Protectionism in the American Automotive Industry
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This research paper explores the economic origins, costs and benefits of the government's protectionist legislature in regard to the United States' automotive industry. It describes the arguments advocating protectionism and describes which of these arguments can be refuted and why. The paper concludes that the free trade and open market of the auto parts industry is positive for the economy.
From the Paper:"Protectionism, as defined by Ask.com's online dictionary of economic terms, is "any of several political-economic doctrines that have in common advocating that the government impose political barriers to international trade . . . in order to 'protect' a domestic firm (or firms) manufacturing these same goods from foreign competition and thereby make it (them) more profitable than would otherwise be the case under free competition. . . ." Most arguments advocating protectionism can be refuted using economic theory, past statistical evidence, and common sense; but there are a few strong arguments for protectionism that are difficult to disclaim. One argument is that savings from free trade will not translate into lower prices. This is based on the claim that consumer's preferences are more inelastic than elastic. For example, clothing manufactures do not lower prices when factories are moved over seas for cheaper labor, hence lower production costs. Producers realize that consumers will buy the same number of items regardless if the lower production costs are reflected in prices. Because of this, producers choose to pocket the extra money as opposed to giving some of the savings back to the consumer."
Sample of Sources Used:
- Freedom's Nest Quotes: Quotes on Protectionism. Kenichi Ohmae. 18 Nov. 2000 <www.freedomsnest.com/cgi-bin/q.cgi?subject=protectionism>
- Free Trade or Protectionism. 18 Nov. 2000 <www.buyamerican.cc/protectionism.shtn>
- When Protectionism is a Good Thing. Herman E. Daly. 1994. PCD Forum Column #67. 18 Nov. 2000 <http://iisd1.iisd.ca/pcdf/1994/67daly.html>
- Trade Issues: Cost of Protectionism. National Center for Policy Analysis: Idea House. 18 Nov. 2000 <http://www.ncpa.org/pi/internet/pd060799b.html>
- The Myths and Realities of Trade Protectionism. Bryan T. Johnson. 1996. The Heritage Foundation. 19 Oct. 2000 <www.heritage.org/library/categories/trade/bg1077.html>
Cite this Research Paper:
Protectionism in the American Automotive Industry (2007, December 16) Retrieved May 18, 2021, from https://www.academon.com/research-paper/protectionism-in-the-american-automotive-industry-100126/
"Protectionism in the American Automotive Industry" 16 December 2007. Web. 18 May. 2021. <https://www.academon.com/research-paper/protectionism-in-the-american-automotive-industry-100126/>