Tuesday, February 12, 2013

Buying a New Car .... Buy American Means What?

An editorial appearing today seems to capture the essence of many problems facing Americans when making a new car purchase today.

Searching for a Star-Spangled Minivan is a somewhat humorous but also quite revealing commentary on life in America. It's subtitled ' 'Buy American' isn't as easy as it used to be. Then there's also the 'buy right-to-work state' urge:'

"When I was a child in the 1970s, my father was committed to buying only an American car. It was the patriotic thing to do, Dad said. We want to help the U.S. economy, he explained. So we had a blue Oldsmobile Omega for nearly a decade and a gray Oldsmobile Calais for years after that.

Dad's car choices probably weren't all that unusual at the time—except for the fact that we were Canadian. It was years before my parents actually moved to the U.S., so my father's American patriotism is all the more powerful to me as I think back on it today.

I was reminded of this recently as my husband and I embarked on buying a new car. We're in the market for either a minivan or an SUV crossover that has three rows of seats. I want to make a patriotic purchase, but it's not as simple as it used to be. Many more calculations go into figuring out what's the most good-for-America car than were needed a few decades ago.

Consider the gradations of virtue in buying American. There are Japanese models that are built in the U.S., so it may actually help the U.S. economy just as much or more to buy a Honda built in Indiana as it would to buy a Chrysler built in Italy. But then there is the question of where in the U.S. the car was built. I am much more supportive of right-to-work states than I am of union-monopolized states, so on that basis isn't it more pro-American to buy a Toyota built in Alabama than a General Motors vehicle from Michigan?
A 1941 Oldsmobile 4-door sedan.

Then there's the problem of buying a vehicle produced by either of the two American auto companies that took U.S. government bailouts. Millions of taxpayers are never getting their money back. In December, news emerged that taxpayers would lose as much as $20 billion on their forced "investment" in GM.

As a supporter of free markets, I reject the need for government bailouts in the first place. But the Detroit rescue by the Troubled Asset Relief Program was a bad deal from start to finish. Nonunion employees and contractors got clobbered as did bondholders, and in the end the Obama administration is accepting pennies on the dollar in repayments just to be able to score political points by declaring, as Vice President Joe Biden kept crowing on the campaign trail, "GM is alive." All this has also been a good thing for the United Auto Workers, but that isn't necessarily the same as being good for the rest of America.

This leaves us with Ford, which deserves support from car buyers like me for declining the TARP bailout. Yet there again, it isn't so simple. First, Ford was founded by a notorious anti-Semite, which is probably why my father bought Oldsmobiles all those years ago. Next, the cars are manufactured in a number of places other than the U.S., including Canada, Mexico, Turkey and Venezuela. Not to mention that the places in the U.S. where Fords are built include some of those nasty union-dominated states we disqualified earlier.

All these knotty considerations aside, though, I'm convinced that no matter what my husband and I buy, it will be a patriotic purchase. Not because of the company, make or model, but simply because we need such a big car in the first place: God willing, we will be a family of six come August. As Jonathan V. Last argues in his new book, "What to Expect When No One's Expecting," the country has a serious baby drought, with potentially dire consequences. The country needs families to have more kids to replenish the workforce, strengthen the economy, and expand the pool of future taxpayers.

Yet my husband and I don't feel that our brand of baby-patriotism is much appreciated or rewarded by Washington. The tax code isn't doing enough to encourage having more kids. And parents thinking of expanding their families must take into consideration financial matters like paying for government-mandated car seats. As Mr. Last argues, the expense of car seats (and the room they take up!) isn't the determining factor in a couple's decision to limit the number of children they have, but it sure doesn't help.

One comfort, as my husband and I shop for cars, is the knowledge that even if the one we pick doesn't meet all of my patriotic specifications, at least we'll be filling it with an above-replacement-rate number of young Americans."

Summing Up

Assuming the writer can afford to buy an American made new car, any such purchase will help our economy grow.

The car dealer and its employees will receive income, the car maker will receive replacement orders to replenish the dealer's inventory, the transportation company will receive an order to deliver the replacement inventory, the auto company's suppliers will receive parts orders to be manufactured and so on down the line.

The circular flow of additional consumer demand leading to additional supply will create continuous economic wealth throughout the broader U.S. and worldwide economy.

Unfortunately, the animal spirits of the American consumer are missing in action today, and the President's State of the Union address tonight will attempt to get We the People feeling better about the future of our great country.

That said, his divisive government knows best point of view has had and will continue to have an unsettling effect on many of our fellow Americans who are uncertain and deeply troubled about the nation's future.

Throw in the befuddled and highly unpopular Congress and its inability to do anything helpful in a bipartisan manner, and the animal spirits needed to stimulate consumer demand may still be lacking for new cars and other purchases. If so, this will cause consumers to remain on the sidelines indefinitely.

So in the end, maybe the writer will elect to wait until the dust settles before buying that new car. And that's the problem, my friends.

A lack of consumer confidence, perhaps coupled with a lack of purchasing power due to a lack of jobs, leading to a lack of consumer demand leading to a lack of economic growth leading to a lack of employment leading to a lack of taxes paid leading to historically high deficits and ending in a scary national debt level. All with no end in sight.

Good luck tonight, Mr. President. We're all waiting to hear what you have to say about all this.

Thanks. Bob.

1 comment:

  1. Great blog Bob. We need more people like you to explain stuff like this to the world. However, technically, it is impossible to buy an all American car nowadays. According to AutoWeek (, the most "American made" vehicle today is the Toyota Matrix, whom sources 95 percent of its content from North America. Next is the Toyota Avalon with 85 percent. Finally in third with only 83 percent of its parts made in the US is the Chevrolet Express and GMC Savana. Even Ford's most "American" car barley hits 80 percent. In fact, America's pride and joy, the Mustang is at a staggering low 55 percent.

    Still, I do agree with you on buying American. Not necessarily because it will help the economy, but because of what you get when you drive off the dealership. America makes some of the best cars in the world when it comes to bang for your buck. Sure, we might not be known for our meticulous craftsmanship and quality (that of which we are very much improving these days), but what does that matter when you're at a red light in your new Camaro SS?

    All in all, while some American cars may in fact be assembled in America, it is important to remember where the parts are actually coming from.

    Again, great work Bob