Obama and Autos

Obama, if you want to lose my support for your presidency here is how: Protectionism for the US automakers.

http://abcnews.go.com/International/story?id=6793284&page=1

"Washington is planning billions in subsidies for the ailing automobile industry, and the US Senate is debating a 'Buy American' provision in its economic stimulus package..."

What this essentially means is that the US will tax the Japanese and German car makers which would make their cars more expensive and therefore lower the demand for their product.

Say comparable American and Japanese cars each cost $10,000. So under a protectionist policy (tariff), a $2,000 tax would be placed on imported cars raising their cost to consumers to 12,000. It would be nice if the American companies would start selling their cars and eventually start making money and paying the taxpayers back for our substantial investment in them. Instead, American car companies raise their prices to $11,500 because why would they continue to sell a product for 10,000 when they could raise their prices and still be the cheapest option. Meanwhile because they're being protected and aren't facing real competition, they have no incentive to improve the quality of their cars. Meanwhile because there are no cars that cost less than 11,500 on the market, consumers buy less cars because they can't afford them further stagnating the economy.

THIS WOULD NOT HELP THE ECONOMY, IT WOULD ONLY MAKE IT WORSE.

I did some checking and America tried this in the 70's. Here is a long article that you probably won't read but talks about America's protectionist efforts for the car company in the 70's and how it didn't work then either.

http://www.eastasiaforum.org/2008/11/29/1970s-deja-vu-creeping-protectionism-is-on-the-rise/

Don't take my word for it that this would be a terrible idea. (From Wikipedia's page on protectionism) "Economics Nobel prize winner and trade theorist Paul Krugman once stated that, "If there were an Economist’s Creed, it would surely contain the affirmations 'I believe in the Principle of Comparative Advantage' and 'I believe in Free Trade'."

Obama, you seem like a smart guy. And I know you made some promises to all the people in Detroit who are losing their jobs, but this will not solve anything.