If everyone who was going to buy a car this year bought AMERICAN, would it jump start our economy?

Question

I often wondered if the economy works in a circle not unlike "The Lion King", so simple yet so hard for us to see.

Addendum: I have customers whose companies have been working with the big three for years, they are now praying for the Chinese to buy their services before their companies go bankrupt, any comment?

Answer 1

No, most of the cars that sell here are made in the USA. Toyota and Honda both are made in America and employ Americans. 20 years ago that was not the case but is now.

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Answer 2

Nope. If everyone bought an American car, BMW, Honda, Toyota, and Hyundai (to name a few) would have to lay off all workers in their American plants... What a nice recovery that would be...

As to the economy working in a circle not unlike "The Lion King", that's exactly how it works, only the circle doesn't stop at national borders...

Answer 3

The regular way of answering this question is to use a short term aggregate demand approach. What would the impact be on domestic demand for cars? How much would import demand decrease? And how big are these changes relative to the deficit in aggregate demand currently faced by the economy? Sorry I don't have the data at hand to answer these questions.

Of course there are a load of follow-up questions to this. How big is this alleged demand deficit to begin with? Why are you advocating this policy rather than other, more sensible policies for increasing demand? For one thing, telling everyone to buy American doesn't deal with the recent downward trend in demand for automobiles overall. For another, it forces people to buy a product they would otherwise not want.

My opinion: it is not the job of you the consumer to sort out your economy's woes. That's the job of the macroeconomists at the Fed and in your government.

Answer 4

1. There aren't enough American cars made to be sold to that many people.
2. American car companies also have plants and factories outside of America - so what is your definition of an "American" car?
3. Even if it had an impact, it'd only be in the American automotive sector, which has been hit so badly, one year of even great sales wouldn't do much. It'd take sustained growth over many years to return the American car industry to what it was - and even then - the greedy car makers would STILL be using foreign labor and plants to produce the cars due to CHEAP LABOR.

Answer 5

I don't know if it would jump start the economy, but it certainly would make all the auto mechanics ecstatic. Every American car I have owned was a piece of junk. Found On Road Dead. Fix Or Repair Daily. So true, so true.

Answer 6

Sure, if you want a car that turns into a piece of junk in less than seven years.