Auto-Immunity

EVIDENTLY tired of being characterized as a "neo-rice" Old Liberal, Presidential contender Walter Mondale has decided it's time America "got tough, and I mean really tough," with its trading partners. "We've been running up the white flag," Mondale--no doubt eyeing the prospects of AFL-CIO endorsement before the Democratic primaries--has been proclaiming in union halls recently, "when we should be running up the American flag." With Senate tough guys John Glenn, Fritz Hollings, and Alan Crimson, he is backing the Domestic Content Bill--a disastrous projectionist measure design to shut foreign-made cars out of the American market.

According to Mondale, today's protectionism will guarantee tomorrow's free trade. Excluding cheap imports, he claims, will allow us to develop "fully competitive auto and steel industries in the 1990s" and prevent unemployment in the interim. Once American auto and steel industries become competitive with those of other countries, the need for projectionist trade barriers will simply fade away. Until then, though, moderate protectionism is the only way to prevent "irresistible demands for harsh and damaging legislation." In addition, by waving the club of American trade barriers over the heads of our allies, Mondale believes we will intimidate them into reducing their own trade barriers.

According to Mondale himself, however, recovery of the American auto industry will require leaving the trade barriers in place for a decade or more, regardless of whatever concessions we can wring from the rest of the world. To suppose that other countries won't retaliate--as proponents of the Domestic Content Bill insist--is ludicrous. The dollars that Americans spend on Japanese cars are ultimately spent by the Japanese on American exports. If we stop importing their cars, they will undoubtedly prevent us from exporting something else (whatever threatens their own industries most) and our growing, successful industries will suffer. A Congressional Budget Office estimate predicts that retaliatory trade barriers will cause job losses in American exporting industries of three times the number to be gained in the auto industry.

Mondale's probable response to these charges--that by the 1990s we won't need trade barriers anymore because the auto industry will have become competitive is unfounded and overly optimistic. First of all, there is no guarantee that other countries will be willing to reopen free trade just because we are ready to compete. And without the rigors of a competitive atmosphere, American industrialists will probably fail to construct Mondale's nifty, new auto industry. Japan's "unfairness" in this sector consists mainly in being able to build better and cheaper cars than we can. Part of the problem lies with aging Detroit factories, and, yes, a break of some sort will help the companies to find capital for new investment.

But the American auto industry is much sicker than that. It seems doubtful that the same marketing acumen that decided back in the '70s that big cars were here to stay will find intelligent ways to spend new investment money. Labor costs, moreover, are likely to remain cripplingly high. The United Auto Workers (UAW) should not have to take all of the blame for this, though: layer after layer of management has encrusted the companies, turning them into bureaucracies to rival the government in size and ineptitude. Without the looming threat of economic oblivion, those who must sacrifice to improve efficiency will have no incentive to do so. Protecting the car companies will only allow the time-honored wasteful practices prevalent in the industry to continue.

Worse, it will damage other industries. When one industry gains protection from foreign competition, other industries have to pay increased prices for the products of the protected industry, which in turn damages the competitiveness of the consuming industries. The car companies, for example, have to buy more expensive steel because of trade barriers which product the steel industry.

TO THE SHORT-SIGHTED greed-motivated demands for protectionism must be added another ugly element: xenophobia. A sign in front of a UAW headquarters reads "U.S. and Canadian vehicles only. Please park imports elsewhere." For some reason, Canadian cars (which we import in large numbers) don't count as imports, but the Japanese cars do. Mondale reflects this attitude when he asks, "What do we want our kids to do? Sweep up around Japanese computers and spend a lifetime serving McDonald's hamburgers?"

Mondale's motives are most blatant in his pleas on behalf of "decent, hardworking Americans" who "suddenly find themselves thrown out of jobs they have held for 20 or 30 years." To help these "decent, hardworking Americans," Mondale has chosen to make Japan a scapegoat and take the jobs from the Japanese. A "liberal" concern for the plight of labor cannot justify plundering the Japanese economy--and thereby unemploying Japanese workers--to prop up our own.

Once, such crass, opportunistic nationalism was the domain of the Right, while liberals argued for free trade and rational recognition of the interdependence of world trade. But responsibly formulating solutions to our real economic problems doesn't win votes as easily as rattling sabers at nefarious foreigners. In the face of brawny, Republican militarism, Mondale and the other projectionist Democrats have had to scrounge up something equally macho to wave around. In embracing protectionism, they have cravenly abandoned the true principles of liberalism.