Currently, in many developed countries, manufacturing and industry are no longer sustainable.
Why is it that manufacturing and industry are failing?
I believe the main reason lies in the structure of the market.
Structurally, individual companies—especially small and medium-sized enterprises—are no longer able to generate profits. As a result, manufacturing and industry as a whole have become unprofitable, leading to market oligopolies. This, in turn, has eroded the competitiveness of manufacturing and industry.
One example is the automobile industry.
It is meaningless to attribute the decline of the American automobile industry solely to superficial factors such as the performance or design of American cars.
There was a time when American cars were highly competitive.
Even in the automobile industry, oligopolization has progressed, and now the market is dominated by the Big Three.
In a country as large as the United States, I believe it would not be unreasonable to have around twenty automobile companies.
Why, then, has the automobile industry become so oligopolized? Why can’t small and medium-sized car manufacturers survive?
The root causes of the industry’s decline seem to be hidden in these questions.
I once saw a documentary on American television about the custom car modification industry.
Does the automobile industry truly require only large corporations and massive factories to survive? Why are new car companies not emerging? Is it merely a matter of wages? I believe there are structural issues within the market that are being overlooked.
Even if that’s not the case, we need to consider how to create a market environment where new car companies can be established.
Such structural problems cannot be solved simply by raising tariffs.
Ultimately, the issue comes down to income. People say that incomes in the U.S. are too high—but is that really true?
Income is inherently relative. Whether income is high or low depends on what it is being compared to. At the other end of that comparison lies the reality of daily life—how people actually live.
In every country, to some extent, people manage to maintain a livelihood. If they couldn’t, they would starve.
In other words, a minimum balance between supply and demand is being maintained.
For supply and demand to function, there must be a balance between income and expenditure.
It is said that labor costs—that is, income—are high in the U.S., but the real question is: high in relation to what?
Behind income lies the relationship between wages and prices.
Wages and prices are two sides of the same coin: wages represent income, and prices represent expenditure.
Therefore, perhaps there is some distortion in the wage structure of the American automobile industry.
Perhaps the root cause lies in the structure of the industry—especially in the structure of the market itself.
There must be some underlying reason.
“It no longer seems to be an era where simply pursuing economies of scale is the answer.
If countries like Japan and others outside the U.S. can move their production bases to America and still turn a profit, then why is it that domestic American companies are unable to start up?
One of America’s strengths is that many industries are self-sufficient and, at the same time, it possesses a massive domestic market.
Yet, the United States has not fully capitalized on this strength.”
“Rather than Americans having a high per capita income, it may be that they bear a heavier burden outside of wages—such as pensions and other costs.
This obscures their actual disposable income.
This issue could be clarified by shifting toward a model of smaller, more independent businesses.
If each factory operated on an independent profit-and-loss basis, it would allow for greater flexibility and potentially enable the production of more original vehicles.
It would also make it possible to reassess income structures.
What we call the rise of large corporations has, in effect, led to bureaucratization.”
It doesn’t have to be just about big industries like automobiles—even small-scale, home-based businesses in light manufacturing can be perfectly viable.
In the past, when people in Japan lost their jobs, they could fall back on running a food stall or a tiny neighborhood pub.
But today, those kinds of small businesses have been pushed out by large corporate chains, making it much harder for individuals to go independent.
Back then, it was common to see retired men, elderly women, and housewives—what we called the “San-chan” generation—running these humble operations.
Now, with fewer of those opportunities, more and more people have ended up in salaried jobs, and society has become increasingly uniform.
Tariffs are one effective means of maintaining a sound market environment.
It is a legitimate reason to preserve the domestic market environment.
Maintaining a sound market environment primarily means preserving fair competition.
Fair competition involves several factors: price differences, employment conditions including fair wages, working environments, currency fluctuations, unfair dumping (intentional underpricing), and price levels.
When competition is based solely on price, all other attributes are stripped away.
As a result, economic and market value converge toward low prices.
Low prices mean that qualitative aspects are disregarded, and only quantity determines value.
This signifies the death of the market.
The market is a place of distribution, a place to provide consumers with what they need in the necessary amounts.
If qualitative aspects are lost despite the diversity of consumer desires, consumers are left with no choices.
The market should not be biased solely toward productivity.
In essence, the role of the market is to realize fair prices.
So then, what is a fair price?
A fair price is one that reflects appropriate costs.
It involves competition beyond just price—competition based on added value such as product quality, design, and performance.
This is only possible when fair prices are maintained.
To clarify what a fair price is, we must understand the function of price.
Price functions in three areas: production, distribution, and consumption.
In the production phase, price reflects cost-effectiveness and reasonable profit.
In other words, it reflects appropriate costs and is a matter of productivity.
A fair price balances production, distribution, and consumption, and meets consumer needs.
Price represents both the quantity and quality of goods.
In the case of food, for example: delicious, cheap, and fast.
Which one do you choose? That is the essence of competition.
And realizing that is the purpose of the market.
Price is a means of product differentiation and diversification.
Creating differences is not inherently a bad thing.
In terms of distribution, price reflects income.
The foundation of income is employment and working conditions.
In terms of consumption, price reflects household spending.
Income is determined by the standard of living.
The goods toward which income is directed reflect that standard.
A standard of living that matches income.
Price reflects income. Price is cost, and cost is the source of income.
Unjustly low prices stem from unjustly low labor costs.
We must not import goods simply because they are cheap, thereby exporting poverty and poor working conditions.
Tariffs are indeed an effective means of protecting a sound market, but they are also a powerful and potentially harmful tool.
Therefore, when imposing tariffs, it is essential to have a clear purpose and to fully understand the potential side effects.
In any case, tariffs alone are not sufficient to achieve the intended goals.