Does buying American Cars help the American Economy?

Question

This is what I hear from my friend. Is their any truth to it? what do you think?

explain a little how it does?

Answer 1

there was a time when buying "american made" would have helped our nation, but that time is long gone. There is not a single car on the road today that is totally american made, components from any car come from all over the world, some maybe assembled here, and that would provide some jobs, but that's about all.

Answer 2

This depends on the % of the $ you spend on the car that stays in the US, and your usula spening patterns.

A large portion of most cars is not manufactured in the US. Many Japanese cars sold in the US are assembled in the US. What matters to the US economy is the % of every $ you spend on the car that stays in the US. That's called a multiplier.

You see, when you spend $1 on the car. Say 40 c goes to Brazil where the steel comes from (I'm totally making these numbers up, but it's just to gove you an idea). Another 10c goes to Malaysia where the rubber comes from. 10c goes to the wages of the assembly plant workers, another 20c to the marketing and advertising anmd admin workers. The rest (20c) goes to the company as profit, and say half of it goes to the CEO as bonus/salary and the last 10c goes to the shareholders.

So, out of the $1, 50c goes out immediately and doesn't contribute to the US economy beyong that. The rest, goes to local people so stays in the US economy. The only difference is in the bonuses (Japanese companies tend to have lower bonuses for their top guys) and the shareholders (Japanese companies are mainl owned by Japanese and funds).

So I'd say out of $1 spent, tehre isn't much difference in the impact whether the car bought is US branded or Japanese Branded.

The actuall difference comes in the price difference. How much more do you pay for a ford compared to a toyota? If you hadn't bought the ford what would you have done with the money? WOuld you have eaten/partied/gone to the races... ?

My point is, chances are, the amount you'd save buying the Japanese Branded but 'US made' car would probably help the US economy more (since you'd spend it on stuff that'd go to local people) that if you had bought the US-branded and 'US-made' car.

Looking only at cars your friend is right but not by as much as you might think. However, given that US-branded cars are more expensive, and that you'd probably spend the price difference on other US products, the US economy might be better off if you bought the Japanese branded car.

Answer 3

The positive impact is not negligible as long as you can identify an "American" car or any other good from that of "non-American" since you thus employ locals in some sense. But speaking pure economic ideas, the most valuable contribution to your economy is when you buy, other things equal, the cheapest product no matter where it has been made.

Answer 4

Buying an American car benefits the stockholders of that American car company. However, investors from any country can own that stock. The "most American" car on the road (as measured by the percentage of its production in the US) is actually the Toyota Camry.

Answer 5

All the Japanese cars that you see are (mostly) made in the US, just like all the American cars are (mostly) made in the US. But the idea that your friend is talking about - if you're buying American you're helping American employees to keep their jobs and American employers to create jobs.