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Why is Toyota in so much trouble in the US?

Published on February 25, 2010 by: in: Economy

It’s been hard to find a newscast in that US and even around the globe that does not have a segment dedicated to the safety problems at Toyota.  If you watch closely, there are a trail of clues that there is more to the story then what you are likely to hear about in traditional

Clue 1.  The congressional hearings and regulatory news conferences have a show trial quality.  Each politician tries to outdo the others in condemning the company.   There appears to be very little interest in discovering facts or the truth, and a great deal of enthusiasm for arousing judgments against the company.

Clue 2.  While every newscast talks about the big recalls, almost none mention that the big three Detroit-based companies have a long history of a much larger number of recalls, both voluntary and forced.   Most newscasts fail to mention that relative to its competitors, Toyota is rarely subject to recalls of any type.

Clue 3. Toyota is the largest car company in the world and dominates many national markets, including many where safety concerns are typically on a par with the U.S.  Yet nowhere else, is Toyota being singled out for such harsh criticism and sanctions.

Clue 4. Much is made of the fact that Toyota is a foreign car company.  Rarely is it mentioned that it is one of the largest employers and corporate taxpayers in the U.S.

So why the tilt?  Why is Toyota being demonized so much and why are so many relevant facts being left out of the reporting?  Well, if you listen closely, you might notice that the talking points of Democratic leaders in congress and the administration closely match what you’ll hear on the traditional networks and in the New York Times and the Washington Post .  The reason is that the government is anything but neutral on Toyota.   Here are three reasons why.

Reason 1:  One of the pillars of support for the Democrats is the Unions.  One of the traditionally most powerful unions is the United Auto Workers.   If you need to see how politically potent the UAW is, you need look no further than the government takeover of Chrysler and GM.     The takeover precluded the normal bankruptcy process and allowed for the government to change the rules in the middle of the game and give the unions a far better deal than they would have gotten under a standard bankruptcy reorganization.  Many believe that the only real reason for the take-over was to repay the UAW for their support for the Democratic Party.  The UAW is dominant among the Detroit-based auto companies.  They have not been successful at enrolling the workforce at Toyota.  In summary, any enemy of the UAW is an enemy of the Democratic Party.

Reason 2:  One of the big problems associated with the government taking over industries is that the situation creates a massive conflict of interest.  How can the government justly regulate companies it is in direct competition with?  The government now owns  both Chrysler and GM.  Why would you expect it to do anything but put a few dents in its biggest competitor?

Reason 3:  Most people outside of political fundraising circles are unaware of the fact that in the last couple of decades one of the most prolific financial supporters for the Democratic Party have been the trial lawyers.  The proliferation of class action suits has been a kind of partnership between the trial lawyers and the Democratics.  The outcome has been the big tobacco company suits, the asbestos suits, and other mega-cases where the politics tilt the laws to generate an outcome that then reinforces the politics.   If you listen to any newscast on Toyota, you will hear emphasis placed on the cause of the accelerator problems.   The politicians involved obviously want the cause to be the electronics rather than the mechanics?   Why do they care?   They care because there are billions of dollars of lawsuits in the works.   In these politicized cases, the trial lawyers prefer blurry facts and high emotions.   Most people can understand a piece of metal and a car mat.  Most people can’t understand complex electronic systems.  So for the trial lawyers, they want it to be about the most complicated part possible.  Then all they have to do is tap into people’s resentment of foreigners or big companies and they win, regardless of the facts.   And if these cases succeed, the Democratic Party stands to get a major cut of the action.

Are these dynamics unique to the Democrats?  No, of course not.  It’s just that most Republicans have a philosophical distrust of government so they are generally less enthusiastic about expanding its roll.   Democrats mostly believe government is a good thing, so that their enthusiasm for government expansion just inherently creates more opportunity for corruption.  This is why corruption is most rampant in American cities where Democrats control and governments are very large.  And because of the structure of our media, shenanigans like this are nearly always well covered if it involves a Republican.  However, if you confine your news gathering to traditional media, almost nothing of what I’ve written will have even come across your radar screen as a possibility.  That of course , is why I took the time to write it.

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About David Hollies

is a writer, lecturer and economist. His home outside Washington, DC is a meeting place for fans of freedom from all over the world.

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