Most Americans fail to truly grasp the positive effect of buying domestic cars, electronics, goods and services.  Most trade theories from the 18th and 19th centuries are outdated and useless to the modern world.  For that matter, most trade theories from just a few decades ago (like “free trade”) are outdated and useless to the modern world. 

However, there are still some truisms upon which an economist or consumer can stand.  One of them was lined out by Robert Ingersoll more than 100 years ago.  Ingersoll stated:

“It is better for Americans to purchase from Americans, even if the things purchased cost more.  If we purchase a ton of steel rails from England for twenty dollars, then we have the rails and England the money.  But if we buy a ton of steel rails from an American for twenty-five dollars, then America has both the rails and the money.” 

What is true for steel rails is true for anything else.  It is better to purchase within one’s own economy than to purchase outside of it.  It is better to buy a movie ticket or a gallon of gasoline in your community than to buy somewhere else, because it gives that local business revenue and employs some local worker to staff the business.   

Just the same, but on a broader level, it is better to buy a good from an American company because in the end the profits go to American businesses and support American jobs.  Even if the good is made outside of the United States – as is the case with many Ford and GM vehicles – it is better to buy from them than to buy from a foreign company producing goods right here.  In a world divided into sovereign nations it is imperative not to allow money to flow overseas if it can at all be avoided. 

Unfortunately, in many industries Americans do not stand by this ethic.  The automobile industry in particular is perhaps the worst offender, but other industries also struggle with insourced competition from overseas. 

The United States has for decades been the world’s number one consumer market for automobiles. Chinese consumption surpassed the U.S. in 2009, but this country is still dependent on, and addicted to, cars and trucks.  However, the market share for domestic companies has been greatly diminished by foreign competition. 

According to The Wall Street Journal, there are thirteen car companies selling vehicles in the U.S. with at least a 1.4 percent share of the market.  Only three of these companies are American.   

The so-called Big Three dominate just 44.7 percent of the domestic market, while foreign corporations hold sway over the remaining 55.3 percent. This means that for every dollar spent in the U.S. on a vehicle purchase, over half goes to a foreign company that is trying to knock out its U.S. competition.  By comparison, save for a few American and European imports, the Japanese auto market is more than 90 percent dominated by Japanese auto companies. 

How did the country that invented the automobile lose the lead in its own tailor-made industry?  It was simple; a combination of foreign predation and domestic indifference. 
For decades it was considered en vogue to buy an imported car.  They were cheaper, due to state subsidization, than American cars and they often burned less gasoline.   
Foreign car companies then began producing in the U.S., thus removing the “import” label, and consumers were told to believe that buying a Toyota, Honda or Nissan made in the U.S. was an investment in their own economy.  Marketing departments conveniently ignored the fact that buying a Toyota is equivalent to not buying a GM, Ford, or Chrysler.  Buying a domestically produced Toyota may employ a Toyota employee, but it also essentially cuts a job for a GM employee who made more money, had better benefits, and kept a U.S. industrial titan afloat. 

At the same time there was an argument from the stance of consumer quality.  Foreign cars, imported or domestically produced, were typically seen as being “better” than American cars.  They were thought to be safer, more reliable, and more long lasting.  In many cases they were all of these things, but only because the foreign company was given funding by its home government and our own government to help offset extra costs.  It is no secret that Toyota loses money on every Prius, Camry and Corolla.  But the point is not now, nor has it ever been, to make money.  The point is to win market share and knock out the competition.  Toyota makes up its losses in the Japanese market, which it dominates, and on the sale of expensive trucks and SUVs. 
This has been going on unabated in the U.S. for decades, and it has withered the U.S. auto industry down to a shell of its former self. 

However, fortunes may be changing for the Big Three.  According to the Associated Press, Americans’ favorability for American vehicles is on the rise.  More Americans now prefer U.S. cars to their Asian competition.  In the wake of huge recalls by both Honda and Toyota, and the uncovering of massive cover-ups by Toyota offices regarding potentially fatal malfunctions in several of its cars, Americans have learned that an Asian car is not as perfect as it would lead one to believe.   

The Big Three will require many years of these incremental gains to retake the top spot in the U.S., but a shift in consumer confidence is a good starting point.  Now, we must hope that more Americans start to understand the fundamentals of import-export economics and see that American cars aren’t just equivalent or better products, they are the only rational selection to make.

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