Always ignored in protectionist arguments is the question of how a company like Toyota, that nobody had ever heard of, run by yellow men with slanty eyes who were our mortal enemies 20 years prior – how this sort of David could’ve slain the mighty Goliath of American manufacturing. It is, in a word, inconceivable. If any market wasn’t “fair,” whatever that means, it was the market for automobiles in the U.S. in the 1960s and 1970s. Nevertheless, frequently, you’ll hear the protectionist cries against foreign companies like Toyota or Honda, who broke into a market dominated by textbook oligopoly thirty or forty years ago :
“We need to keep profits in America – these companies send their profits back to Japan!” And all sorts of other economic gobbledygook. These allegations are, for starters, demonstrably untrue – anyone who wants a slice of the pie need only call their broker and buy shares of their publicly traded stocks. Furthermore, the proposition is rooted in the worst sort of nationalistic mercantilism, which despite two hundred years of intellectual and economic progress, refuses to die. These points are well worth making. But not today. Today, I have a question for anyone who makes or supports those protectionist war cries:
Would you ask that General Motors, the largest U.S. auto maker – and I believe, still the largest auto maker in the world – for example, limit their operations to America?
How can any of the start-ups in the “emerging global markets,” where General Motors earned the lion’s share of its $891 million 2Q2007 profits, compete with the General’s superior wage structure? Their supply chain? Economies of scale? Is it not true that General Motors is in fact stealing profits that otherwise rightly belong to foreigners, in foreign lands?
Anyone who repudiates the profits Toyota earns in the United States must similarly decry those profits earned by General Motors in China, by Coca-Cola in France, and so on. If this sort of special pleading strikes you as inconsistent, you’re not alone. If this makes the protectionist uneasy, perhaps he should reverse his position.
