T Nation

Pat Buchanan on The Toyota Republicans


Pat makes a good point, IMHO.

The Toyota Republicans
by Patrick J. Buchanan
Posted 12/16/2008 ET

"GOP to Detroit: Drop Dead!"

Some may have read the headline Friday, had not President Bush stepped in to save GM, Ford and Chrysler, which Senate Republicans had just voted to send to the knacker's yard.

What are Republicans thinking of, pulling the plug, at Christmas, on GM, risking swift death for the greatest manufacturing company in American history, a strategic asset and pillar of the U.S. economy.

The $14 billion loan to the Big Three that Republican senators filibustered to death is just 2 percent of the $700 billion the Senate voted to bail out Wall Street. Having gone along with bailouts of Bear Stearns, AIG, Fannie, Freddie and CitiGroup, why refuse a reprieve to an industry upon which millions of the best blue-collar jobs in America depend?

In a good year, Americans buy 17 million cars. A more populous EU probably buys as many. Three billion people in India, Southeast Asia and China, four times as many people as there are in the EU and United States, are moving toward the middle class. They, too, will be wanting cars. And millions of them love American cars.

Is the Republican Party so fanatic in its ideology that, rather than sin against a commandment of Milton Friedman, it is willing to see America written forever out of this fantastic market, let millions of jobs vanish and write off the industrial Midwest?

So it would seem. "Companies fail every day, and others take their place," said Sen. Richard Shelby on "Face the Nation."

Presumably, the companies that will "take their place," when GM, Ford and Chrysler die, are German, Japanese or Korean, like the ones lured into Shelby's state of Alabama, with the bait of subsidies free-market Republicans are supposed to abhor.

In 1993, Alabama put together a $258 million package to bring a Mercedes plant in. In 1999, Honda was offered $158 million to build a plant there. In 2002, Alabama won a Hyundai plant by offering a $252 million subsidy.

"We have a number of profitable automakers in America, and they should not be disadvantaged for making wise business decisions while failure is rewarded," says Sen. Jim DeMint of South Carolina.

DeMint is referring to "profitable automakers" like BMW, which sited a plant in Spartanburg, after South Carolina offered the Germans a $150 million subsidy and $80 million to expand.

Be it BMW, Honda, Toyota, Nissan, Mazda, Mitsubishi or Hyundai, the South has become a sanctuary for foreign assembly plants, for which Southern states have been paying subsidies.

Fine. But why this "Let-them-eat-cake!" coldness toward U.S. auto companies? General Motors employs more workers than all these foreign plants combined. And, unlike Mitsubishi, General Motors didn't bomb Pearl Harbor.

Do these Southern senators understand why the foreign automakers suddenly up and decided to build plants in the United States?

It was the economic nationalism of Ronald Reagan.

When an icon of American industry, Harley-Davidson, was being run out of business by cutthroat Japanese dumping of big bikes to kill the "Harley Hog," Reagan slapped 50 percent tariffs on their motorcycles and imposed quotas on imported Japanese cars. Message to Tokyo. If you folks want to keep selling cars here, start building them here.

Fear of Reaganism brought those foreign automakers, lickety-split, to America's shores, not any love of Southern cooking.

Do the Republicans not yet understand how they lost the New Majority coalition that gave them three landslides and five victories in six presidential races from 1968 to 1988? Do they not know why the Reagan Democrats in Pennsylvania, Ohio and Michigan are going home?

The Republican Party gave their jobs away!

How? By telling U.S. manufacturers they could shut plants here, get rid of their U.S. workers, build factories in Mexico, Asia or China, and ship their products back, free of charge.

Republican globalists gave U.S. manufacturers every incentive to go abroad and take their jobs with them, the jobs of Middle America.

And, for 30 years, that is what U.S. manufacturers have done, have been forced to do, as their competitors closed down and moved their plants abroad in search of low-wage Third World labor.

It's Herbert Hoover time in here, Vice President Cheney is said to have told the Senate Republicans -- as they prepared to march out onto the floor and turn thumbs down on any reprieve for General Motors.

In today's world, America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies. And we have a Republican Party blissfully ignorant that we live in a world of us or them. It doesn't even know who "us" is.

We need a new team on the field and a new coach who believes with Vince Lombardi that "winning isn't everything. It's the only thing.


So his idea of "winning" is buying goods at artificially high prizes and to thereby keep the American industry on the 20th century while everyone else moves in the 21sth.

Well, as a European, the only thing I can say is:

Hell yeah, please do that.


...I feel like he misses the point entirely.


He's been doing that quite a bit lately, what with his WWII revisionism and all.


Propping up failed businesses that can't survive on their own with public money is ridiculous. Comparisons with WWII(where the government basically forced Detroit to shift production for war) are inaccurate as well. If the government demands that GM make certain types of cars, there is no guarantee that consumers will demand and buy them.

I don't care about a ripple effect...Detroit is on the outs with or without a bailout and the naive economic nationalists like Buchanan can't seem to see this. Rip the band-aid off I say.


If he had only said this in the early 90s when dems and repubs were really ramping up globalization.


This whole discussion is ridiculas on both ends. The money needed to float the autocompanies is a drop in the bucket comparitively with what we have already agreed to bail out. But, on the other hand, there is already the tools in place to deal with manufacturers in these situations; it's called bankruptcy!!

There is no better tool to assist the automakers to reform their companies and to remake themselves in the image of a successfull automaker (i.e., Toyota, Honda, etc...), than chapter eleven. They need a better business plan, one which can be reached in chapter eleven in part by renegotiating their union contracts in addition to reforming their white collar compensation, which I'm told is also way out of line capared to other successfull companies.

I'd love to hear someone's argument against chapter eleven for the automakers. And please, none of this "too big to fail" bs either. Nobody is too big to fail, not even the big three.


Pat raises good points, except for one thing. Because the foreign car makers are subsidized by their home countries, the work they farm out to the US assembly plants is not the cream of the high wage manufacturing jobs.

ie Honda can cast an engine block, crank, pistons and cylinder head here in the US then ship it all to Japan for machining which is a high skill high wage job, then ship the completed parts back to the US with precision machined value added parts like piston rings and valves and say it was %90 made in America.

What Senator Shelby is advocating is letting foreign manufacturers have the opportunity to cherry pick the cream of Americas industrial manufacturing jobs and ship them overseas. While Americans get stuck with the lower paid lower skill level assembly jobs.

Other than Britain which no longer has a domestic industry no other industrialized country is as cavalier with the fate of there auto industry as the US is.

The suggestion that companies die and others replace them is bullshit. The Big Three are all that is left of a multitude of American automobile manufacturers. Once they are gone that is it for American Automobile manufacturers, there will not be a new American company that takes their place.

All that will be left is foreign companies whose first loyalty is with their own people who will get the best jobs while Americans will get doled out enough of the lowest paying jobs for them to save face and be in the American market.


I think the big three should enter chapter 11 as well.

But I believe the argument against ch. 11 is that, in this ill-working credit market, there "is no ch. 11." In other words, Ch.11 would immediately morph into ch.7 (liquidation)... which almost no one wants. IMO the govt role in this is to insure that the big three can get their loans and restructure WITHIN the confines of ch. 11.

Please feel free to explain it better those who can better explain the credit markets.


You are wrong the big three can and do compete with foreign manufacturers. Ford of Europe and GM's Vauxhall and Opel divisions are very successful in Europe against domestic competitors who are subsidized by their governments. Renault and Fiat are the companies that can't survive without government subsidies, that's wehy you don't see them in the US market anymore.

If you bothered to read the article you would have seen that the foreign companies who have been competing against the big three have been getting huge government subsidies from the southern states. It's not a level playing field for the big three inside the US because Southern states have been paying foreigners to build factories in their state.

The ripple effect is going to be huge. The big three may be collectively referred to as Detroit but that term is somewhat outdated. A more accurate term is the Interstate 75 industrial corridor which stretches from Michigan all the way to Georgia. If the big three fail that whole I75 corridor is going to be decimated. The effects won't be ripples it will be Tsunami's.


Liquidation would be very attractive to a lot of foreign competitors because the big three do have profitable operations overseas and there are some iconic brands like Jeep and Cadillac that could end up in China, just like the British company Rover did.

If you shut down the big three for chapter 11 there are a lot of autoworkers and parts suppliers who are relying on their jobs to pay off mortgages, car loans, credit cards. If the credit markets loose that income stream I don't see how they are going to be able to give car loans so the big three can get out of ch. 11.


That's my understanding as well. I'd love to hear from someone on here with decent knowledge of economics and credit markets.


I'm cool with tariffs.