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Pushback against a bailout

December 24, 2008

The nation's auto industry is dying. In desperation, the government steps in and jacks up the import tariffs of imported cars to save the domestic producers.

Then things go awry. Riots break out when people realize they are going to be forced to pay for inferior cars they don't want. Riot police arrest and beat protesters and smash the cameras of a Japanese video crew.

America in 2009? No, Russia this week:

The government announced the tariffs on imported automobiles earlier this month to bolster flagging domestic car production and try to head off layoffs or labor unrest among the country's more than 1.5 million car industry workers.

But imported used cars are highly popular among Russians, particularly throughout the Far East, where private cars imported from nearby Japan vastly outnumber vehicles built in Russia. Protests against the tariffs, which are scheduled to go into effect next month, have been most vehement in Russia's largest Pacific port—Vladivostok.

So far, U.S. taxpayers are just being asked to subsidize zombie automakers with doomed loans. Will the costs of subsidizing one industry in the U.S. ever inspire pushback from the consumers and taxpayers who bear the costs? Given the history of the U.S. crop growing industry, not anytime soon.

Hat Tip: Hank Stern of Insureblog.

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