Le Chrysler Baron

Not often will you find demand-sider Hobart Rowen (Washington Post) and supply-sider George Gilder (Tyringham, Mass.) pulling on the same oar. But when it comes to import quotas on Japanese automobiles, they are united. Free trade doth strange oarfellows make. The quotas were imposed by the Reagan Administration in 1981 to help Detroit meet the competition. Initially set at 1.68 million vehicles, the quota was increased this year to 1.85 million. More recently, because of the flap over executive pay and perks, U.S. trade representative William Brock has expressed reservations about renewing the quotas next year. But the familiar political dynamic may well prevail: Helping a few people seems more attractive to politicians than helping the great mass of people called consumers.

What distresses Rowen and Gilder is that under the government-furnished protectionist umbrella, GM, Ford, and Chrysler have been able to set prices perhaps $500 a car above what a free market would permit; while, according to Robert Crandall of the Brookings Institution, Japanese cars here cost about $1,500 more than the same models shipped to other foreign countries. In 1983 alone that meant $6 billion in added protectionist revenue for Japanese and American producers. (The way these quotas work, the “monopoly profit” goes to the Japanese. The United States Government could have captured it by auctioning the quotas to the Japanese companies, but it didn’t bother.)

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Tom Bethell

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Not often will you find demand-sider Hobart Rowen (Washington Post) and supply-sider George Gilder (Tyringham, Mass.) pulling on the same oar. But when it comes to import quotas on Japanese automobiles, they are united. Free trade doth strange oarfellows make. The quotas were imposed by the Reagan Administration in 1981 to help Detroit meet the competition. Initially set at 1.68 million vehicles, the quota was increased this year to 1.85 million. More recently, because of the flap over executive pay and perks, U.S. trade representative William Brock has expressed reservations about renewing the quotas next year. But the familiar political dynamic may well prevail: Helping a few people seems more attractive to politicians than helping the great mass of people called consumers.

What distresses Rowen and Gilder is that under the government-furnished protectionist umbrella, GM, Ford, and Chrysler have been able to set prices perhaps $500 a car above what a free market would permit; while, according to Robert Crandall of the Brookings Institution, Japanese cars here cost about $1,500 more than the same models shipped to other foreign countries. In 1983 alone that meant $6 billion in added protectionist revenue for Japanese and American producers. (The way these quotas work, the “monopoly profit” goes to the Japanese. The United States Government could have captured it by auctioning the quotas to the Japanese companies, but it didn’t bother.)