“I want to see Koreans driving Fords, Chevys and Chryslers!”

This one remark by President Obama merits some quick comment.  He made this statement after pressing once again for implementation of his trade agreement with South Korea, the one that gives Koreans unlimited access to the American market while limiting American exports to 75,000 cars per year.  Perhaps understanding that such a stance would go over like a lead balloon with Americans who understand what our trade agreements have done to us, he made the statement to try to make us think that things will somehow be different this time around. 

There’s just one problem, Mr. President.  You won’t see Koreans driving Fords, Chevys and Chryslers because they don’t drive cars, at least not nearly as many as Americans, per capita.  Koreans walk or ride bicycles.  It’s way too damned crowded for anything else.  At 1,257 people per square mile, South Korea is the third most densely populated nation on earth (of any size, not counting tiny city-states).  Only Bangladesh and the Occupied Palestinian Territory are more densely populated.  South Korea is 15 times more densely populated than America.  Just imagine what traffic would be like in your city if it had 15 times as many people and they all tried to crowd onto the freeway at once during rush hour.  That’s why Koreans don’t drive cars. 

What they do have is lots of labor capacity – 48 million people.  So let’s do some math.  Let’s assume that the per capita consumption of cars by Koreans is half that of Americans.  That’s being generous.  It’s probably worse.  America, a nation of 312 million people, usually consumes about 15 million cars per year.  That means that Korea would consume about 1.15 million vehicles per year.  (48 million people divided by 312 million, times 0.5 times 15 million.)  When the nations are combined through free trade, that gives us a total market of 16.15 million vehicles.  If the work of manufacturing these vehicles is spread evenly across the combined labor force, then America now gets to manufacture only 14 million vehicles.  (312 million people divided by 360 million people, times 16.15 million cars.)  Korea, on the other hand, now gets to manufacture 2.15 million vehicles, almost twice as many as before. 

Don’t you see, Mr. President?  Because of the disparity in per capita consumption, driven by the disparity in population density, free trade with Korea is a sure fire loser!  We can’t help but lose production of 1 million vehicles to Korea, which is exactly what has already happened in trade with Korea.  And it’s exactly what has happened in trade in automobiles with Japan and Germany.  It’s unavoidable.  As long as you attempt to trade freely with such overpopulated nations, it’s impossible to “compete” your way out of this situation! 

This is why our economy is failing, Mr. President, because of your unwillingness to consider new ideas and to follow through with your campaign promises to do something about our trade deficit. 

 

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One Response to “I want to see Koreans driving Fords, Chevys and Chryslers!”

  1. Pete Murphy says:

    I actually erred in the above calculation by including the whole Korean car market. I forgot that the U.S. participation in the Korean market is capped at 75,000 cars. Therefore, American car production falls to 13.075 million. (312 million divided by 360 million, times 15 million cars, plus 75,000). American car production falls by nearly two million cars while Korea gets to manufacture over 3 million cars instead of the original 1.15 million.

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