Buzz Wants to Make Autos an Election Issue

[August1991]

They'll have to, cause we won't have the money to pay for new TVs, computers, cars or much of anything else.

*Sigh* Then why would they ship us any stuff?

If all we do is buy then what you've got is a huge outflow of money every year. Huge trade deficits are not good for an economy.

Sounds like a good deal to me. We send them paper and they send us cars.

The difference, August, was that typewriter repairmen then became PC repairmen. Horse traders became auto dealers. What we're talking about here is not the replacement of one type of job with another but the elimination of a job entirely with no substitute.

In putting the emphasis on the loss to the typewriter repairmen, you ignore the much greater benefit of the device you're looking at right now.

When someone first discovered how to make fire, should the main concern have been the loss of the fire-keeper's job?

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Trade is voluntary. If you don't like what the world has to offer, you are free to refuse the deal and go away. In effect, the benefits you fear losing through more trade were the product of trade in the first place.

A trades with B and then C arrives. B switches to trading with C and A is left without trade. What can A do? Match what C has to offer or do something else. It is in "doing something else" that we have become such a successful species.

[Charles Anthony]

Say what you will but the Auto sector alone stretching from Windsor through to Oshawa is in big trouble without them. Along with a majority of our economy that relies on it.

There could be something else that is "hurting" the auto industry. If mink coats go out of style, would you say that the fashion industry is "hurting" the mink coat industry?

Are American cars so great? Do they have to be made in North America to be good cars?

If we allowed free trade in the auto industry, it might be cheaper to send all of our domestic auto-workers home and pay their exact salary in welfare with the money we save on cheaper imported cars. You could even impose an import duty.

[Saturn]

If NA cars have such a poor level of quality then Asian buyers will not buy them, or at least, not for long, so why the roadblocks?

I think you are mixing cause and effect, if there was a significant demand for the US products then the consumers would demand that procedures be expidited. If the Canadian govenment tried to do the same with Japanese imports they would find the biggest complainers would be Canadians that want to buy Japanese vehicles.

The reality is, the big three can only sell product in NA because they sell it cheap compared to the imports. If the big three want to sell to into Japan and Korea then they would have to sell them on price - an extremely difficult thing to do given the wages and benefits demanded by CAW workers in NA.

For that reason, if I was an executive at the big three, I would not waste my time trying to get product built in North America shipped to Japan. I would set up a new factory in China and ship the product from there. In fact, that is what I believe the big three are doing already.

The reality is that NA cars are gas guzzling monstrocities of poor quality and nobody wants them. Toyota builds cars right here in Ontario and pays it's workers just as much as the NA three. The materials are the same, the workers are the same, their pay is the same and the cars cost the same. The difference is that consumers buy Toyotas like hot cakes and the NA3 cars sit in the dealership lots. The key is that Toyota is spending far more in it's engineering department than the NA three. The NA three are spending far more money on lawyers and lobbyists to fight environmental standards and public transportation instead of on designing and building cars that consumers want. And then they blame their workers for it as if the guys in the factory design who design those lemons.

[Saturn]

If all the high-paying manufacturing jobs, all the IT jobs, all the design jobs, all the editing and writing jobs, all the engineer and scientific jobs drift to Asia, South American, etc., what is left for Canadians to do? Cut down trees?

The market has a wonderful way of self correcting. If and when this happens the standard of living and wages in this country will drop until it is "competitive" with other countries. That would allow us to establish a new equilibrium where the standard of living everyone is about equal everywhere and the jobs are distributed randomly across countries. The argument that free traders make is the pie grows bigger so we don't need to worry about a drop in standard of living. Consider the following numbers:

Today: Developing World: 20, Industrialized World: 100, Pie = 120

Future: Developing World: 60, Industrialized World: 80, Pie = 140

As you can see, this scenario shows that it is possible for the pie to get bigger but the share of that pie which industrialized countries enjoy actually drops. There is nothing in free trade theory that says the pie will always grow fast enough to ensure entire countries will never end up losers. In fact. most free trade opponents will acknowledge that some people always end up poorer because of free trade - they just refuse to acknowledge that the group of people who end up losing from free trade could easily represent 50-60% of the population of Canada.

What you need to note here though is that the pie always gets bigger for multi-national companies. It is the same corporations who run manufacturing in China as in North America. To them it doesn't matter that the relative share of NA drops aganst China's share. All that matters is that the pie gets bigger because they get the same proportion of the total pie. Of course they will always argue that whatever is good for them is good for north americans too. Do you expect them to say it isn't?