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Home Publications Blogs Beat the Press Lessons from Harley-Davidson: Protectionism Can Work

Lessons from Harley-Davidson: Protectionism Can Work

Wednesday, 30 January 2013 05:59

When the Post ran a piece on the lessons that Harley-Davidson teaches us about the economy readers naturally assumed that it would mention it as an example of successful protectionism. In 1982, in the middle of a steep recession, President Reagan imposed tariffs on imported motorcycles. This gave Harley-Davidson the breathing room it needed to survive the recession and modernize its operations. It continues to be a healthy profitable company.

Anyhow, this history didn't make the Post's list, but the other items are nonetheless interesting.

Comments (7)Add Comment
Zen and the Art of Motorcycle Protectionism
written by Last Mover, January 30, 2013 5:36
Dean Baker doesn't seem to appreciate the economic principle of permanent infant industry protectionism. It's not just about protecting start-ups until they get legs to survive on their own.

When consumer preferences shifted to made-in-Japan motorcycles that can run rings around a Harley, it was time to intervene and create a permanent economic playpen for aging overweight Americans to climb onto a throaty Harley hog and be the patriotic warriors they are, made in America through and through.
Harley is doomed
written by Benny Profane, January 30, 2013 6:52
Wow, the post went whole hog (hehe) just printing HD's or some analysts PR piece. Young people do not think they are cool, or, enough of them to replace the aging Boomers who no longer can tap home equity to buy one of these ancient machines still running on mid 20th century engineering and designs. But, their biggest problem is that they cannot offshore their production in any way, because the Harley owner will not even look at a bike with Chinese parts in it. Remember the AMF debacle in their history? Most loyal customers do.
Maybe they can train the robots to make these things cheaper, but, the clock is ticking.........
written by JDM, January 30, 2013 7:30
Actually Harleys have a lot of foreign-made parts now, many from China. Harley also has plans to open a factory in India, which would be its third overseas plant (Thailand and Singapore so far.
written by Benny Profane, January 30, 2013 8:09
Maybe a few minor parts, although I doubt that. And, expanding their market in India and other third world countries is a hoot. Ever been on the roads over there? Imagine a Harley, of all things, bouncing around on that. I'd go for a large dirt bike, myself.
written by LPB, January 30, 2013 9:01
It would be interesting to know what it cost US consumers to save the jobs of Harly-Davidson workers. Would we have all been better of just giving them an early government pension (which would have made the cost of saving those more transparent).
"All manufacturing is subsidized"
written by Joe T., January 30, 2013 10:41
Just an addition to Last Mover's thoughts: About six months ago I heard a manufacturing-sector expert (I forget whom) on Bloomberg radio, in response to questioning about "unfair" international competition, state, "All manufacturing is subsidized."
written by JDM, January 31, 2013 3:04
"Maybe a few minor parts, although I doubt that."

Then you're stuck doubting reality. The estimates I've seen is about 65% American-made. It's complicated to nail down because it varies from year to year and model to model, and some assemblies are composed of parts from the USA and elsewhere but assembled overseas or in Mexico.

BTW, both Kawasaki and Honda build motorcycles in the USA, Kawasaki since 1974. Part of the reason was the tariffs and part was because many police departments insist on American-made motorcycles. (The first US built Kawasakis were police bikes.)

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.