WSJ Opinion: What is an 'American' Car?

Washington DC May 8, 2009; The AIADA newsletter reported that as Chrysler fell into bankruptcy last week, with GM perhaps close behind, President Barack Obama and other government leaders were dispensing advice to the auto industry.

According to Matthew J. Slaughter of the Wall Street Journal, unfortunately, much of this advice ignores the dynamism of today's global economy. The economic principle of comparative advantage, which explains many of America's gains from globalization, tells us that hard-working Americans are not going to excel at everything. And that's ok.

Imports from overseas do not represent failure, but rather they raise standards of living.

In light of recent developments, the question remains—so what exactly makes a car 'American'? Does it mean a car made by a U.S.-headquartered company? Or is an 'American' car one made within U.S. borders?

The broad goal of American economic policy should be to help all companies operating in the U.S. create and maintain good jobs at good wages. It means that the U.S. is not going to be great at everything. It means that U.S.-based companies need to be expanding abroad.

And it means that some of the best companies in America are foreign-owned insourcing companies.

To read Slaughter's full commentary on America's approach to the automotive industry, click here.