November 17, 2008

Cars and Effect

How about this: rather than just giving the Big Three car makers a pile of money for nothing, that the government invest in them, or give them a loan, with several hefty strings attached. How about insisting that these automakers, in addition to building the trucks and SUVs that have legitimate use in rough country and snowbound dirt-road sections of the US of A (though hardly in most suburbs and certainly not in most cities, where they are marks both of vanity and insufficiency, as well as inefficiency), that a truly fuel-efficient, small, and affordable car be placed at the top of the agenda. Perhaps not quite so small as the Tata Nano, or even one of those strange little French cars, or even the original Volkswagen — though that's getting close in terms of size and intent.

Then it will be time to call upon our people to step up to the plate and buy and use this car — let's call it "The American Eagle" and make it a patriotic point to own and use one, not out of vanity but out of pride and shared values. An all-electric model for city use would not be a bad idea, either. How about it?

Tobias Haller BSG


Anonymous said...

One of my co-workers came up with this solution, which he forwarded on to our State Senators. I can't find any real holes in it, yet.

1) Top management (VP and above) must take an immediate 25% pay cut, and freeze all bonuses/stock/incentive compensation.
2) They must take advantage of the existing $25 billion plant-retooling loan program to retool the plants building their least-efficient models into plants building new fuel-efficient models.
3) They will submit to new CAFE standards for increased fuel efficiency, with no exemptions for SUVs and light trucks. The above plant-retooling loans will help them meet the new standards.
4) They have the choice of repaying the loans within 5 years, or accepting government ownership of equivalent stock at today's price. Government will have voting privileges if the stock option is chosen.

Country Parson said...

The American Eagle was a dud as far as cars go. A decent product that no one would buy. It seems to me that part of the problem is marketing. It's not so much a matter of Americans wanting/demanding big cars and SUVs as it is of car company marketing efforts to create a sense of need where none existed before and would not have arisen on its own. It's an old advertising truism that consumers do not know what they need. They must be told what they need and then introduced to the wonderful new product that fills that need. There is also the problem of an old, entrenched bureaucracy (both management and labor) that simply does not know how to change directions. The only thing they have ever done is to force the world into the mold of their own making and they have no other skills. It's a tough nut. How about some old fashioned trust busting, or some new form of bankruptcy, or something equally dramatic rather than just another bailout?

Anonymous said...

Why stop there? Let's also impose a few more conditions:

- We should mandate they build a two-person car that runs on wind.
- We should mandate they build a one-person car the gets 200 mpg and runs on biomass.
- We should mandate that, after management gets 25% cut, all UAW workers will get 50% raises. The union is absolutely blameless for Detroit's uncompetitiveness, after all, and shouldn't have to suffer any longer at the hands of The Man.
- We should mandate that all of the people GM is paying in the high five figures to not work, should be paid more.

Maybe we could call this the "America Pretends It's Still the '50s" package. What do you all think?

Tobias Stanislas Haller BSG said...

I think you are angry about something, Phil, but I can't tell what it is. Do you have anything helpful to say, as other commenters have. I'm assuming, of course, that these suggestions are sarcastic, but given that, I can't tell what you really think ought to be done, if anything. Perhaps you just think we should let the free market do its work and take the consequences -- that's an arguable position, but I can't tell what your real opinion is unless you intended these suggestions for real, which I find hard to imagine! And I really don't see what anything you say has to do with the 50s.

Meanwhile, CP, thanks for the helpful comment. I think marketing is a big part of the problem, in convincing people they need Hummers even though they live in Manhattan.

KJ said...

If I were to buy this "patriotic car" (I'm not sure if that would be a winning or losing marketing ploy. Would it come with an American lapel pin?) it would have to be:

1. Reliable

2. Fun to drive.

Add that to the mix, and I'm there!

Anonymous said...

No anger, Tobias, but, yes, sarcasm. I regret that isn't considered an effective way to make a point.

In any case, you suggest attaching "several hefty strings" and, to be plain, I think those are just as unserious as the ones I proposed. If enough consumers want a "truly fuel-efficient, small, and affordable car" - and, if the current state of the art supports it - some company will deliver such a product. Mandating the same in the absence of enough demand to support its development and production costs just leads us right back to where we are now with American automakers.

The only effective "string" would be one which abrogates the crippling union contracts agreed to over the years by Detroit's feckless management. (This could also be achieved through Chapter 11 bankruptcy.) Would you be in favor of that?

Tobias Stanislas Haller BSG said...

Thanks, Phil. That makes more sense. I just couldn't tell where you were coming from.

My suggestions are serious, though I realize that it is all conditioned on a willingness to do something positive for our country. I agree that unions bear much of the burden in all of this, as does an extreme ratio of earnings between management and line workers. And Madison Ave -- which is where the advertising comes in. The fact is that most Americans are "over-motorized" because that's what they want to be, and that's what they've grown accustomed to.

But that "fat" lifestyle isn't going to last. The oil will run out, maybe not in our lifetimes, but at some point, and we seem very little able to think of alternatives. The Brazilians are miles ahead of us on ethanol (which I know also has its mix of good and bad -- but they've handled it far berter than the US has, I think, by using other cellulose sources than corn.)

I'm not calling on any one sector of the population to take the "hit" as I think we are all in this together. But it seems to me that we should be able to do as well as some other nations in inspiring our people to act in civic-minded ways. It won't be easy, and offering incentives will be a big part of it. The Tata Nano I mentioned is going to change the face of India. Surely a less radical step could have some positive influence in the US, and this seems an opportune time to bring pressure to bear as the Car Companies hold out their hands for no-string rescues. As it is, we seem only to see a demand for more efficiency when the cost of fuel rises. That seems more like a Pavlovian than an informed response to the reality.

I would hate to see us miss an opportunity to put some English on this particular ball; and I don't think the measures need be draconian.

toujoursdan said...

I have no love for the auto industry - from the destruction of the electric light rail lines in most major cities in the 1950s to the dreary ugliness of urban sprawl and the nightmare of the freeway system today, I hold them at least partially responsible for many of our urban ills. I think cars are evil. They may be a necessary evil but they are evil.

That said I have to think that these companies are too big to fail. They represent the last manufacturing jobs in North America and one of the few ways a high school graduate can still get into the middle class.

That said again, much of the problem here lies with the huge pension and healthcare costs they have to manage. They wouldn't be in the same mess without that crushing overhead.

Toyota and Nissan recently located plants in Canada because healthcare costs are borne by the state and because the Canada Pension Plan is solvent. The U.S. really needs to find a way to shore up Social Security so that it can provide a meaningful benefit (because few Americans I know are putting enough into their 401k's to live a middle class lifestyle once they retire) and the U.S. must consider a single payer or state funded (but not necessarily managed) healthcare system.

Finally, one other major reason Toyota and Nissan picked Ontario over Alabama, was ironically, because taxes and labour costs were too low in Alabama. These low taxes made the educational system so poor that the amount of ongoing training they would have had to invest to bring those workers up to their standards was more than they would have saved in taxes.

I agree that they misstepped by focusing on SUVs and large trucks, but there are other macro economic forces at work that have hurt them too.

Tobias Stanislas Haller BSG said...

Thanks Tousjourdan. This is a very complex problem, with lots of interconnections and dependencies. It is not a simple matter of cause and effect.

I also need to confess that I don't myself drive a car -- never learned how to, and don't want to -- though James and I do own a car and use it rarely.

In NY we suffer from the fact that Robert Moses thought the car was the future, and instead of improving our subway and commuter system (still a major miracle that it works as well as it does) he poured everything into highways and parkways. Efforts to reduce driving into NYC always seem to butt up against the unwillingness people have to take the rail, which would benefit from greater usage.

My over-all vision would be:

* better public mass transport

* smaller efficient in-city cars

* car free days in Manhattan, apart from emergency vehicles

* more support for cyclists.

On that latter, I've not cycled in years, but could use the exercise; it's just that the car drivers in the Bronx are notoriously wild and dangerous.

Tobias Stanislas Haller BSG said...

... and apologies for misspelling your name... I can only plead cold fingers! The church boiler is out and the temperature is dropping! WE had a lovely flood in the boiler room and basement at the church this Sunday -- two feet of water in the hall and four around the boiler. Cause still unknown, but cleanup is proceeding.

Anonymous said...

Feh, to Phil's "the market will determine" blah-blah-blah.

Why does the EARTH (and its non-human inhabitants) never get a say in all this? Or our descendents, who will be PAYING for our "Market-Driven Solutions" (w/ an overheated/flooded-and-or-droughted planet) long after we're gone?

But as far as the "Detroit: Drop Dead!" solution goes: I, and every other Michiganian, would like to be ADOPTED by someone Out There (in non-"feckless" land). Like, now!

Anonymous said...

um... Wouldn't it be easier to just do what John Anderson suggested back in the 1980 election: stablize gas prices at a high level (to reduce consumption but increase predicatbility) through a sliding taxation scale? This is what has been done in Europe for a long time.

That way we wouldn't be reliant on either the "far sightedness" of car executives (currently very doubtful) nor the "efficiency" and "creativity" of government regulations (always doubtful).

The market would then be predictable, stable, AND innovative; we could use the money collected in taxes (which our government seems to do pretty efficiently and honestly) for what our government seems to do best (build infrastructure - public transit and better roads as needed, etc).

Manipulating the marketplace with taxes is a pretty old strategy that seems to work VERY effectively in many instances. People would then have the freedom to choose how they want to respond to the realities of the market, rather than being dictated to (however benevolent the intent).

Just a suggestion....


Country Parson said...

Phil, the market is not rational - never has been. That's why it's been so easy to manipulate. But I digress; I have seldom agreed with Mitt Romney on anything but confess that his Op Ed in todays NYT sounded like the best advice yet on what to do about the big three in the auto industry. And it brings to mind that we are talking about the three and not about all the other car companies manufacturing in the U.S. and doing well.

toujoursdan said...

My over-all vision would be:

* better public mass transport

* car free days in Manhattan, apart from emergency vehicles

Sadly, the MTA is moving in the opposite direction. They are about to eliminate several subway lines and cut back service on others.

Read this New York Daily News article.

They really need to change the funding matrix. The tax structure isn't keeping up with demand.