Volkswagen makes a neat little pickup called the Amarok, but unless you travel to Europe, you’ll probably never see one. In Australia, they have an interesting little pickup that combines the best qualities of an off-road vehicle and a hot little sports car. But, you can’t buy one in the United States. And the best-selling pickup in the world is the Toyota HiLux. Even though you can buy a near cousin—the Toyota Tacoma—the rugged Hilux has never been available for American buyers, either.
Instead, Americans pay more for pickups than just about anyone else in the world.
And if you want to know why, you can blame World War II, President Lyndon Johnson, and chickens. Let me explain—no. That will take too long, so let me sum up.
It started with World War II, when food production dropped dramatically while young men got out from the behind their plows and got into tanks. Not only were there too few people working agriculture, but what little food was left after the needs of the military were met, could not be adequately distributed to civilians because of the lack of transport. Coupled with this was the strict European system of food rationing that stifled innovation in food production.
In England, for example, you were encouraged to have a victory garden and raise a few rabbits or chickens for personal consumption, but if you raised enough to sell your neighbor a few potatoes and a spare pound of meat, that was considered illegal and selling on the black market. Even if you tried to sell your goods legally, AND you managed to fill out the mountain of paperwork, AND you endured the endless inspections, you would discover that the price controls mandated that you must sell at a loss.
Remarkably, no one seemed to realize that the double whammy of price controls during a period of inflation and a restrictive rationing system severely stifled any entrepreneurial impulse to either expand production or to innovate. Since the authorities would not reverse these policies until conditions improved, and conditions did not improve until the price controls and the rationing system were stopped…England was still rationing food 9 years after the end of the war.
England might still be clipping coupons to buy food had not Winston Churchill come out of retirement to lead the Conservative Party to victory on a platform of ending rationing.
Meanwhile, in the United States—just like in England—civilians were encouraged to plant a garden and raise a few chickens to supplement the rationing system. But, there were two major differences. The US rationing system did not care if someone sold a chicken or two to a neighbor, and the system here was slowly relaxed, encouraging businesses to innovate and expand food production. All food rationing in America ceased in 1946.
By the end of the war, there were two major changes in the business of selling food to the United States. First, meat preferences had changed for most Americans. Before the war, most Americans rarely ate chicken—it was reserved for special occasions such as holidays or Sunday dinner. Most Americans consumed more mutton or pork than chicken, but just five years after the end of the war, the annual sales of poultry surpassed the sales of mutton and was catching up with that of pork. (That trend continued: the average American today eats roughly 80 pounds of chicken a year compared to only 50 pounds of pork.)
The other major change took place in a rather obscure company that specialized in the importation of tea and animal hides—The Great Atlantic and Pacific Tea Company had begun specializing in the production and sale of chicken meat. Prior to this, most companies had thought of chickens as little more than life support systems for egg production.
Just prior to World War I, the company had begun to expand, setting up tiny little tea shops across America to sell the tea they imported. This was the start of what economists call vertical integration. Slowly, the little tea shops added, first, cigarettes, then a few groceries. After that, the company bought a fleet of trucks and built huge warehouses to handle the inventory for all the little tea shops… and just before the war started, the company rebranded itself as A&P and started opening up what were to become 16,000 supermarkets in 3,800 communities.
As the war ended, the Justice Department brought suit against A&P for illegal trade practices. It seems that the company would move into a location, lower its prices until the competition was bankrupt, then raise prices in a market it now controlled. If this sounds like the tactic of another company you know—it’s probably just a coincidence.
Companies like A&P expanded their vertical integration by building proprietary hatcheries, growers, feed mills and processors that all merged into larger and larger commercial farms. It wasn’t long before the United States began exporting these large, tasty, and incredibly cheap chickens to foreign markets. When American frozen chickens hit Europe, it all but bankrupted the small and struggling-to-emerge-from-the-war poultry industry. And those European farmers all turned to their governments and screamed, “Fowl!” (Well, the French screamed, “Poule!” And the Germans cried, “Huhn!”)
The European Economic Community (EEC), the forerunner to today’s European Union, put tariffs on the importation of American frozen chicken in the early 1960’s. Since the tariffs were high enough to protect the production of European chicken, the American imports slowed down to a trickle. Predictably, American producers screamed at Washington to do something to protect American jobs in this flagrant abuse of free trade. (“Fowl!”)
Washington and the EEC had many meetings at which notes were taken and time was wasted and absolutely nothing constructive was accomplished. In December 1963, President Lyndon Johnson was tired of all the talk with no results, and since an election year was rapidly approaching, he placed a retaliatory tariff on the importation of foreign light trucks. This was a clear signal for the Europeans to drop the chicken tariff and since no one had ever accused Lyndon Johnson of being subtle, the tariff was a massive 25% on the value of all imported foreign trucks.
With the imposition of that tariff, the importation of foreign trucks screeched to a halt. Shortly after that, Europe and Japan began importing small economy cars and the “Big Three” auto manufacturers took a real whipping in the market. Today, the most profitable sector of the American automobile market for General Motors and Ford is their domestic sales of pickup trucks, each and every one of which sells for a higher price than if those automobile makers were facing competition from overseas.
For a country that constantly lectures the rest of the world about the benefits of free trade, this tariff (commonly called the “Chicken Tax” on competitively priced pickup trucks) is outrageous. Oh, we can buy American-made Toyota trucks, but as consumers, we are entirely cut off from the free market for competitive pickups made in the rest of the world.
To avoid the "chicken tax," Subaru made a clever modification to the Brat. It installed two rear-facing seats, often referred to as "jump seats," in the cargo bed of the Brat. These seats were not conventional passenger seats but something akin to cheap plastic lawn chairs. By adding these seats, Subaru was able to classify the Brat as a "passenger vehicle" rather than a light truck. And that wasn’t a truck bed in the back: it was a convertible passenger compartment. Ludicrous!—but, legally, Subaru got away with it.
One more point: Europe drastically lowered the tariff on imported chicken way back in the sixties. Unfortunately, by then, Detroit had gotten rich from the chicken tax and could afford to make hefty campaign donations to the right politicians. Those politicians are far more interested in being re-elected than insuring that you pay a fair price for your truck.
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