Monday, June 13, 2005

The price of protectionism

It has been reported that Toyota plans to raise prices in the US in order to avoid gaining too much market share from US auto-makers and prompting a protectionist backlash.

GM and Ford are struggling to profitably make cars that Americans want to buy, largely because they are weighed down with uncompetitive labour contracts and huge legacy pension and retiree healthcare obligations.

For anyone who doesn't understand the price of protectionist economic policies - even in the form of implied threats or a feared backlash - here it is right between your eyes. Repeat after me: Protectionism means higher prices for consumers. It is as simple as that.

Shame on Toyota for giving in to this blackmail. Shame on GM and Ford for pretending to be capitalists when what they really are is rent-seeking parasites, and shame on the US government for governing in the interests of some Americans rather than all Americans.

If you really feel sorry for Ford and GM's auto workers feel free to send them a check, although I don't see why you should since it is their own actions - so ably represented by the UAW - that have made their firms uncompetitive. As for me, I'll keep my money and stick to buying the best quality car at the lowest price wherever it is made. In my case that's a Subaru built in Indiana. You don't hear the Americans working there complaining about competition.

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