Toyota recall – Would you turn over damaging information to competitors?

When U.S. Transportation Secretary Ray LaHood said Toyota owners should stop driving their cars, questions immediately emerged about LaHood’s motivations. There is no way to prove of disprove his motives; only LaHood knows for sure what motivated the statement. The perception that our government doesn’t have pure motivations is real, and this view will continue as long as they are tied to GM and Chrysler.

One question to bring up is why Toyota didn’t address the defect sooner; was it because they didn’t want to turn over damaging information to one of their competitors? Toyota could claim they were worried about the severity of the problem being exaggerated by U.S. officials, and can point to LaHood’s statement to back up those concerns.

If new regulations are put into place to protect consumers from the defects found in Toyota’s cars, Japan could start accusing the United States of regulatory misconduct and unfair trade practices. There is no guarantee a trade war will erupt from the recall, but it is a possible unintended consequence.

There might be calls for a congressional investigation of the transportation department to make sure nothing fishy has been going on. As much as I like keeping congress busy with innocuous distractions, an investigation will just be a waste of time and money because it is so difficult to prove pure or impure motivations.

The longer government motors is in existence the more the problem will grow. When GM or Chrysler wins a contract with the government, the conflict of interest problem will be brought up again. Ford will be able to claim the government is showing favoritism each time they don’t win a contract.

This story is another example of what can go wrong when one institution of society becomes too entwined with another. Hybrids work well in cars, but government and industry hybrids are accidents waiting to happen. The government should have stayed focused on its role of governing and not subsidizing industry. Staying focused on protecting liberty it is the best way to govern and avoid conflict of interests and the resulting unintended consequences.

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