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Bush's Protectionism Phobia
One of GW Bush's favorite props on the "free trade stage" is the Harley-Davidson motorcycle, he frequently refers to the company as an example of US manufacturing reaping the benefits of a global economy.
Most recently he had a H-D sitting alongside a John Deere tractor on the White House lawn during his pitch for a trade agreement with Columbia
aa trade agreement which we're supposed to believe is totally in our favor. Given this presentation does anyone else wonder why the heck Columbia hired a group of high-powered lobbyist in order to push through such a lopsided trade pac?
During his rant against protectionism last week in Peru our elected President of the United States showed more spirit than he's displayed in ages, I dare say this was the forceful, morally convinced G.W. Bush of the pre-Iraq invasion era.
Well, this is on the H-D website. It's a fact he never bothers mentioning;
1983 - Harley-Davidson successfully petitions the International Trade Commission (ITC) for tariff relief, which is granted April 1, 1983. The tariff, scheduled to end five years later, is placed on all imported Japanese motorcycles 700cc or larger as a response to Japanese motorcycle manufacturers stockpiling inventories of unsold motorcycles in the United States.
Yep, none other than the Ronald Reagan Administration saved Harley-Davidson from bankruptcy during a dark time in its history. Coincidentally, H-D was in the process of retooling for the debut of a brand new engine.
So, from this apparent breech of factual continuity when it comes to Republicanism, Busi-ism, and protectionism, I have a question;
What has changed in the economic world over the past 25 years to change what was once a useful tool of protecting US industry from product dumping into an evil instrument of economic destruction? Our principle export is food, isn't it? So we feed the world and in turn world destroys our manufacturing base and middle class.
If you ask me it's a ****ed up state of affairs.
I don't believe anything uttered by that man or his neocon parrots....
There are also tariffs protecting SUVs - that one hasn't worked out so well lately.
Seems like the trick is to evaluate when the tariff has done its job and should be lifted to let supply and demand drive the change. That doesn't seem to happen all to often - almost like 'temporary' taxes.
In this case it was time-limited to 5 years. I'm not agruing against prudence or in favor of blanket, draconian protectionist measures. Think of protectionism as the war option in global diplomacy, it's an option that shouldn't be considered without good reason, but to remove it from consideration altogether is foolhardy.
History proved this temporary example of protectionism did give H-D the time and breathing space to implement it's business and product line reorganization plan. The results speak for themselves.
OTOH here's the patently false assertions made by a CATO Economist back in 1984. How did such an unquestionable source get it so wrong?
Taking America for a Ride:
The Politics of Motorcycle Tariffs
by Daniel Klein
Daniel Klein is a graduate student in economics at New York University.
Last spring, the import duties on large motorcycles were raised drastically. By any economic criterion, the new tariff is counterproductive, and the Reagan administration was fully aware of it. The decision is thus an interesting case study in the political economy of protectionism.
Background of the Tariff
In the past three decades the motorcycle market has grown tremendously. The number of American motorcycle registrations has increased from 198,000 in 1945 to 1.4 million in 1965 and to nearly 6 million in 1981.
In the past two years, however, the American motorcycle market has severely contracted. The recession left many young people, the greatest motorcycle-buying age group, with less to spend. Employment in heavyweight-motorcycle production and related activities rose from 2,239 persons in 1977 to 3,110 in 1981, but (as a result of slackened demand) dropped to 1,974 in 1982. (Heavyweight motorcycles have engines with piston displacement of 700 cubic centimeters or more.) From 1981 to 1982, total inventories of unsold heavyweight bikes jumped from 108,000 to more than 200,000. For the first nine months of 1982, hours worked declined 20 percent and wages paid fell 12 percent from the same period in 1981.[1]
The Harley-Davidson Motor Company, the only American company to manufacture motorcycles since 1948, has been hit especially hard. In 1980 the company had record sales of $289 million and pretax earnings of $12.3 million, but in 1982 sales slumped to just over $200 million, causing "substantial losses."[2] The company operated at a loss in 1981 as well.
Harley-Davidson, which produces bikes of 1000cc and 1300cc (although new, smaller models are planned), has continually been losing ground to Japanese competitors. In 1972, Harley had 100 percent of the market for motorcycles with engines of 1000cc or more; a decade later it had less than 15 percent.[3] Although it had accounted for 20 percent of the total American
market in the late 1970s, Harley-Davidson could claim only 14 percent in 1982. The four Japanese makers--Honda, Yamaha, Suzuki, and Kawasaki--are accustomed to tight competition. They excel in product innovation and keep their prices low-- earlier this year, they undercut their American counterparts by $1,500 to $2,000 per vehicle.[4]
In 1981, after 12 years as a subsidiary of AMF, Inc., Harley-Davidson was purchased from the parent company by a group headed by Vaughn Beals, vice president at AMF since 1976. After the purchase, Beals left AMF to become chairman and chief executive officer for Harley. Beals felt optimistic when the purchase was made. Upon leaving the frustrating hierarchy of AMF, Beals explained his happiness with his new situation: "It's the independence, the satisfaction you receive when something works. And if it doesn't work, you have no one to blame but yourself."[5]
Many of the company's recent difficulties may have originated in its association with AMF, which (some say) concentrated on short-term sales and profit objectives at the cost of long-term investments needed to combat the import problem.[6] Phil Schilling, editor of Cycle magazine, said that during that time, "the quality of the product suffered, and that was no secret."[7] Gordon Jennings, an independent consultant to the motorcycle industry, said that Harley "ceased to be competitive with foreign motorcycles in terms of overall performance, which event [sic] occurred in the Sixties. . . . Product improvement at Harley has relied too much upon styling."[8] In an automotive survey, consumers rated Harley-Davidson last in advanced technology, though high in styling, power, and performance.[9]
Due to the change in market demand, its own entrepreneurial deficiencies, and a crushing debt problem, Harley was quickly approaching bankruptcy (sound familiar?). The firm turned to the government for aid, and consequently, in hopes of forestalling any protective measures, the Japanese motorcycle industry offered to help the company. "According to the sources, the Japanese said they would provide technological assistance valued at about $10 million and would guarantee $20 million of bank loans."[11] Harley turned down the offer. Instead, Harley-Davidson contracted with Porsche, the German car manufacturer, to build a model called "Nova." which will be available with both 800cc and l000cc engines. It is specifically designed to meet Japanese competition. There also has been talk of a new 700cc model.[12]
Presumably, Harley-Davidson was confident that it would get import relief from the government. Bob Moffit, chairman of the board of directors of the Motorcycle Industry Council, thought the political climate made it likely that Harley would receive some relief.[13]
Description of the Tariff
In September of 1982, Harley-Davidson petitioned the U.S. International Trade Commission (ITC) for relief from the importation of heavyweight motorcycles and power-train subassemblies (an engine part). The petition was filed under Section 201 of the Trade Act of 1974, known as the "Escape Clause," which allows an industry to request import relief from foreign competition when increasing imports are causing or threatening serious injury to the domestic industry. In these cases, the ITC investigates the claim and then reports to the president. If the finding is affirmative, the executive branch examines the matter and the president makes a decision within 60 days.
After its hearing on November 30, 1982, the ITC found that Harley-Davidson made up 75 percent of the American motorcycle industry (as measured in terms of capital and labor). The rest of the industry is composed of one Honda plant and one Kawasaki plant. On January 19, 1983, the ITC concluded by a vote of two to one that imports of heavyweight cycles, but not power-train subassemblies, posed a substantial threat to the American motorcycle industry.[14]
To provide relief, the ITC recommended the following five-year tariff plan for heavyweight motorcycles: Raise the current tariff of 4.4 percent to 49.4 percent and keep it there for a year; lower the rate to 39.4 percent in the second year, to 24.4 percent in the third year, to 19.4 percent in the fourth year, and to 14.4 percent in the fifth year. After the fifth year the tariff is to return to 4.4 percent.
On April 1, 1983, President Reagan adopted the ITC recommendation, with minor alterations. Appended were provisions to lessen the impact of the federal relief on small foreign suppliers. The order allows 5,000 West German motorcycles each year to come in without duty increases, with the allowance rising to 6,000 in the second year, 7,000 in the third year, 8,500 in the fourth year, and 10,000 in the fifth year. It also allows 4,000 units from Britain and Italy to come in at the old rate (increasing by 1,000 units annually for five years). Japan is to be permitted to send 6,000 units (increasing by 1,000 units annually) to the United States at the old duty. In 1982, 80 percent of the imported heavyweight motorcycles were Japanese. With the provisions that were added to the ITC plan, the tariff affects trade with the Japanese companies almost exclusively.
The Economic Impact of the New Motorcycle Tariff
According to the economic analysis and estimation that have been done on the Harley-Davidson case, the new tariff will unambiguously prove to be a setback for the American economy. ITC specialists predict that the tariff hike will raise prices 10 percent the first year.[15] Other officials believe that the price increase might be as high as 17 percent. In 1982, retail prices on heavyweight motorcycles ranged from $1,000 to $5,000.[16] Stockpiles of unsold bikes accumulated during 1982 because motorcycle-industry anticipations had been overoptimistic for what turned out to be a recessionary period. Some say these bikes make up a year and a half of inventory.[17] As they are sold off, they will gradually be replaced by bikes affected by the new tariff, and prices will begin to rise more dramatically. The ITC estimated an increase of 12.5 percent for the second year.
One result of the price increases, said government officials, would be to reduce sales of all makes by 20,000 units during the first two years. Harley-Davidson is expected to see an increase of 8,000 to 10,000 units sold within the same period.
If relief had not been granted, Harley's creditors might have called in their loans, forcing the firm into bankruptcy. Approximately 2,500 employees of Harley-Davidson and its suppliers could have been put out of work. However, some administration officials said that the tariff threatens as many as 3,000 workers in motorcycle retail, distribution, and after-market (parts, accessories, service, etc.). In a letter (6 December 1982) to Secretary Kenneth Mason of the ITC, Ed Lemco, a motorcycle-industry consultant, argued that with a large tariff, "the net effect would be substantial loss of American jobs and the failure of a great number of American businesses."
.....
link to the original document;
http://www.cato.org/pubs/pas/pa032.html
Perot - maybe I am completely misunderstanding you but the article was written in 1984 and the assertions by the author were based on research of others as to the economic affects. Not sure how his conclusions are false based on research - it is basically an opinion of what could happen. Obviously from a free market perspective.
Of course we have the hindsight to see that it worked out for Harley Davidson but what was the impact to the industry and consumer? I admit I know nothing about his industry. I did read somewhere that the Japanese response was to build more bikes in the US, thereby circumventing the tariffs. Harley lost financing from Citibank and almost went bankrupt. It was only then that it became leaner in 1984. Not necessarily because of tariffs but competition (free trade?).
However it is fascinating that Harley needed tariff protection (some could say Bailout) b/c of it's inability to manage its production and quality and the Japanese took advantage. It was the threat of bankruptcy that spurred action to become a better manufacturer that allowed them to regain its lead. (See any parallels here - ahem auto industry)?
"Perot - maybe I am completely misunderstanding you but the article was written in 1984 and the assertions by the author were based on research of others as to the economic affects. Not sure how his conclusions are false based on research - it is basically an opinion of what could happen. Obviously from a free market perspective."
Obviously. One of the first misconceptions that we must shake is the idea that conventional economic theorizing is based on a pure, science analysis of cause and effect. Place economics in lockstep with political ideology and the result is a economic belief system, no more and no less. Anyone that paints himself into that ideological corner cannot perform true research nor entertain all possible solutions. Why, the answer just might be the 'wrong' one, and we can't have that...
Thus, "that will/woun't work because it runs counter to the Church of Free Market Economics and I'm an ordained minister so there!" approach doesn't always hold water, either in this example or for the woes enveloping the 21st Century Global Economy.
Borders are like skin, they protect the organism from invasion while providing a climate condusive to healthy, stable growth. I know of no civilization that unconditionally threw open its borders and survived. You have to wonder what exactly drives people who feverently wish to do just that
I do agree that economics can be quite cultish. Each circumstance should be judge based on its merits and not held to whether or not it passes the free market theory test. There is never a one size fits all to address economic situations.
The quality of the Harley is what killed its business which is why I noted that it sounded a lot like the state of the auto industry. What the tariff did is remove competition which is bad for the consumer:
"'The Harley tariff took away the ability to find different types of motorcycles at reasonable prices,'' said Paul Dean, editor of Cycle World. ''And that did not do the motorcycle industry any good.''
On quality:
"That is something even Harley dealers concede. ''People would have rather bought American; they simply did not want to buy inferior quality,'' said Oliver Shokouh, who owns the Harley dealership in Glendale, Calif. Michael J. Lombardi, the third generation of Lombardis to run Frank Lombardi & Sons Inc., Harley's Staten Island dealership, is just as blunt: ''I used to feel bad taking customers' money, the quality was so bad. Today, Harley executives acknowledge that Harley's troubles were internal. ''For years we tried to figure out why the Japanese were beating us so badly,'' said Vaughn L. Beals, Harley's tall, dapper chairman and chief executive. ''First we thought it was their culture. Then we thought it was automation. Then we thought it was dumping. Finally we realized the problem was us, not them.''
WHAT has helped Harley most in the last few years was not protectionism but cash. In 1986 the company went public. Since then, Harley, which had profits of $17.7 million on revenues of $685.4 million last year, has regained 40 percent of the market for over-850cc bikes, the only kind it makes. It has a thriving business from parts and accessories, and from licensing its name for T-shirts, bags, even cigarettes. The licensing not only brings in nice fees, but ''it gives us national advertising that we could not afford to do,'' Mr. Beals said."
"Of course we have the hindsight to see that it worked out for Harley Davidson but what was the impact to the industry and consumer? I admit I know nothing about his industry. I did read somewhere that the Japanese response was to build more bikes in the US, thereby circumventing the tariffs. Harley lost financing from Citibank and almost went bankrupt. It was only then that it became leaner in 1984. Not necessarily because of tariffs but competition (free trade?)."
The H-D 45 degree V-Twin layout is an inefficient engine design which can trace its origins to radial aircraft engine designs of the 20's and 30's. Due to unevenly spaced ignition timing and inherent reciprocating mass imbalances (think of a misloaded washer machine) most manufacturers employed smoother, more efficient, modern designs, i.e. inline 4 (Honda, Kawasaki musclebikes), vertical twins, boxer twins (BMW), 90 degree twin (Ducati), etc. Harley stuck with the old layout because it didn't compete in international racing and their customers came to identify the engine sound and shake with Harley Davidson. The lowdown crusier became their nitche. After Honda established a foothold in the US market it sought to lure potential customers by producing a bike out of character for Honda but erriely similiar to H-D, the Honda Shadow. Suzuki and Kawasaki followed suit, and soon H-D was facing the prospect of going IPO and designing a new generation engine and bike while the Japanese 'big 3' laid all-out seige to it's sole motorcycle market segment.
[quote]However it is fascinating that Harley needed tariff protection (some could say Bailout) b/c of it's inability to manage its production and quality and the Japanese took advantage. It was the threat of bankruptcy that spurred action to become a better manufacturer that allowed them to regain its lead. (See any parallels here - ahem auto industry)?[/quote]
Yes, but the corrections were going to happen regardless of motorcycle dumping.
In 1981, AMF sold the company to a group of thirteen investors led by Vaughn Beals and Willie G. Davidson for $80 million.[33] Inventory was strictly controlled using the Just In Time system.
The Honda Shadow refers to a family of motorcycles made by Honda since 1983. The Honda giant is a cruiser-type motorcycle, meaning it has a relaxed, feet-forward riding position and wide handlebars.
The Evolution engine (popularly known as Evo or Blockhead) is an air-cooled, 45 degree, V-twin motorcycle engine manufactured since 1984 by the Harley Davidson Motor Company.
In essence, after H-D declined offers to integrate their business model the Japanese manufacturers ganged up on H-D, they flooded the market with bikes sold at a loss in hopes of sending it into bankruptcy, thus forever owning the US market. The tariff provided H-D the opportunity to weather the storm.
Hi Perot - have you had a chance to read my post above with the NYT article?
It sums it quite well.
I look forward to hearing your thoughts.
I read the article, in fact I vaguely remember it. There are definite parallels between the management failings that brought H-D to the edge of insolvency and the Detroit example. I'm not arguing that at all. What Cycle World fails to mention is the timeline of events. The clean sheet design Evo engine hearlded as a gigantic leap forward in reliability and power delivery was penned before incorporation, H-D was correcting itself prior to 1983. Nor does Cycle World mention the pricing crusier bikes at a loss strategy employed by Japanese manufacturers. Perhaps Cycle World's advertiser and readership market had something to do with it...
Forbes and Liz Taylor also deserve credit for taking H-D's image from outlaw biker mount to chic Hollywood status symbol.
Perot - the article was from the NY Times? I had highlighted a quote by the guy from Cycle World.
I thought the NY Times article gave a very good insight into Harley Davidson. It was printed today coincidentally.
Good insight? It editorializes the facts.
WHAT has helped Harley most in the last few years was not protectionism but cash. In 1986 the company went public. Since then, Harley, which had profits of $17.7 million on revenues of $685.4 million last year, has regained 40 percent of the market for over-850cc bikes, the only kind it makes.
Conceivably H-D wouldn't have made it to IPO were it not for the tariff. Given someone who first escapes death then later enjoy financial success, logic states it is the escape itself that is the most significant event.
See the 'painted into a philosophical corner' thinking again? It cannot be allowed to possess merit, thus it must be ignored, minimized, or marginalized.
You know, like the points made earlier in the discussion.
There sits W atop a irrefutable symbol of government intervention in the global marketplace...eeeeEEEWWWWWWW
I agree with your premise but I do not particularly agree with the Harley example. Guess we will have to agree to disagree on this one.
*shakes head at this usleless debate*
Didn't Perot and I smash the last person to make these free trade arguments?
Why do people try to take us on?
Please enlighten us. We are not discussing free trade but rather or not Harley's turnaround is a direct result of the tariff or if it happened in spite of it. Or at least I was.
At what point did I say free trade is the end all be all?
I don't think your condescending tone is necessary to be injected into a civil conversation between myself and Perot.
????
I am confused one by jill and secondly by what did I say?
I guess I did take Wolfman's post a bit personally as it is only Perot and myself discussing the issue. Kind of hard not to do so. But my reply is one based in confusion as to why he would leave such a post rather than discuss the substance of the topic.
To continue the discussion - Harley almost filed for bankruptcy protection during the tariff protection period. Simple protections alone did not solve Harley's problems?
No, I just trapped you and said something that she would react to. You reacted the same way.
We've dealt with your type before.
Also note that this forum is for the community, and I don't think that a private discussion should be allowed. Any topic should be open for anyone to post and respond to. You can't just make some topic private because you want to. It doesn't work that way.
Wolf - did I do something to you personally? To my knowledge I have not replied to you before.
I am sorry if I implied that it was a private discussion - it is most definitely not. While you are free to post as you wish, I am saying rather than be rude to me or any other poster, how about articulating your position about the topic. We are all adults here ( I assume).
I saw nothing in your post that did that and felt more like a personal attack on me since it was only Perot and I discussing/debating at this point. On top of that your attack is not even accurate. I am guessing you glossed over the points of where I said free trade is not a one size fits all solution.
Please explain what 'my kind' is?
You have me completely and utterly confused now.
I have no idea what you mean by bait.
I don't even know how this spiraled so out of control???
I feel like I have been put on trial and convicted for something.
Perhaps if you could let me know what I did then I could correct the mistake. I don't like doing something incorrectly and then getting yelled at for it with no one letting me know what I did. I got enough of that as a kid.
To clarify, Wolf is right in that this is an on line community, and all discussions are open to anyone who wishes to contribute.
He is also right in observing that there are some characteristics in posting that are easily traced from one user to another. Such as going back and editing your reply to sound less negative. The others shall remain my little secret. ;-)
So please be aware that any and all are welcome to post their thoughts on any topic at any time.
Thank you, Suzi
Again apologies for any miscommunication but I only pointed out the fact that at that point in time it was Perot and I discussing this issue - not that the discussion can only be between Perot and I.
I still see no contributory value in Wolf's post and am disappointed in the support of such negativity. This forum appears to be full of thoughtful posters for the most part. I would hope everyone would strive to be that way.
Wolf, in answer there are several possible reasons people immediately jump at the mere mention of proactive trade protection, even isolated and measured cases such as this. Out of respect for Mary I'll leave it to her to answer for herself, in the meantime here's a loosely thrown together guide on determining intent of purpose within message board
First there's the more harmless; conditioned reflex in defense of a tightly held belief system. Thought process conditioning takes place within the classroom just as effectively as it does within any church, temple, mosque, or political party meeting hall. I'm not picking on economist, all theoretical science disciplines have their camps of conventionalist and ostricized radicals. Within quantum physics a mathematically sound, repeatable confirmation is sufficient grounds rewriting the textboods. Unfortunately for us an entire nation's economic foundation must crumble in order to warrant revision of established economic theory (in light of the PRC's growing financial might and weaking western economies when will the free market uber alles folks wake up and realize for the west its a fundimantally flawed, practically suicidal economic policy). Plus there's the peer community which usually marches in ideological lockstep. If one wants to belong and move up it the ladder questioning conventional wisdom is not beneficial in this regard. Have a look at economist writings on the web, heck they're all pretty much zerox copies when it come to free markets and market protections.
The feverency of said defenses can be used as a scale for measuring depth of indoctrination, the more emotional and strident - the greater emotional attachment. However not all devotees bring their emotions to the debate. Persons who rarely create threads but immediately leap into select topics with readymade counterarguements. Especially if they bring along aloff, demeaning, dismissive, or sarcastic attitudes. This pattern reveals the presence of an experienced and vested member of the HardLiner thought police. Unlike the gazsy eyed youngsters mentioned earlisr, these types may actually acknowledge the validity of your position on an intellectual level. But make no mistake, phrases such a "you have a point".is no part of their debate lexicon. On the contrary, faith defenders of the higher order frequently choose to elevate tensions with condensending, personal rethoric. Never fall for that tactic! In heretic v troll contest there's never such a thing as a draw. By luring his opponent into an off-topic personality pissing contest he has succeeded in deflecting attention from the topic, thus he wins . Learn to recognize professional trolls, they can be either newbes or long term members possessing an affinity for immediate single-topic defense. When they become desperate and try to make it personal don't take the bait. Seize the opening! Wind up, and let loose a perfectly constructed, defense-shattering combination of logic. Make sure no doubt is left who is staying on topic and who is becoming rude or hysterical. A carefully worded closing statement of sarcasm-laced fact puncuate the delivery (but at risk of backfiring, so don't overdo it). Remember, a blindingly loyal pundit will never admit the flaws of his or her subject or allow himself to be swayed by the value of your arguement. When confronted with these types it's the audience who'll be swayed, that's why the pundit attempts to dismantle your character and composure.
A final thought; within the realm of discussion forums the singleminded desire to win or lose at all cost far too often clouds the topic. Chalk it up a one of the many failing of human nature. But I believe it's a tendency that's easily overcome, all that's required is self-awareness in order to recognize and guard against such tendencies, plus inner courage within oneself to honestly entertain alternatives. You have to be prepared to be wrong.
Allowing yourself this freedom is key for discovering the true social worth and personal fulfillment values of this exercise called debate. The reward for merely defeating or humiliating your opponent is mere junk food for the overfed ego Maybe the attorney types beg to differ, for them winning is everything. .
The REAL rewards are far, far superior; IMHO. They are;
Enlightnment and Discovery, confirmation of truths, wiping away misguided theory, it's a life freed from permamant attachment to preconstructed lies.
As Mark Twain one said;
“Loyalty to petrified opinion never broke a chain or freed a human soul.”
Hope all that makes sense.
Learn to recognize professional trolls, they can be either newbes or long term members possessing an affinity for immediate single-topic defense. When they become desperate and try to make it personal don't take the bait.
This is decidedly the hardest part of trying to refute a troll; I do combine the heat of emotion with reason and point-by-point attacks on their arguments in my response, but some trolls combine an actual argument with a personal attack. I walk away from people like that, because they are sociopathic poison. If the troll is an amateur, I'm often tempted to taunt or ridicule (I shouldn't, but that usually gets them to go away the fastest).
----And there's no sense crying over every mistake
You just keep on trying 'til you run out of cake.
Now on protectionism/free trade.
It is shown that both types of trade have their pros and cons.
I like the idea of a mixed potectionism/free trade model like we have now.
Most people talk about the World Economy. The World Economy doesn't matter. The American Economy should be what matters to us. No other economy should matter, how people run their country and their economies, that's up to them and them alone.
Most of the time we can compete with other companies from around the world. We can hold our share of the market in many different sectors of the world. This is good and where we can, we should compete and kick butt and rack in as much money as we can.
Then there's protectionism, that's the second part of the mixed economy idea.
See the economy is like a spider web with many different strands. If one strand is pulled we see the impact elsewhere as the web starts to unravel. If the automotive industry closes down, who will see the hit?
The steel factories, dealerships, electrical factories even the miners will take damage from the hit.
Sometimes it may be good to throw up a protection barrier if it can help sector reorganize and become viable in competion against foreign companies.
Everything in economics has to deal with trade offs. If throwing a barrier up has a good long term gain that out weighs a short term lose, then that's the way to go.
It is also the other way around.
We also shouldn't look at trade between nations as the basis of free trade, we should look at the sectors themselves.
Perhaps I didn't articulate as succintly as you did but that is what I meant when I posted that free trade was not a one size all solution.
I believe Reagan used protectionism when necessary (an exception basis).
However we must also be careful to understand the ramifications of tariffs like you described in your web analogy. Everything is interrelate so we have to understand what happens when you make a change.
Of course that is all theory - in the example of Harley. Do you think if Harley had a quality product a tariff would have been necessary?
I do not, but simply because the motorcycle industry is a smaller industry.
The automobile industry however, I think some small tarriffs to even the playing feild while the 3 giants get their sh*t together is in order, and then our 3 auto companies should also give the government a stake in the companies so that we benefit from helping out their sorry butts.
The only reason I believe that is that if the autocompanies go down, we could see 10 to 12 million jobs lost. The news said almost 3 million, but that is wrong. Dead wrong.
I say leave em go, no ones fault but their own. Someone else will use the opportunity to rise a new company that will be ran correctly for the time. When these companies continue to pay new and old employess out the bazooka and skyrocket the prices of vehichles who is to blame. If the government does bail them out we had better benefit from it.
I say we fix them with a band aid and then demand that they reorganize.
I say we demand that they cut all their old managment and replace the bastards that did this to us.
I think you would have to include gov't in that group to kick out since they have given the Big 3 loopholes from special breaks on SUVs to looser CAFE standards. Definitely were enablers.
Has the 25% truck tariff met its objective or has it outgrown its usefulness? It has been in effect for 75 years or so now. As it currently stands I am not sure if it was a help or hindrance. It would seem that we are propping up an inferior product. I do agree the devastation that would result from their demise is too great. Unemployment is predicted to be at a high of 9% for 2009. I shudder to think what would happen if Blakey's scenario comes to fruition.Could the tariff that was for years on SUVs have driven the moneylust for Detroit? Think I read somewhere that on cars there was about 3% profit but on trucks/SUVs it was between 10-15%.
"What? Hire? No, you must be mistaken, Mr. Wagoner. We're setting you free to restart your failed career from nothing. Severance package? Don't be ridiculous, we're the government."
----And there's no sense crying over every mistake
You just keep on trying 'til you run out of cake.
LOL...something like that. Only not quite as ominous as do as we say or else.
Let me put it to you this way, admitting it was on a much smaller scale. I was GM of a business for many years. A big part of my pay was in my quarterly bonus. Said bonus was based on bottom line profits. Had my business been losing money, not only would I have not gotten a bonus, I would have been replaced in short order. I made business decisions and was responsible for the outcome. Shouldn't the same standards apply?
Hey, I'm a Republican, and do believe in personal responsibility. ;-)
Let them talk and spew their political agenda. They don't set the policy for the United States, the citizens of the United States sets our policy.
But we buy their tainted and poisenious ttoys that fuel their economy.
We have each other by the testicals and neither one wants to let go.