In 1983 the Harley-Davidson Motorcycle Company was flat on its back. It had suffered through the road rash of being acquired by the AMF Corporation, a company best known for its construction of high quality bowling pins. To AMF, Harley was a cash cow, to put very little in and take a great deal out. Like an empty soda can, when the sweet stuff stops coming out, you just throw it away and move on. By the time Harley had reached that point, a group of investors rose, wanting to rescue the iconic American brand name. But Harley could not compete with the foreign competition; they were too big and Harley was too small.
Mega corporations like Honda and Kawasaki could sell their motorcycles at a loss in the US market and never see it affect their bottom line. The US International Trade Commission then did the unthinkable. Not since the Lindbergh baby snatching has there been such a heinous crime. They imposed a 45% tariff, yes, by God, a tariff! on imported motorcycles over 700 Cc’s. And because of this dastardly act Harley today employs 9,000 Americans and remains extremely profitable by importing components for their own American-made motorcycles.
That’s why Mark Twain once said, “ If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man.” Harley, once pulled from the wreckage on the roadside of international trade, became a disciple of its would-be murderer. But listen . . .! The world did not end; 9,000 American’s are employed, American motorcycles roar up and down the highways, and all is well! How could this be? Our politicians tell us protectionism would bring about trade wars! And a breakdown of international cooperation. Why, even the mention of renegotiating trade deals might make the Canadians ponder starting their own nuclear program.
Rather than taxing their own citizens, they taxed those who wanted access to our markets. The tariffs protected us from dumping by foreign competitors and encouraged foreign competitors, serious about selling in our markets, to build and invest here. Harley recently signed an agreement with India to allow Harleys to be imported. At one time Harley-Davidson was the most exported motorcycle in the world, and today there are over one million members of the Harley Owners Groups worldwide, from Europe to Kuala Lampur, from Singapore to Australia. All because of that dirty little bastard, protectionism.
So, now you eat your bacon, lettuce, and tomato sandwich, without the tomato, and wonder why it is that they can’t locate the cause of the salmonella poison. The reason is free trade. Given a choice in the grocery store between Florida-grown tomatoes and Mexican-grown tomatoes, the Mexican tomatoes will rot on the shelf. This fact depresses the price of Mexican tomatoes so what’s a capitalist to do? They repackage the tomatoes, called reboxing. They mix Florida tomatoes with Mexican tomatoes, and presto chango, the result is just tomatoes!
They are quite content to export 70% of the 3.7 millions automobiles that they produce each year, but are careful to hold their own auto imports at 3% of the market. How do they manage this? Why, tariffs of course! They welcome this illegitimate relative into the fold, for despite all his faults he brings with him prosperity. While he is easily defamed and disparaged in the media, the Koreans welcome him in through the front door. Money talks and bullshit walks. What sort of stupid country would play a game where you can’t win? A game of flinch where you are not allowed to hit back.
You would think, given the success of Harley Davidson, American auto manufactures would be clamoring for the same sort of agreement. Except the US manufacturers like the low tariffs. Ford owns 51% of Mazda and owns Volvo outright, why would they want higher tariffs? GM owns Saab and bought up the remnants of Dae Woo of Korea; that new fuel-efficient Chevrolet is actually Korean (See Tomatoes). The GTO is Australian. You see, they like the current tariff system. Heads I win, tails you lose. The Tahoes and Expeditions and Mountaineers are all built in America, and gee, I’m sorry, we have to close those plants, sales are way down.
The expensive American worker has been replaced and free trade is resplendent, God bless America. Proponents of free trade would shout me down with charts and graphs of arrows pointing ever upwards. The President loves to talk about American productivity. Why, if your friendly Wal-Mart associate rings up ten Chinese-made products in an hour instead of nine, why, that’s a 10% rise in productivity! The profit made between the minimum wage salary of the Wal-Mart employee and the Chinese supplier goes right into our national Gross Domestic Product. So when they say higher wages hurt productivity, it’s absolutely the truth!
Because, of course, the margin of profit is only between wholesaling and retailing. The real money is in manufacturing. How much money does Wal-Mart make selling a copy of Microsoft Windows versus the profit Microsoft makes by creating it? Automobiles are much more labor intensive but the principle's the same. By building overseas the company avoids healthcare costs, the unions are much more pliable, and best of all are the tax advantages. The company is only interested in the wellbeing of the company, not the country! God bless America is for the flag-waving idiots, the Fox news hounds, and those who dare not speak the name -- protectionism.
If you ask they will proudly proclaim it is better to be a hungry free trader than a low-down, dirty, prosperous protectionist. But if you ask them, why is that, they don’t know. Because someone told them so, over and over and over.