February 3, 2010

Toyota Recall and the Political Witch Hunt

Isn't the government being a bit predatory in having The National Highway Traffic Safety Administration start an investigation into Toyota accelerator problems?  After all, they are a majority stakeholder in GM.  It's not the first instance of an assault either.  Or the second since the Obama administration.

Don't get me wrong, I'm not a big fan of Japan's selectivity in terms of free trade;
Here’s a scenario you didn't see: The North American International Auto Show got underway last week and not a single Japanese car was allowed. Such a slight would be unthinkable, but it’s not far from what Japan did recently when it chose to exclude U.S. autos from its “Cash for Clunkers” trade-in program.

The gall is astounding. In 2009, when the U.S. began to formulate a “Cash for Clunkers” program, Congresswoman Betty Sutton (D-Ohio) had proposed that any such legislation extend only to cars produced in North America. Overseas automakers quickly responded in an uproar, and the $3 billion U.S. program was instead made open to all fuel-efficient cars, no matter their country of origin.

In amazing contrast though, the Japanese government recently adopted its own Cash for Clunkers program and not a single car from the Detroit Three was made eligible. Rep. Sutton is outraged and has been joined by Michigan Sens. Debbie Stabenow and Carl Levin, as well as Reps. Sander Levin and John Dingell, in protesting this stunning lack of reciprocity.

Clearly foreign markets are not altogether as free as they are in North America. Those of us who advocate free trade have to make sure that when we are promoting the virtues of free trade, we are dealing with a level playing field, otherwise we are simply setting ourselves up to be patsies. Free trade is a good thing unless on side of the trading partnership is gaming the system. Even then, retaliation in the form of protectionism, as organized labor would have it, is not the answer. Free trade benefits consumers as well as producers and consumers should not be punished. Instead, figuring out alternative means to open up foreign markets to American products is the best way to go about leveling the playing field.

But all that aside, has the government adapted a form of soft protectionism? Is the government trying to placate unions by punishing Toyota? Is Honda next? More importantly, is the government using it's position as a player in the automotive game (by way of it's GM ownership), using it's role as referee (in it's role as government) to protect it's investment in GM?

You simply can't be a player and the referee and expect to remain neutral. And even if you could, you can't expect others to see you as neutral. There's an ever-present danger, all too real given human nature, to stack the deck in your own favor. No one could conclusively make the case that this is what's going on but it sure looks wrong.

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