So many protectionists out there these days. Fear sells newspapers and it also gets Congressmen elected. We've written extensively in this space on protectionism and the absurdity of isolationist policy. See our past commentaries:
- Manufactured Protectionism
- Free Trade Protectionists
- It's Not a Law Just Because it Passes
Foreigners steal our jobs; foreigners are buying all our assets; foreigners ate my homework—we've come up with an excuse for all of it, haven't we? The assumption is that America is either losing competitiveness or mortgaging its future by engaging in free trade and competing with the broader global economy. It's axiomatic and obvious to say that with increased competition the consumer, that is, the citizen, benefits. When competition increases in the US, the US citizen benefits; when the world gets more competitive, the world's citizens benefit.
Many will say, "Maybe that's true for the individual, but the US as a country will still lose." It should be no small shock, then, to find that competition works both ways. And sometimes (oftentimes) we win.
Case in point: In 1998 the Chrysler Corporation—that bulwark of American pride, that bastion of patriotic ingenuity, that hallmark of the Detroit motorcades, was bought by German carmaker Daimler-Benz in a $38 billion stock deal. At the time we gasped in horror and gnashed our teeth. Even our carmakers are being bought by foreigners!
Well, in less than ten years Daimler did a fantastic job of running the company into the ground. And here we are in 2007—where Kirk Kerkorian's US-based Tracinda Group said last week it offered to acquire Chrysler for $4.5 billion in cash.
We ask you: if you could sell an asset for $38 billion, buy it back ten years later for about 12% of the original price, and pocket the $33.5 billion, would you? That's precisely what the US did in this tremendous boondoggle.
Open borders are wonderful.