Rx for Auto Industry -- No Tax Ours, Double Tax Theirs

At the risk of being told, "Stay in the Living section, Mark. You don't know anything about economics," I think I have a solution to the American automobile industry conundrum.

As I write this, my family's three foreign made-cars sit in my driveway. If when I bought them, I had to pay double the sales tax on them and could have paid no sales tax on an American make (that's would be a 17 % difference at the time I purchased/leased the cars), that may have closed the gap on my decision, because I know that most cars -- American or foreign make -- have been pretty solid mechanically for several years.

Does that go against a free market philosophy? Probably. Is that protectionistic? Of course. Would that irk Japanese and European car manufacturers? Obviously. Is something like that necessary? Most definitely.

Why is it that such a solution will never be chosen? I'm sure there are all kinds of trade agreements in place that I am not informed about. I'm sure there are all kinds of international implications to such a move as well that I am equally ill informed about.

However I think there is one additional reason why we won't do it. It's along the lines of "why men won't ask for driving directions," but instead will drive around lost before they ask for help.

The (mostly male) American ego has trouble asking for help. I think that is based on a paranoia that if you ask for help, you are saying to the person you are asking that you not only need their help, but that you are less than them. And the paranoia is that they will either reject you or laugh at you or rub your face in it.

In other words, foolish pride may be one of the main stumbling blocks to considering the solution proposed above and many other solutions that America could consider if we could get off our high horse - which the rest of the world clearly knows we have soundly fallen off.

It's time for America to wake up and smell the reality that just because we need help doesn't make us any less than the rest of the world. It just makes us part of it.

Follow Mark Goulston, M.D. on Twitter: www.twitter.com/markgoulston

Comments

[itolduso]

Your 'cure' would be better applied to our housing market to end the "real-estate -ponzi-sch­eme"....no­/low tax on homesteads, triple tax on 'investment' houses. HOMES should never be used as gambling chips.

[VegMitch]

So then Japan does the same thing to our computer equipment and Germany does the same thing to another one of our exports. And the cycle continues. Do the words Smoot and Hawley bring anything to mind? Recycling should not apply to bad ideas.

[Mark Goulston, M.D. - Huffpost Blogger]

Thank you. I appreciate it when reprimands on my short-sightedness push me to become better educated in areas that I need to be. Because of your post, I've read up on Smoot and Hawley and will now go back to the drawing board to see if can improve upon my "bad" ideas.

[therealredstateblues]

I hope you read a full fair and balanced account of smoot hawley - that which has been in history and economics books for many years, not just the revisionist stuff that has recently come out from the globalists and usually right wing sources

[therealredstateblues]

here we go again with the Smoot-Hawley fairy tale

the depression was well underway BEFORE Smoot Hawley was passed. Krugman, who won a Nobel prize for his studies of trade says right on his website that that attempts to show that Smoot Hawley had any effect on the depression are inaccurate and revisionist

the govt's own statistics show that Smoot Hawley at worst had less than a quarter of 1% of GDP effect

A case could have been made that a trade war would be bad at a time of trade surplus, but in a time of trade deficts some "protectionist" measures are not only called for but absolutely legal and appropriate.

It is just as the author suggests the globalists and MSM have become so involved in their ideology they refuse to get out and ask for the directions out.

Americans refuse to recognize there already is a trade war going on and we are not winning it. look at the labels of the products you buy. look at the trade deficit numbers, drive thru your local industrial parks and look at all the closed factories.

The bottom line is there is no such thing as "free" trade. everyone else practice some form of industrial policy or protectionst measures - VATs, export rebates, industry subsidies import barriers - unilateral free trade clearly is not working for the US.

[therealredstateblues]

Part II

Would US automakers be in better shape today if they like the japanese had national health care? had R&D subsidies and a protected home market?

We are not going to be able to borrow and spend our way out of this one - we need to produce our way out - we need to put people in the US back to work making things - the very engine that produces wealth, shares prosperity and induces innovation

[therealredstateblues]

Japan makes their own computer equipment - we have outosurced most of ours to singapore and indonesia. In fact electronics, semicon and computer hardware are some of the fastest rates of offshoring - the so called High tech jobs that were supposed to be so plentiful when the grunt labor jobs went away - except the opposite happened - the labor jobs have stayed put ant the advanced jobs went away

Germany , despite having generally hgher wages, taxes and social costs that the US is the third largest exporter in the world - a huge chunk of their economy is about making things and exporting them - exactly what do they need from us they could really put the hurt on?

the bottom line is that the Asians and Europeans NEED our market for their goods - we need to get smarter about leveraging this need to our advatage rather than our dtriment