “fair”. While that sounds good, it also happens that fair in their terms tend to benefit them. In any case, they are really trying to enforce equal outcome rather than equal opportunity. Which is also why they got rolled in wars.

  • avatar
    John Horner

    Of course the world is upset at the notion of Buy American rules. The US has been running a massive trade deficit for years now. Europe and Japan were lifted out of the throes of WWII by exporting to the US (while at the same time aggressively protecting their home industries). Asia’s “tigers” developed into modern societies by exporting to the US, and protecting their home industries.

    Today China is developing at a rapid clip by exporting to the US and protecting its home industries. China is welcome to come to the US, buy a company and then export the whole operation back to the mother land. However, no US company is allowed to buy 100% of a Chinese company, let alone buy it and strip it. If you want to sell in China, you have to set up a joint venture and build the stuff there for the most part. Oh, and don’t even think about trying to take your profits back home if it works out.

    I, like many, am tired of the US’ drop-our-pants approach to promoting free trade.

  • avatar

    Much of the so-called stimulus plan is going to be spent at the state and local level. The WTO has no power over state and local governments mandating domestic and local sourcing.

  • avatar

    Were I to buy one of these cars, the bulk of every dollar in the purchase pays a worker or supplier, and only a few cents feed back as profit to some suit-ridden office in a heathen land.

    In terms of the cost of building a car in North America, the #1 component is components, the cost of parts and subassemblies. Labor’s way down on the list. After parts comes the cost of government regulations like safety and emissions plus the cost of product liability testing, insurance and litigation.

    At the same time, though, this doesn’t include the cost of designing and developing a car, which is $1-$2 billion plus more if there are new engines and transmissions (or hybrid drives) needed.

    So you also have to consider where the so-called value added work is being done. It’s not just where the profits flow, or where the production facilities are, it’s where the highest paid employees are working.

  • avatar
    psarhjinian

    Ownership matters. It shouldn’t be overrated or underrated, but it matters. If you feel that the US bosses Canada around it may be because the US owns many of the companies operating there.

    That’s accurate, but it doesn’t change my point contradicting the claim the the US is a patsy. It isn’t, it’s a bully that picks on those weaker than itself. This is why talking to someone from China or the EU about American trade relations will net you a very different response than, say, a Canadian or Mexican. Or a Cuban, for sure.

    That said, I don’t believe that ownership matters as much as people like to think. It certainly doesn’t matter when you’re dealing with a multinational: there’s nothing significantly inherently “American” about IBM or GE, inherently German about Siemens, or inherently Japanese about Sony: the marketing, product development, employment and resource-sourcing is so diverse, and so multifaceted that other than where the head guys sit, it’s hardly relevant.

    The same should apply to automakers: what, precisely, makes a Chevy Aveo or Impala American? An Opel Insignia? A Holden Commodore?

    And while you’re at it, will you stop forcing your asbestos on every poor country that you can.

    Yeah, I know about that. It has everything to do with Quebec (“Canada’s Bailout Province”) and, quite frankly, I’m ashamed by it.

  • avatar
    gsp


    Ownership matters. It shouldn’t be overrated or underrated, but it matters. If you feel that the US bosses Canada around it may be because the US owns many of the companies operating there.

    Ownership in a country other than ones own is based on a trade surplus or deficit. On the balance, the US is owning less and less of foreign assets… in the words of Warren Buffett, “the rest of the world owns $3 trillion more of us than we own of them.” This number is growing every year.

    Canada on the other hand has a trade surplus with the world ($50 billion yearly) and with the USA($6 billion yearly.) The conclusions of these facts should be obvious to any reader.

    Further, we own oil. A lot of it. Oil and natural resources are going to make Canada rich in the 21st Century. In the USA if a person or corporation owns land they own the rights to the oil and resources below that land. In Canada (as in most of the rest of the world) owning land does not give you the right to the resources below. Foreign corporations find it harder to “boss” governments around under this system. Now, you have Iraq as an example of another system of obtaining resources but that is another story.

    Regarding the asbetos, most informed Canadains are ashamed of it and make no excuses. It most certainly is an instance of Quebec getting its way.

  • avatar
    no_slushbox

    psarhjinian and gsp:

    You need to get together and decide whether you are being had by the US or the other way around.

    psarhjinian:

    Cuban sanctions are something most knowledgeable people in the States are ashamed of, on both sides of the aisle, but unfortunately Flordia gets its way on that.

    Mexico is a very complex situation where a corrupt, horrible right wing government stays in power by sending poor, would be dissenters across the border, just to send remittances to back to Mexico to support that corrupt, horrible right wing government.

    It keeps Mexico from evolving to be a truly democratic country and undermines the wages of US workers. But the rich in Mexico stay in power and the rich in the US get cheap labor.

  • avatar

    Good article.

    Protectionism appeals to people at a visceral level, well below basic economics. And it may well benefit a country, for a while. But the point is everyone loses in the end.

    A man on the telly the other day summed it up. If limiting where you can buy stuff is such a good idea, why stop at the country level? Only buy from your state, or your town. Or your street. Carry on like that and we will back to the 1700s.

    cheers

    Malcolm

  • avatar
    unseensightz

    Doesn’t it make sense that if you keep American corporations in America, along with all of their manufacturing and any others jobs incurred by the corporation in America, then the money will just continue to cycle through the economy. If all the companies stayed in the country, recieved supplies from other companies in the country, had high prices (or low ones, whichever) for their goods, payed their workers high wages (like the unions) then the high paid workers could buy the high priced goods and the cycle just continues. It worked for America in the early to mid 20th century and it could still work today, if we would wake up and realize we need to care for our country before we can care for others. And thats exactly what every other country save America realizes and does. Its sad really.

  • avatar
    John Horner

    FYI, China is presenting sitting on two TRILLION dollars of foreign reserves, all gathered up by exporting more than it has imported. Is that what is meant by “free trade”?

    Just how much of China’s recent big stimulus package do you think they will be spending with foreign manufacturers? Why aren’t the free trade cheerleaders pushing back on China?

  • avatar
    gsp

    America became an economic superpower partly based on slave labour and China will do the same thing. You can talk entry barriers, complain about environmental issues, human rights, poor quality etc. All this doesn’t matter. They have basically free labour and a strong desire to make money.

    But China has not won. They are sitting on all these dollars (see last post) that are not easily going to be converted into REAL assets. The fact that Chian sold us stuff too cheaply, has not really benefited them much. China is getting really close to massive civil unrest due to layoffs. Whole cities of industries have shut down due to this recession. Many Chinese are pissed that their government is sitting on so much foreign currency which may get heavily devalued.

    Everybody is in a world of hurt right now, China included.

  • avatar
    Dynamic88

    magoo

    You’ve done it again!

    (That’s meant as a compliment)

  • avatar
    DrX

    @ unseensightz

    Unfortunately, your utopian comment ignores the entire reason that trade came about and persisted in the first place. Making goods requires raw materials and energy, not just labor. Unfortunately for us, we don’t possess all of the raw materials that we need to build everything that we’d like to have. Thus, we trade with other countries to acquire these things. Similarly, we don’t have all the oil to refine into gasoline to run our cars. So closing the borders and living in our own little utopia is obviously an unattainable fantasy.

  • avatar
    PeteMoran

    @ no_slushy

    Robots are most likely more energy efficient than people.

    Experts in the area are Carlisle, Lu and Bone.

    “Are Parallel Manipulators More Energy Efficient?” (Sorry, I don’t have a non-subscription link on the internet.)

    The evolved human animal is orders of magnitude more energy efficient than available robots.

    Robots won’t be brining low wage repetitive tasks back to high wage countries any time soon. Nike won’t be making trainers with robots in the USofA; they won’t make that investment, nor is it energy efficient.

    Clearly there will be exceptions in the future, but industrial robot use is about repeatable accuracy first and foremost.

    The US military is doing things that I know of with robots and unmanned technology that are incredibly impressive yet scary. And that is the stuff I know of.

    Increasing the automation of manufacturing and services won’t be the tipping point to Terminator/iRobot, etc., not that something else might be.

    It’s OK, I was joking….

  • avatar
    unseensightz

    @DrX

    You are completely correct in that line of thinking. And a completely isolated United States wouldn’t work, but a far more isolated, or even a United States with far more fair trade policies for itself, rather than for other countries, would work, and thats the main point I was getting at and I sort of went over board, thanks for bringing me back.

  • avatar
    King Bojack

    America!!! FUCK yeah! Coming again to bail the Fuckin’ world out! America!!! Fucking yeah! Bailouts are the only way yeah! Free trade peeps your game is through, cuz now you have to answer to America!!! Fuck YEAH!

  • avatar
    Phil Ressler

    Ideally, “Buy American” would be a personal decision. Individuals in the United States would be sophisticated enough about discerning their own interests to buy domestically wherever possible, without an American purchase being a subsidy for something inferior. This is a very straightforward proposition, which was once a mainstay practice in the mid-20th century. Then consumer culture ceased to merely grow — it rocketed. Lots of good came of this and the variety of goods — plus biases about how products are designed and built — available to Americans broadened.

    The US, tired, wealthy and wary of bailing the world out of global conflict twice, and about to undertake a third protracted defense of liberal civilization, consciously used the combination of its open markets, military projection and direct foreign aid to foster the world we have now, where major western/westernized countries are incentivized against fratricide, enemies must reconsider their ambitions, and old colonies of Imperial Europe got something of a chance to pull themselves up. Without open markets in America, Britain, France, Germany, Japan, China, the Tigers and others would not have made the same rate of progress over the past 60+ years. So we have the world we worked hard to get: distributed wealth, economic linkage, shared interest against fratricide, and a semblance of stability compared to what preceded.

    It’s easy for Americans to say, “We’ve done enough. It’s time to take care of ourselves.” If we could have confidence that the greater proclivity toward shared interests from 50 years ago might revive in our current population, then “Buy American” provisions in stimulus legislation would be moot. It wouldn’t need stipulation. Bankers have shown us the banking sector has a tough time recognizing shared interest. Add certain automotive executives, UAW leaders, Senators, congressmen and consumers. So, how do you offer up nearly $1T in Federal economic stimulus without asking that American steel and concrete be purchased for infrastructure construction? It’s also environmentally the right thing. Why ship heavy steel across the Pacific in dirty ships before then shipping it around the US by rail and trucks, when we could be buying it much closer?

    Now if we could be sure that buying Korean steel for stimulus-funded American bridges would result in more near-term jet orders from Boeing, that would be an excellent mitigating factor. But essentially, the global economy still requires the American consumer to take the lead, as has been amply demonstrated in real time. So swirling a trillion dollars through myriad transactions in our domestic economy should do more to lift the world through re-awakening of the American consumer than sloshing that money directly into foreign markets.

    The WTO should worry about destructive tariffs and alternative trade constrictions that keep goods out of countries, not the demand side behaviors affected by emergency public funds. I expect Chinese stimulus to be directed to reflation of Chinese employment. I expect French stimulus to be directed primarily to reflating French employment, and so forth. It’s easy for WTO members to simply agree on this temporarily. How about at least until we get back to two consecutive quarters of GDP growth?

    Every economic theory instanced in a practicing economic system has buried its subscribers in an avalanche of problems at some time or other. Capitalism has stubbed its toes and broken its feet multiple times, in laissez-faire, regulated and de-regulatory periods, and it’s no surprise — people are not nearly so rational, individually nor in the aggregate, as purists prefer to imagine.

    But it’s the best system on the shelf. So let’s fix it. More than in any country, reflating the US economy lifts the world. Japan can’t do it, the EU can’t do it, the BRICs aren’t big enough, and China/India don’t consume enough. For some decades to come, there will still be no replacement for a robust United States to energize the global economy. Hence, taxpayer-funded stimulus should directly reflate American employment and consumer confidence first.

    Phil

  • avatar
    PeteMoran

    The age of cheap credit consumerism is dead. The US consumer is broke. Future generations around the world are going to pay.

    One thing that can be done is to increase productivity to increase the value-add of labour and energy. If the USA (and others) can shift to renewable energy, the energy input costs in the long term (25+ years) will be stable, thus helping raise productivity if measured as value-add.

    Stable future energy pricing via more renewables (no volatile fuel costs) should mean businesses have more capital to invest, and citizens less expenditure on energy, expanding the economy.

    Happily, P.BO has energy independence as a platform and elements will emerge into the US stimulus.

  • avatar
    Phil Ressler

    The age of cheap credit consumerism is dead. The US consumer is broke. Future generations around the world are going to pay.

    This is a popular view among pessimists but it’s going to prove incorrect.

    Even before what came to be known as “cheap credit” the US consumer was the locomotive for the globe, with corporate expansion adding more muscle. Well, both are going to come back, and it will be much sooner than a generation from now. First, the Fed has only expanded the money supply by about 10% during this crisis and that won’t really work through the economy for another 6 – 9 months. That action isn’t inflationary with so much slack. Second, the pumping of a couple of trillion dollars of borrowed money into our (and the globe’s) economy will either be paid back by higher taxes (bad) or steeper growth (good). It’s going to be the latter. US dynamism, plus the intrinsic population growth, will do their part to reflate growth and give that money new destinations.

    One thing that can be done is to increase productivity to increase the value-add of labour and energy. If the USA (and others) can shift to renewable energy, the energy input costs in the long term (25+ years) will be stable, thus helping raise productivity if measured as value-add.

    This should prove true. Even without a commitment to renewable energy, the US reaped similar benefits from its collective efficiency gains prompted by reaction to the twin fuel availability crises and cost shocks of 1973 & 1979. Within 20 years we were able to drive a percentage point gain in GDP on less than half the energy required in 1974. Add cost stabilization (deflation, actually) between 1980 – 2003, and the effects were contributory to expansion.

    Phil

  • avatar
    PeteMoran

    @ Phil

    I sure hope you’re right. No trade wars and no deflation please USA.

    Even without a commitment to renewable energy, the US reaped similar benefits from its collective efficiency gains prompted by reaction to the twin fuel availability crises and cost shocks of 1973 & 1979. Within 20 years we were able to drive a percentage point gain in GDP on less than half the energy required in 1974. Add cost stabilization (deflation, actually) between 1980 – 2003, and the effects were contributory to expansion.

    That’s an interesting comment. Our company modelled what effect the stability of renewable energy pricing might have had on electricity pricing since the first oil shocks (had it been available). Our propeller heads calculated an extra 1.5% of GDP had renewables been available.

    Those renewable plants would be paying even bigger dividends now.

    Anyway, the technology wasn’t available (or at least wasn’t considered viable).

    Time to get started.

  • avatar
    agenthex

    America!!! FUCK yeah! Coming again to bail the Fuckin’ world out! America!!! Fucking yeah! Bailouts are the only way yeah! Free trade peeps your game is through, cuz now you have to answer to America!!! Fuck YEAH!

    LOL. This is hilarious enough to QFT.
    -

    A man on the telly the other day summed it up. If limiting where you can buy stuff is such a good idea, why stop at the country level? Only buy from your state, or your town. Or your street. Carry on like that and we will back to the 1700s.

    But don’t you know. Jingoism is the new capitalism. Just look at some of the above comments to the see the specter of ultra-nationalism rising.

    Just remember it’s all manipulation and disinformation until everybody gets hurt.
    -

    Nations such as China don’t bear these costs. One can look at this two ways, one being that we pay an excessive cost or that China effectively cheats, pushing the costs into the future and on to the backs of others.

    Uh, it’s the multinationals profiting the most by moving production to China. The political types like to manipulate people to redirect manufactured disgust to easy targets.

    People’ll believe anything if you praise them and blame others. ie:
    -

    The US, tired, wealthy and wary of bailing the world out of global conflict twice, and about to undertake a third protracted defense of liberal civilization, consciously used the combination of its open markets, military projection and direct foreign aid to foster the world we have now.. blah blah blah.

    So are you merely fulfilling Leo Strauss’s methodology or do you actually believe in american exceptionalism? At at least don’t fall into the trap of the latter.

  • avatar
    Dynamic88

    Every economic theory instanced in a practicing economic system has buried its subscribers in an avalanche of problems at some time or other. Capitalism has stubbed its toes and broken its feet multiple times, in laissez-faire, regulated and de-regulatory periods, and it’s no surprise — people are not nearly so rational, individually nor in the aggregate, as purists prefer to imagine.

    Very True.

    Ideally, “Buy American” would be a personal decision. Individuals in the United States would be sophisticated enough about discerning their own interests to buy domestically wherever possible, without an American purchase being a subsidy for something inferior. This is a very straightforward proposition, which was once a mainstay practice in the mid-20th century. Then consumer culture ceased to merely grow — it rocketed. Lots of good came of this and the variety of goods — plus biases about how products are designed and built — available to Americans broadened.

    When speaking of individual consumers, it’s not just the lack on understand of shared interests – though that’s a very accurate and important point- it’s also that it is simply hard to find American made products. With cars it’s easy. With socks, much more difficult. Most people won’t sit down and Google to find an American sock maker, they’d prefer, understandably, to pick up a pair at the local store. If the store only stocks socks made in Malaysia, people conclude that they just can’t buy American made socks anymore. There is only so much effort you can expect from consumers, especially with low ticket items.

    It isn’t just socks though. I’ve been researching American made goods lately and have found a bewildering variety of goods made in the US – many of which I’ve never heard of – and some of these companies have been around a long time. In some cases (ball point pens) the American made goods are just as cheap as the imports. In most cases American goods are a little higher, but still reasonably competitive (except to the price shopper). In some cases the American goods are way higher, and though the products look to be well made, the price still seems hard to justify, even for the communitarian shopper. But the main point is that the products, in many cases, simply are not on the shelves at the local store. The store wants to offer low prices and have a high margin (understandably). American goods mean slightly higher prices, and lower margins. Make it hard for people to find and buy something, and they wont.

  • avatar
    menno

    Once again; it’s back to basics. Read the United States Constitution, and try to understand the simple fact that the founders were not so dumb, after all.

    What are the allowable taxes? Federal Excise Tax (i.e. a small purchase tax on CONSUMPTION of goods) and Import Tariffs (i.e. – allowing foreign goods to come in, but emplacing tariffs on them to allow fair competition against local goods).

    Article 1 section 10 also states that MONEY for use within the states IS what? GOLD. A fixed, tangible, valuable commodity. Not “promises, promises, lies” with fractional banking (and pretend-value-only-between-the-ears paper fiat money). “Crank up the printing presses boys”. (The value of our money has depreciated 98% since the “Federal Reserve” was set up to allow the Banksters to control our money in 1913 – again, outside the intent of the founding fathers).

    Now think of this. If we had stuck to the original premise of our forefathers, what would have happened when we reached peak oil in 1969, and started to dramatically increase oil imports? It would have had a big tariff on it.

    So, with that in mind, do you suppose we could have then had a viable coal-to-oil industry start up in competition with imported oil? I daresay, yes. So when the Arabs turned off the oil taps in 1973, would this have affected this country as badly? Clearly not, had the coal-to-oil industry been in operation by then.

    Likewise, another “car” example. Volkswagen wanted to sell cars in America; they needed the dollar. Having, let’s just say, a 20% retail price tariff on imported goods would have meant the 1956 Volkswagen Beetle from Germany would have cost $1930 instead of the $1609 that it did (plus, of course, 5% Federal Excise Tax and state taxes).

    This $1930 for a VW would have put the car at a significant disadvantage compared to, say, a 1956 Studebaker Champion priced at $1717 (plus 5% FET and any state taxes), or a even a 1956 Chevrolet One-Fifty 2 door priced at $1869.

    So, by 1956, when Volkswagen bought a factory in New Brunswick, New Jersey from Studebaker with the intent of MANUFACTURING Volkswagens for the US market, even with the higher cost of U.S. labor, the price would have been much closer to the $1609 figure.

    Interestingly enough, Volkswagen decided against building cars in the US and instead, built more factories in Germany at which they realized they could not hire sufficient people to do the work, so they “encouraged” the German government to allow “guest workers” from muslim nations, particularly Turkey. These folks have now stayed, and – how can I put this nicely? – as may be seen in France right now, and to a lesser degree in Germany and other European nations, folks who move to nations without any intentions of fitting in, eventually cause friction. Was that polite enough?

    So once again; can anyone else see how our founding fathers truly had some smarts, and can anyone else see why this nation once prospered like no other in history? Of course, we’ve been busy undermining the foundation of all of this by allowing and encouraging our elected officials to do just that.

    So it’s our fault as much as it is theirs, in some ways. Isn’t it?

    BTW, the 5% FET on new cars was abolished in 1965 in the U.S., not too long after “no day time speed limits” were abolished outside of towns in Michigan and many other states.

    Having REAL GOLD AS MONEY also would be a very big incentive to not importing any more than is exported, on average, for any nation. Right? Otherwise, one ends up with a handful of beads instead of something valuable, like Long Island, New York. Geddit?

  • avatar
    Phil Ressler

    Uh, it’s the multinationals profiting the most by moving production to China. The political types like to manipulate people to redirect manufactured disgust to easy targets.

    It’s true that China gets nowhere near the share of wealth transfered people think when people in other countries buy their manufacturered goods. Typically the distribution chain is taking much more, including the brands that represent Chinese made products as their own. As the low wage stage, China is exploited by multi-nationals, but as usual that exploitation is lift for many Chinese, which is why the exchange works/worked as well as it has.

    So are you merely fulfilling Leo Strauss’s methodology or do you actually believe in american exceptionalism? At at least don’t fall into the trap of the latter.

    Strauss is commonly misrepresented as an architect of the Right and you can pay no attention to that because it’s not true. What people do with a point-of-view once they’ve claimed it as their own often ends up quite unrelated to the intent of the originator. So it is with Stauss. I wasn’t thinking about him at all when I wrote that. But in the second point, American Exceptionalism is self-evident by what the world consistency looks to us for. It’s not the exceptionalism of the Christian Right. God has no role in it. It is instead an intersection of global representation that comprises the United States under an enabling framework that balances liberty for the individual and the structures necessary for large enterprise, continuing geopolitical advantage, the leverage of creativity, and sufficient geographic mass to always have a frontier in one direction or another. For most of a century, the world has looked for the U.S. to solve problems that were beyond the scope of any other nation’s ability or willingness to tackle. That also makes people in other countries uncomfortable sometimes. But every time we turn inward, or when others prematurely judge themselves to be absent material connection to the U.S. and our own well being, they find out otherwise.

    Put another way, what America has done for the world has been exceptional in both specific crises and continuing presence, but that’s not a claim there haven’t been mistakes and setbacks, nor that American Exceptionalism exempts us from the the essential rules of humanity. It’s also not assured to be permanent.

    Phil

  • avatar
    agenthex

    It’s true that China gets nowhere near the share of wealth transfered people think when people in other countries buy their manufacturered goods. Typically the distribution chain is taking much more, including the brands that represent Chinese made products as their own.
    +
    Strauss is commonly misrepresented as an architect of the Right and you can pay no attention to that because it’s not true. What people do with a point-of-view once they’ve claimed it as their own often ends up quite unrelated to the intent of the originator. So it is with Stauss.

    Oh wow, we actually agree on things. What is this world coming to…

    Strauss is like the modern day jesus to a similar bunch of folk. Or st. nick to a younger crowd.
    -

    For most of a century, the world has looked for the U.S. to solve problems that were beyond the scope of any other nation’s ability or willingness to tackle.

    Sure, it’s a result of the natural advantages we’ve enjoy, as you’ve pointed out . Plenty of land/opportunity, talent+ambition pours in, add geo isolation, the rest is history. Works especially well when there needs to be a tiebreaker in a stalemated conflict, as everyone found out 50-some years ago.

    But then it goes both ways, as we’ve consistently used the advantage to our own self-interest. It just so happens those with coinciding goals can reap some benefit. What many forget is for the groups we do bother with, whether they actually share any philosophical ideals is largely secondary to whether they prove useful to us.

    To summarize, America is special in the abstract sense with its unique place in the scheme of things, but certainly not in the mythical sense as some inhabitants (or even foreign admirers, lol) like to present it.

  • avatar
    jurisb

    Buy American ! Gnash your teeth, close your eyes and give your last dollars for those local products..Only what products? After having eaten an American ice-cream( vermont`s finest), drunken all american soda made of 23 herbs and flushed it down on all American standard, I realized I should give locals a chance.So let`s do some shopping. Let`s start with cars. What american made car I could buy that would be used for its direct purpose, for driving, not visiting car repair shops?CAn you give me a reliable, high quality all american car? You see, crown victoria is all american but not really high quality or that reliable. Then again malibu is pretty good, but not that much aMERICAN, RATHER GERMANO-JAPANESE.And stamped on pre-programmed german robots.So imports offer a better choice. Ok,. next. Mobile phones? Half sunken titanic motorola should be my choice right? Should I discard the competition blindly? American LCD, Tv ,Video, Photocamera, bike, receiver? give me the brands, I even can`t recollect.How can we buy American, if American doesn`t exist? Most of the companies that are sort of American are actually just brand management companies selling china-engineered items.Polaroid?memorex? RCA? Saturn? Prology,Magnavox,GE,? the endless list of simulated Americanism.When you buy Chevrolet Lacetti, guess who benefits from it most? You are right, South Korea, because they engineered this vehicle completely. And just because you slap a chevy badge on it, doesn`t make it American. The origin of a product is determined by the country that engineers it and regulates its quality and final assembly standards and is physically responsible for blueprints and validating tests. But of course I can buy American, if it doesn`t have moving mechanisms, or more than 3 parts bolted together, then Americans can manage it.

  • avatar
    robertplattbell

    Buying American is an expensive proposition due to the staggering depreciation on American cars.

    The last American car I bought was a 1995 Ford Taurus SHO, with a wonderful Yamaha engine searching (in vain) for a worthy chassis.

    I went to the dealer and paid $25,000 for it, about $7,000 below the $32,000 sticker price. The day I took it home, it was a $17,000 used car.

    I drove it for five years, put 65,000 miles on it, and sold it for $8600, and only got that much because it had well over $5000 in repairs and modifications to it (custom exhaust, tires clutch, suspension, etc.).

    I ended up buying a used 1997 BMW convertible to replace it, for $21,000. It cost $4000 less than the Taurus, and I still have it, nearly 9 years later, and it still looks and drives like new and has retained about 1/3 to 1/2 its purchase price.

    I wonder, if back in 1995, if I had bought a used BMW 3-series instead of the new SHO, I probably would still have the car, and it would still have a lot of life left in it. And I would have saved the $16,000 I lost in depreciation on the SHO in five years.

    American cars depreciate horribly, which makes them expensive to own. Until Detroit figures this out, sales will continue to stagnate. Japanese cars cost more now, but cost less to own. People are figuring this out. Plus, you can keep them longer.

    The Big 3 are trying to go after the CHEAP end of the market by gutting content from the cars. Putting a live axle, for example, in the Mustang, relegating it from enthusast car to trailer park cruiser.

    In the last decade, Americans bought Mercedes, Lexus, BMW, Acura, largely because they could afford it – and GM, FORD and CHRYSLER didn’t even offer cars in those price ranges. People waving $100,000 at the BMW or Mercedes dealer, and the guy across the street a the GM dealer saying “Sorry, all I got is CRAP! Want a Lumina?” Expensive foreign cars were more costly to buy, but with lower depreciation, less expensive to own than some domestic makes.

    Why buy a Taurus, when for the same cost, you can have a BMW? That’s the crux of it.

    And after looking at the dinky brakes on the new Taurus, I can see Ford has learned nothing. Just a refaced Homer Simpson car with the last generation’s Camry face slapped on. Can you say “Derivative”?

    Try as I might, I can’t see myself buying an American car. The only two I have left in my fleet (1995 F-150, 1948 Willys) have yet to wear out.

    I mean I’d like to do my bit. But a Taurus? A Lumina? Mouse-fur interiors? Retrograde suspensions? Pushrod engines? Sorry, I just can’t do it.

  • avatar
    joeaverage

    And then there are that whole ends of the product spectrum that Detroit ignores. Small cars – what I prefer to own and operate. I get cheap but I can’t get good at the same time. I’ll pay Civic prices but not for a Cobalt. Ford almost had me with the Focus but they killed off the hatchback? Chrysler got close with the PT (even with my fear of their long term quality) but the gas mileage isn’t very good for it’s size.

    I will look at the HHR eventually despite the lemon my friend owns which has been in the shop eight times in 10K miles. Under warranty or not my elderly 10 and 12 year old imports aren’t having that kind of trouble. Still haven’t looked very hard at the gas mileage figures on the HHR. You see I keep a car forever and I figure gasoline in a decade will be EXPENSIVE so I buy efficient vehicles now in anticipation of owning them still then.

    Would I consider a Cobalt? Not likely. Would I consider a used Neon? I actually like the design but still worry about the longevity. Yes, I know the PT and Neon are direct relations. How about an Aveo? Its a Daewoo. Don’t feel any better about them than I do Chrysler. You know – the part where I pass 150K miles and everything is disintegrating that worries me.

    It keeps coming down to a used Focus or a used Astra if I want to buy “domestic”. And yes, I know that the Astra is built in Belgium.

    So is an Astra more American than a Honda built in Illinois?

    I know that the compact car market is not a place of large profits for the domestics b/c of the way they operate but I’d like to buy a domestic small car if there was one I felt excited about (just a little) or confident in. Instead they have given it over to the imports just like GM did the minivan market.

    I guess I need to quit yapping and just go buy a Buick.

    On the topic of other American goods we’d buy if able I lay blame on the management of the retailers and the consumer alike.

    We are in a race to the bottom price and that requires a bottom wage for everyone involved except the top level management.

    Products not produced in low age countries need not apply.

    Meanwhile the consumer demands the lowest prices too. I figure that is largely related to their addiction to buying more stuff that quickly goes obsolete or breaks and can’t be economically repaired. This addiction to stuff must be balanced with the consumer’s numerous fixed costs like mortgages near their qualification limits, flat earning potential for some time, and many costly subscription services. Pile that on top of the “need” to have two incomes to buy all of this stuff leading to a rushed lifestyle where folks eat out alot, buy prepackaged foods, and raise children who can’t fathom anything else.

    So people hunt hard for the lowest prices requiring low profit margins for companies where only the people at the top make any real pay. In some cases the people at the top make hundreds of times more than the person at the bottom who barely make ends meet. Also must maintain stock share prices as well.

    Anyhow it is a circular problem threatening to flush our society down a circular drain. All sorts of potential side effects like kids raised by worn out uninterested parents, kid who care for themselves alot, kids who don’t get as much guidance and raising as they should. I also have to wonder if this isn’t part of our divorce rates.

    I heard a suggestion somewhere that if a family wants to live on one income like the 1960s then it is still possible but you have to live like it was still the 1960s without cell phones, and all the little throw away conveniences. You have to cook from scratch, mend and repair stuff, and increase your level of stuff slowly and skip the fads like $1500 flat panel TVs and the constant household technology upgrades.

    We’re aiming down that road more each year. Buying less and enjoying our time together more. Our friends and family don’t really get us very well b/c while they are constantly buying stuff we keep the same old stuff but we’re happy. We’re not much fun to brag to about what they bought or what they are going to buy next.


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