I think you’re mixing rural consumers with patriotic consumers: rural consumers aren’t creating noise (your word) in the marketplace- they’re rationally demanding a certain set of goods.

You’ve lost me on the second half of your comment. First, it’s very true that many Americans have less access to foreign cars than domestic ones: fewer dealerships and a smaller maintenance network. However, consumers do have amazing access to information. There are a dozen different (and extremely popular) car magazines and websites out there providing trustworthy info.
As for you saying that ‘it is impossible’ for the market to decide… what’re you talking about? Different factors can distort a free (I prefer the term ‘perfect’) market but the market (consisting of individuals, both rational and irrational) decides which cars are superior everyday. They keep choosing Toyota and Honda over GM and Chrysler.

Last paragraph: the producers of goods DO create information. I think that’s what you meant to say. I don’t know how that undercut the functioning of the market.

Bottom line: Patriotic consumers thought they were being pro-American when they purchased inferior products from the Big Three but their action ultimately hurt the industry.

First, it is completely unfair to flippantly dismiss the 25% of people who populate rural areas. I’d hate to think how you would react if you got a 25% pay cut–no big deal, it’s only a quarter of my salary. The point being that 25% of data is not “noise” distorting “market signals”; 25% of a data set is a substantial signal in its own right. This does not negate your point about the TPS, but it is an important corrective.

Second, and more theoretical, is that you can’t have it both ways. “Patriotic American consumers” may have distorted “market signals,” but that presupposes a free market. Your thesis is not incorrect in its bare bones, but it assumes equal access to information among all market participants. Marketing, goodwill, etc. temper the information that is filtered to the consumer. If your argument is that the market should decide, then that is fine, but it is also impossible. In fact, one could advance the argument that, given the prolonged success of their inferior models, American car companies were better adapted businesses than foreign car manufacturers.

In the final analysis, your thesis needs to be questioned on the basis that information exists and is not created by the producers of goods (via marketing). I don’t think that you would refute this point, and it would seem to undercut the underlying premise of your argument–i.e., that market principles can work.

The fact of the matter is, and I described this more in this [http://questionablesource.com/?p=232] article, that Toyota developed the next generation production system called TDS in the 1960s and the products they created from this system, which was basically as revolutionary as Henry Ford’s industrial system, were simply superior. It was faster, better and cheaper. Detroit (and nearly every heavy industry manufacturer) now uses a variation on TDS. My thesis in this article is that patriotic American consumers distorted market signals and thus, delayed Big Three adoption of TDS and other much needed innovations.

To No Butta’s points I’d also like to add the fact that the Big 3 have built up considerable goodwill in America (and I mean that in the financial, P&L sense as well). That, in part, is why we’re even having this discussion over “buying American.” The short of it is the Big 3 did not always produce inferior cars; for a while, they were the best. And that “while” was not that long ago. A lot of people, particularly people who NEED trucks and SUV’s (not everyone lives in a city after all), were loyal to American car makers (and still are–the Ford F-150 is still the highest rated pick-up). So, Walther’s right as is No Butta, but it’s also important to realize that we are on the back end of a much longer term (and not completely irrational) trend.