While I have qualms about the wisdom of the approach, I have frequently mocked those on the right who consider the government’s investment in GM as evidence that Barack Obama is a socialist. Conservatives have a way of pointing out, and often exaggerating, any Democratic act which intervenes in the free market while often ignoring similar actions coming from Republicans. I’ve often receive responses to my criticism of anti-market action by George Bush from the right with claims that Bush was not a true conservative. Pointing out that Richard Nixon brought the ultimate perversion of the free market, wage and price controls, has been met with responses from younger conservatives that Nixon is ancient history. (Such conservatives should look at how their views differ from those of Barry Goldwater.) While the conservative movement has moved so far to the extreme right that they are actually at odds with pretty much every former Republican leader they tend to continue to worship Ronald Reagan. They have apparently forgotten Reagan’s intervention in the automobile industry.
Conor Clarke points out that the previous time there was major government intervention in the auto industry it came from Ronald Reagan:
It doesn’t get mentioned much, but in 1981 the Reagan Administration asked Japanese automakers to impose a “voluntary export restraint” (VER), which capped at 1.68 million the number of cars Japan could send to the United States each year. Reportedly, this was under threat of an outright tariff, but the VER accomplished just about the same thing. Prices of Japanese cars went up, which allowed American manufacturers to raise their prices too. (This was great for the protected industry — in the short run — and bad for the American consumer.)
In the long run it led to foreign manufacturers building a lot of plants in the US, since cars manufactured here were exempt from the VER. From the Federal Reserve Bank of Chicago (pdf): “Having agreed to limit the level of vehicle exports to the U.S., the major Japanese automakers all started producing vehicles in North America. That development resulted in a rather dramatic shift in production by the foreign carmakers from overseas to North America.” So when you think dramatic market interventions that fundamentally changed the face and stability of the American car industry, please, don’t forget Ronald Reagan.