I’m pretty young, but even I’m old enough to remember when this sort of industrial policy was badly out of vogue. But now France is getting in the auto bailout game:
French carmakers will receive a government bailout of up to 6 billion (£5.5 billion) in return for pledging to keep factories in France open, Francois Fillon, the Prime Minister, said today. […] “There is no question of the State helping a manufacturer which would purely and simply decide to close one or more plants in France. […] [Carlos Ghosn] urged lower taxes for French-made cars and a tax hike on imported cars, claiming that French vehicles cost on average Euro1000 more than foreign rivals because of French fiscal rules.
For well-known reasons, free trade deals between the U.S. and the developing world have come under a lot of criticism for undermining U.S. environmental and labor standings and undermining American wages. But whatever you think of that debate, those kind of considerations don’t really apply when you’re talking about this kind of thing which has to do with producers in one rich country wanting protection from competition from companies based in other rich countries. Moving back to a sharply segmented market will be bad for consumers and over the longer-run it’s still going to leave us with a situation where either car firms need to shrink or else car firms will need to keep on being propped up by governments.