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In short: The American auto industry was dying. Ronald Reagan was under enormous political pressure to do something about it. in the end he imposed import limits. These were “Voluntary,” the foreign car makers all agreed to them, but they were limits.
See, by voluntarily abiding by the limits the importers were avoiding legislation which, because of the political climate, would have been a whole lot worse..
Okay, so the American auto industry had given up almost half it’s market to the imports in just a few years. Detroit was hemorrhaging jobs, Chrysler went bankrupt, and Ford was on it’s knees. The unions were screaming bloody murder, and for once Corporate America didn’t fight them. The result was limits imposed on imports. Voluntary limits…
Honda builds cars in America. Toyota builds cars in America. Hyundai builds cars in America. Subaru builds cars in America. Mercedes & BMW both build their SUVs in America. Nissan builds cars in America.
Regulations — restriction — worked. They created jobs.
Now here’s why we need protectionism:
Imagine it’s 1955 and some region of the country is in a localized recession. The President whips up some sort of stimulus package — a highway plan, or some major construction — something that’s going to place thousands of people to work. What happens?
Well, those thousands of people want the good life as much as everybody else. They take their earnings and they buy cars, and radios and TVs, maybe even new appliances like refrigerators, washing machines or even dishwashers. That’s businesses for the people who sell those things (jobs). That’s business for the people who ship them (jobs). That’s businesses for the people who make them (jobs). And all those people want the same good life. They want the same TVs, and new clothes & appliances… etc, etc, etc.
Well, before you know it we’re no longer talking thousands of jobs, we’re talking tens of thousands. We stimulated the economy (jobs) and the economy grew (jobs).
THIS IS NOT TRUE ANYMORE
Without protectionism, that same stimulus is nearly worthless. See, you can still put thousands of people to work easily enough, and those thousands of people still want the good life, they’re still going to run out and buy all that stuff, but none of it is made here. None of it.
Everything was made here in the 1950s. Telephones, radios, sneakers, TVs… washing machines… clothes… everything was made here. And it can still be made here today, but only with protectionism.
Look at sneakers. Reeboks sell for up to $150. Cost? Nothing. You could easily pay someone in America a decent living wage and still support an obscene profit margin at even the prices of their cheapest sneakers. But not if your competition is importing them from somewhere where they pay next to nothing. They can under sell you. Or, even better, they can charge just as much, but spend oodles more on marketing. So you can’t make your Reeboks here unless all the other sneakers are made here as well, all your competition.
Supply siders like to brainwash you into thinking that protectionism is bad. This is because it cuts into their profit margins. Protectionism is great for the labor force, it’s fantastic for the economy, it super for the government (less unemployment, more tax revenue from all those gainfully employed spenders) and it just plain works. Protectionism works.
Ronald Reagan proved that protectionism works. Isn’t it about time that conservatives accepted reality?
P.S. Mercedes builds it’s SUVs in Alabama, while BMW builds it’s SUVs in South Carolina. That’s right, your German luxury import was built by Rednecks!
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