Leadership

Protectionism: Help or Hindrance for US Automakers?

By Jessica Stillman

Updated on: December 16, 2008 / 9:03 AM EST / MoneyWatch

The Find: A short video on whether protectionist policies abroad have hurt the US automobile industry, and whether such measures here at home would help it.
The Source: A video interview with Bruce Kogut, a professor at Columbia University's Graduate School of Business on Worldfocus, via the Columbia Business School Public Offering blog.

The Takeaway: That the US automobile industry is in desperate straits is undeniable, but did protectionist policies abroad, and in Asia particularly, contribute to the pitiful state of Detroit's big three? With GM and the others producing automobiles in Asian plants and doing a brisk business in China and Korea, and with constraints on exports to Asia tapering down, the bottom line is that, if US cars aren't selling well abroad, it's not down to protectionism, explains Kogut.

Europe, rather than Asia, has a longer history of employing protectionist policies, but even there these measures are on the decline, with the success of European car manufacturers now due to extremely high plant productivity in nearly all segments of the market (with lower end players like Fiat as the exception).

So could protectionist policies such as tariffs on the part of the US benefit Detroit? Kogut acknowledges the temptation to come to the aid of domestic producers during times of economic turmoil, but he ultimately argues that tariffs or similar measures would not have any significant impact on the US auto industry. To find out why, check out the concise and insightful interview, which also features Kogut's opinions of a possible bail-out package for Detroit.

The Question: Should the government bail out Detroit?

(Image of 1970s GM bus by ecparker, CC 2.0)