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 Posted: Thu Nov 20, 2008 1:31 am Post subject: A Tariff in Time...Saves Billions ( Greg Johnson ) |
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http://www.wvwnews.net/story.php?id=6062
A Tariff in Time...Saves Billions
Economy; Posted on: 2008-11-19
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The proposed automotive industry bailout
by Greg Johnson
Free markets mean competition. Competition means winners and losers. Some
losers even lose their shirts and go out of business. When a business fails,
this should be regarded as a success for the capitalist system as a whole.
That goes for really big businesses as well as small ones.
Why, then, is nobody applauding the prospect of America’s Big Three
automakers—Ford, GM, and Chrysler—going out of business? Shouldn’t this be
counted as a sign that capitalism, free trade, and competition are working
splendidly?
“Yes, but what about the suffering that will be borne by American workers?”
But, again, one can’t have a free market without the freedom to fail, and when
businesses fail, workers lose their jobs. So job losses, which are a sign of
local failures, are actually a sign of overall health for the system, just as
sloughing off dead skin is the sign of a healthy snake.
So let’s hear a big round of applause for free trade and free choice.
But aside from a few kooks, I’ll wager, the silence out there is deafening. I
suspect that even most libertarians are not thrilled at the prospects of three
million Americans losing their livelihoods.
But if we are not willing to allow the Big Three to fail, then we really do
not believe in free trade. When confronted with the ultimate consequences, we
flinch.
But before we commit $25 billion to bailing out the Big Three, shouldn’t we
ask ourselves if there are other non-free market strategies that would be
better at staving off the collapse of the US automotive industry? Is loaning
out or giving away billions of dollars the best strategy conceivable? (Any
loans would amount to massive giveaways, since inflation favors borrowers, and
the US government has doubled the amount of dollars in circulation since the
beginning of October. When the global financial markets regain their senses,
the increased supply of dollars will lead to a massive devaluation, i.e.,
inflation.)
The main problem with giving or loaning money to the Big Three is that it does
not address the underlying problem: US manufacturers are not able to compete
with foreigners. And if the underlying problem is not dealt with, another
bailout will just be required in the future. (Remember the Chrysler bailout of
1979?) In fact, a new bailout will probably increase the likelihood of a
future bailout, since once the car industry receives huge loans, it will
create pressure to bail them out again lest they default.
But how do we address the underlying cause: the inability of the Big Three to
compete with foreigners? The solution I propose has two prongs: (1) tariffs on
imported cars and car parts, and (2) regulations directed at increasing the
quality of US manufactured cars.
Throughout most of US history, the Federal Government was largely funded by
tariffs on foreign manufactured goods. Imagine if we had left those tariffs in
place. The Big Three would be flourishing, not queuing up for billions of tax
dollars, and the government would be collecting billions of tax dollars from
people who insist on buying imported cars. The best way to ensure the
long-term competitiveness of the US automotive industry is a return to
protectionism.
But protectionism alone is not enough. Protectionism would remove foreign
competition, but it would not make American cars genuinely competitive. That
is to say, it would do nothing to improve the quality of American cars. In
fact, it would remove incentives to improvement, insofar as competition with
foreign manufacturers spurs the Big Three to make better cars. (American
manufacturers would, of course, continue to compete with one another.)
Look at it another way: US citizens might gain by stabilizing the US car
industry, but what’s in it for US consumers? A good consumer is not
necessarily a good citizen, and when the two conflict, the interest of the
citizen should trump that of the consumer. But shouldn’t we do all we can to
decrease the conflict? Wouldn’t it be nice to have the best auto industry in
the world, so that one would not have to sacrifice being a good consumer to
being a good citizen?
To achieve that, the government cannot allow US auto manufacturers to get lazy
behind the wall of tariffs. We need to use carrots and sticks to encourage
them to constantly improve themselves. How could that be accomplished? People
are justly skeptical of the government’s power to improve anything. But that
is because of the envious, leveling egalitarian agenda behind so many
government programs, not because of a flaw in government intervention per se.
Government can also raise standards rather than lower them. It can reward
excellence rather than penalize it.
Consider seatbelts, for instance. It would be cheaper for car manufacturers to
leave them out, and in a highly competitive market, they would have an
incentive to leave them out of some low end models. Seatbelts would become an
option, an extra, not standard for all cars. The government mandating that
seatbelts be included in all cars means that no manufacturer has a competitive
disadvantage in including them.
The same is true of all safety innovations. Imagine that GM invents a better
airbag. In a free market system, they might patent it, to gain a competitive
advantage at the expense of overall public safety. What if, however, the
government was to mandate that new safety innovations be used across the whole
industry? The whole public would benefit, and other manufacturers could be
compelled to pay GM a small royalty: not so large as to constitute a real
competitive disadvantage, but large enough to recoup the research and
development costs and offset the loss of a monopoly on a new safety invention.
Presumably, as each manufacturer came up with new innovations that were
mandated to be adopted across the industry, these royalties would balance each
other out, and the rising standards would lift the companies and consumers
alike.
Tax laws could also be structured to encourage research and development to
improve safety, performance, and energy efficiency, and to reduce pollution.
Is this approach Democratic or Republican, capitalist or socialist,
conservative or liberal? None of the above, really. I do not look at economic
problems from the point of view of a capitalist, a laborer, or a consumer.
These are partial viewpoints, from which one cannot see the common good.
Instead, I look at economic issues from the point of view of what is required
for a healthy republic. Protectionism and regulation to progressively raise
standards are necessary to create and preserve a strong middle-class society,
a society with private property that is broadly distributed. They are
necessary to ensure a society that is economically self-sufficient and
technologically advanced enough to be competitive politically in a world of
scarcity and Darwinian competition for planetary dominion.
To the extent that the interests of capital, labor, and consumers contradict
the health of the community, they must be trimmed back. The common good must
come before every individual or factional interest.
My specific form of communitarianism is racial nationalism. I look forward to
the replacement of multicultural, multiracial America with a homogeneous white
ethnostate. But whatever patriotism you hold, even an attachment to the
present regime, the proposals outlined above would be preferable to constantly
bailing out a sinking ship rather than just plugging the hull.
Greg Johnson, Ph.D., is the editor of The Occidental Quarterly: Western
Perspectives on Man, Culture, and Politics
News Source: The Occidental Quarterly/Western Voices
2007-2008 European Americans United. |
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