The words and images are disarmingly simple; just a few short sentences about trade fairness, a few quick pictures of blue-collar workers and an earnest-looking Dick Gephardt standing in the Iowa cold.
But put together, those words and images become 60 seconds worth of powerful and stirring television, a political commercial that has already changed the course of the 1988 Democratic presidential campaign.
It is nicknamed the “Hyundai spot” for the inexpensive South Korean car referred to in the ad, and it is receiving much of the credit for transforming Missouri Rep. Richard A. Gephardt from an also-ran to a front-runner in the space of a few short weeks.
Soars in the Polls
When “Hyundai” started blasting foreign trade barriers on Iowa’s airwaves in January, Gephardt soared in the polls. All but written off as a loser just one month before the Feb. 8 Iowa caucuses, he went on to win Iowa and place a strong second in New Hampshire, where he also aired “Hyundai.”
Now, Gephardt seems solidly entrenched as one of the Democratic front-runners heading into Super Tuesday, and he is calling on “Hyundai” once more to work its magic in the South. It began airing last weekend and is the only ad Gephardt is using throughout the South.
In fact, “Hyundai” has become the signature of the Gephardt campaign, the centerpiece of a broader populist message aimed at voters who are frustrated and discontented over the loss of American pre-eminence in the world.
“The American people understand that America is beginning to be in a state of economic decline,” Gephardt argues on the campaign trail.
“Hyundai,” the brainchild of Gephardt media consultants Bob Shrum and David Doak, has been so successful because it has given Gephardt the vehicle he needed to connect with voters, providing a tight focus and an emotional human element to his aggressive trade program, which is the key to his campaign. It has also turned trade into a springboard that lets Gephardt talk about the broader needs of Americans left behind by the rapidly changing economy.
Through “Hyundai,” Gephardt seems to be attempting to turn latent protectionist sentiment into a new kind of economic nationalism that few political observers realized could be exploited so effectively through the trade issue.
“I don’t think the trade issue is just about trade,” notes Shrum. “The trade issue is about strength, and national leadership and the country. It is a specific illustration of this larger theme, which I think people feel, that we have lost control of our economy.”
Yet “Hyundai” has also become emblematic of the central problem with Gephardt’s quasi-populist message--like much of what Gephardt says about trade, it vastly oversimplifies the issues to make a dramatic point.
In order to play to a nationalistic feeling of inadequacy and unfairness, Gephardt’s “Hyundai” spot argues that the trade deficit is not America’s fault, that America is the victim of unscrupulous foreigners.
In the ad, Gephardt makes his point by talking about South Korean limits on auto imports from America.
“They (American auto workers) work their hearts out every day trying to turn out a good product at a decent price,” Gephardt says to the camera. “Then the Korean government slaps on nine separate taxes and tariffs. And when that government’s done, a $10,000 Chrysler K-car costs $48,000 in Korea. It’s not their fault we can’t sell our cars in a market like that--and I’m tired of hearing American workers blamed for it.
Calls for Negotiation
“I’ve been criticized for my trade policy--for saying it’s time to open up markets, and push down trade barriers like those Korean taxes and tariffs. The Gephardt amendment calls for six months of negotiation. And if that doesn’t work, and I’m President, and we have to walk away from that table, the Koreans will know two things.
“They’ll know that we’ll still honor our treaties to defend them--because that’s the kind of country we are. But they’ll also be left asking themselves: How many Americans are going to pay $48,000 for one of their Hyundais?”
While Gephardt’s figures in the ad about South Korea’s protectionist policies are generally accurate, trade specialists say the ad lays far too much of the blame for America’s trade deficit on the trade barriers of other countries.
Since the ad was produced late last year, Korea--which banned all foreign car sales as recently as 1986--has reduced its import tariff on foreign cars from 50% to 40%, and is about to cut it once more to 30%.
As a result, an imported car costing $10,000 elsewhere would now cost about $38,000 in Korea, about $10,000 less than the Gephardt ads say, according to estimates compiled by the Detroit-based Motor Vehicle Manufacturers Assn., from figures provided by the U.S. Commerce Department and the U.S. Embassy in Seoul.
But it is true that the tariffs and taxes in Korea are so stiff that virtually no imported cars are sold there. General Motors is hoping to sell a “couple hundred” there this year for the first time, according to a spokesman. But Chrysler sells none, so the infamous "$48,000 K-car” does not exist.
“You can argue that they haven’t opened their markets fast enough, and I would agree,” says John T. Bennett, an economist with the Washington-based Korea Economic Institute of America, which is affiliated with a Korean government agency.
“There is an element of truth in what Gephardt says,” adds Fenwick Yu, a specialist in Asian economies at Data Resources Inc., an economic research firm in Lexington, Mass. “There is no doubt the Koreans are very protectionist.”
Ignores Key Fact
Still, the “Hyundai” ad ignores a key fact--that almost all of the fees that Gephardt complains about, with the exception of the import tariff, also apply to domestically produced Korean cars.
In order to reduce consumption and forcibly increase the nation’s savings and investment rates as part of a heavy-handed industrial policy aimed at promoting exports, Korea has made it almost impossible for its own citizens to afford big-ticket items such as cars. As a result, a hypothetical $10,000 car built in Korea would cost roughly $28,000 on the Korean market, according to U.S. estimates.
Thus, the price gap between comparable foreign and domestic cars would actually be $10,000. But the larger problem with Gephardt’s ad is that it implies that by simply pressuring other nations to eliminate their trade barriers, America’s trade problems can be solved.
Skirts Real Problems
Economists say that argument is a convenient way for Gephardt to avoid the protectionist label, but it skirts the real problems facing America’s drive to regain competitiveness.
The U.S. federal budget deficit, high domestic interest rates and an imbalance in world currency exchange rates, coupled with the fact that the U.S. economy grew more quickly than many others in the mid-1980s, have been far more important factors in the growth of the trade deficit than foreign barriers, economists say.
“Behind what Gephardt says there is a valid point,” says Stephen Marris, a senior fellow at the Institute for International Economics in Washington. “There are some countries that are free riders on the United States and the international trading system.
“But where he goes all wrong,” adds Marris, “is that he is looking at things too narrowly.”
More Important Partners
Most economists agree, for instance, that eliminating all foreign trade barriers around the world would reduce the U.S. trade deficit by only about 20%. While governmental restrictions are still significant barriers to trade with such newly industrialized nations as Korea and Taiwan, tariffs and other barriers are less of a hindrance to trade between America and its most important partners, such as the Common Market and Japan.
Japan, for instance, has a somewhat burdensome inspection process for auto imports but no tariffs on foreign cars; the United States, meanwhile, charges an import fee of 2.3%. The relative openness of the Japanese market may be one reason the Gephardt campaign chose to focus on Korea rather than Japan in its advertisement.
When asked why Korea was used in the ad rather than Japan, Gephardt’s deputy campaign manager, Joseph Trippi, said it was because the Korean tariff figures, which the campaign obtained from Chrysler’s Washington office, were more striking.