You think “just go with the badge on the car, all is well and no one will criticize.” However, the impacts of your purchase on your chosen nation-state go well beyond a point of final assembly or even domestically-sourced content.
Here, I will use the situation of automobiles to demonstrate the points.
In automobiles, there are several distinct axes of goodness that bear on the benefit to the larger nation-state:
– The material inputs into the vehicle: metals, electronics
– The labor used to create it: concept/market research, engineering, manufacture, sales, maintenance
– The machine tooling and facilities used to build it
– The lifecycle economic operation cost of the product
– The fitness for purpose of the vehicle, including versatility from that when originally procured
– The safety of the vehicle for its occupants, who normally are worth far more than the vehicle itself
– The stress on critical economic resources, e.g. petroleum, during usage
– The environmental impacts of operation, locally and all-in
– The recycling and disposal costs
– The ultimate profit from the enterprises that deliver and maintain a serviceable vehicle
Here I will use as some examples the ~2018 versions (when this text was originally written) of vehicles as the examples.
The material inputs to the vehicles are complicated. On the one hand, for an electric vehicle, you usually source lithium or cobalt from not very free countries, with poor labor standards and at relatively high environmental costs. On the other hand, if you need those materials to fuel a war effort or reduce overall energy consumption (making more available in wartime or peacetime), sourcing them and bringing them within your polity’s borders clearly benefits the citizens of the nation-state. Steel and plastics are usually not as scarce.
The labor for these items is very complicated for any given vehicle. For a Ford Fusion, most recognizably American of all makes, a 2018 Ford Fusion would have final assembly in Hermosillo, Mexico, with large amounts of non-domestic content. For electric vehicles and hatchbacks, you might either see direct imports (very common with hatchbacks) or large parts (e.g. batteries) coming from foreign sources. On larger vehicles, you normally see domestic manufacture and high domestic part sourcing (e.g. Honda Odyssey) – in the US, Tennessee, Kentucky, Indiana, Ohio, and other states figure heavily in foreign makes. Toyota’s US supply chain for gasoline-powered vehicles equals or exceeds most domestic makes.
The machine tooling can come from any number of domestic or foreign manufacturers. The facilities themselves can safely be attributed to the nation-state where they’re built. Even if the machine tooling is foreign, it is available domestically for war products.
The lifecycle economic operation cost is extremely important; if the car is much cheaper coming from a foreign country, it makes sense to buy the foreign vehicle (especially if tooling is very specialized) and buy weapons and welfare with the saved money, instead of providing those subsidies indirectly via protectionism.
The vehicle has to do the job well. If you save a bunch of trips and time overall by buying a larger or smaller vehicle that is better optimized for your use, those savings, again, can be plowed back into buying weapons and welfare. Likewise, an unreliable vehicle, or one not suited for its current employment, will waste more money.
The safety of the vehicle is a tremendously important factor when at any given time, you may have more than $5M of pure economic potential (people) in the automobile. Indirect subsidy paid for with millions of dollars in losses in a collision is economically ineffective.
The gas mileage and any other uses of critical economic resources in the operation of the vehicle becomes critically important in wartime. A foreign automobile that takes half the gas will be kept; a gas guzzler of any make will be mothballed or scrapped.
The environmental impacts of operation become incredibly important in certain metropolitan areas, such as Los Angeles and Beijing, where the topography and weather patterns cause haze to accumulate. In any large metropolitan area, the reduction of emissions and other toxins can make a big difference in overall health and quality of life.
When the vehicle becomes non-economic for further operation, there may be toxins or high voltage hazards that require mitigation – and if those exist in any significant levels, those harm the health of your nation-state.
The ultimate profit comes from the humans holding the shares of the companies in question, or the private equity. In a publicly traded company, that could be to the benefit of the firms that hold the stock, or it could be detrimental, if the money would be better invested elsewhere. In the extreme, but all too frequent case, the national and other levels of government come in and bail out the automaking enterprise, which represents a negative profit to the nation-state as a whole. Depending on the frequency of these bailouts, maintaining mothballed plants and tooling may be the most effective means of maintaining military production readiness. Subsidies applied either to buy the vehicles, source production in a given municipality, or in certain cases, even to dispose of the vehicles (“cash for clunkers”, a gross waste of economic resources), further erode the all-in profit to a nation-state.
To give a direct breakdown from my own experience: the user does a series of short trips, a few longer trips a month, and then a few very-long-range trips. Some cargo is carried, passengers are carried relatively infrequently.
To simplify, say that the Subaru Outback (2.5L), Ford Fusion (non-hybrid), and Chevrolet Volt are on the table. Say they are all the highest-end versions in terms of overall feature set.
– The material inputs into the vehicle: mixed amongst the different manufacturers, although the lithium-ion batteries in the Volt implicate the battery supply chain
– The labor used to create it: also mixed amongst the manufacturers
– The machine tooling and facilities used to build it: the Fusion is finished in Mexico, the Outback and Volt are domestic at final assembly
– The lifecycle economic operation cost of the product: the Fusion is probably the worst because of the worst gas mileage, the Outback is larger and better gas mileage, the Volt may be lowest, although it’s unclear because the specific revision on offer is only 2-3 years old. If the car isn’t driven much, then the order would be reversed, and the Volt would be substantially more expensive because the battery capability mostly is wasted. However in terms of initial purchase price to the user, the Fusion is the cheapest, the Volt is second-cheapest, and the Outback is clearly the most expensive.
– The fitness for purpose of the vehicle, including versatility from that when originally procured: All are fit, the Outback has most space, the Volt is smallest (good for fitting in tight parking areas), the Fusion is a compromise, a good people mover and can do some types of cargo. Overall the Outback is the most versatile of all the vehicles
– The safety of the vehicle for its occupants, who normally are worth far more than the vehicle itself: all vehicles have very high safety ratings; each vehicle has drawbacks (Subaru has only optical automated safety and the cameras are exposed on the interior but has largest collision buffer, Ford has worst headlights, Volt is smallest but probably most nimble for dodging)
– The stress on critical economic resources, e.g. petroleum, during usage: Fusion is worst, Outback isn’t great (good for its size), Volt is much better on gas mileage and overall energy with smart charging
– The environmental impacts of operation: Ford should be the worst, the Outback should be second worst, and the Volt should be best, simply on gas mileage. The electric usage of a Volt depends on where the vehicle is operated and when the power is pulled off the grid. Free solar or excess baseload may have little to no marginal impact.
– The recycling and disposal costs: all are similar except that the Volt’s battery may be re-usable as-is prior to being recycled (or, alternatively, you could consider that its battery isn’t recycled and it’s a giant waste)
– The ultimate profit from the enterprises that deliver and maintain a serviceable vehicle: All companies are listed on stock exchanges. Most recently General Motors received a bailout from the US government; Fuji Heavy Industries (Subaru’s parent) had a murky transition around 1990 where Nissan was brought in to right the operations. The Volt is getting a heavy taxpayer subsidy (~$9000) depending on jurisdiction.
Not simple at all – although it may seem the Volt would be the winner, that only works depending on how much cargo space is used, and assumes the vehicle will be heavily driven to show benefit on the gas mileage. The fact that the taxpayers may be paying $9000 in losses on the Volt (plus GM went bankrupt, so stack some more on there) wipes out any obvious national economic profit, given a profit margin for vehicles on the order of 10% (probably less). The benefit would be from the potential for more efficient energy savings at high mileage. Even that depends on the usage of the battery – if the battery isn’t heavily used, or the cargo space is less important, the Toyota Prius (an all-Japanese vehicle) becomes the winner on the mileage issue.
Then we want to talk about significantly used vehicles, when most of the depreciation has happened, or even extend to motorcycles and related, and evaluate that against usage profiles…
Fortunately not all goods are as complicated in manufacture as automobiles. However, because of the tradeoffs between the suitability of the vehicle, the gas mileage, the all-in costs to the nation-states involved, and the requirements of the user, only a truly inappropriate choice (like buying a large truck when you barely use the space) can be criticized as harmful to the health of the country. Furthermore, since many foreign manufacturers are allied or concordant with the US national security interest, the true benefit of the nation-state production centralization is unclear, especially in an environment of low unemployment and decent wages.