For one hundred years, Americans have differentiated themselves-- even defined themselves-- by the cars we drive.
I have mixed feelings about the failure of Congress to agree on a Detroit bailout. Like you, I'm feeling shell-shocked by the incredible destruction of wealth in the stock markets, that shows no sign of recovery. The way to understand the crisis of the automotive industry is that it is just another part of the gargantuan deleveraging cycle that we are in the midst of, spinning out jobs relentlessly.
All the assumptions of growth that depended on leverage (that pretty much includes the entire economy based on mass consumption) are breaking down. What will emerge is a different economy; one, possibly, where our relationship to the auto is redefined as an appliance commodity.
"What is good for Detroit is good for America." That hasn't been true for a long time. Early in the 20th century, Detroit destroyed mass transit in American cities. It was able to do so, because the industry rapidly deployed capital, labor, and new manufacturing processes based on low material and fuel costs.
If there was ever a time to bet on mass transit, especially light, electrified rail: this is it. What's your view?
4 comments:
I agree 100%. We need trolleys in all our cities.
I sent a copy of this article along with my thoughts to my Congress critters (Nelson, Martinez) and Rep. (L. Diaz-Balart).
In case nobody has noticed this deserves a mention. Where have the people gone who used to be good at their jobs? Nobody gets it done anymore, taking the easy and sleazy way out of everything. No pride, no trying for excellence, just put another day in the books. Now this guy Madoff, who took $50,000,000,000 from investors was thought of as a great investor with the brokers. Oh, we found one person who was good at his job.
The reason Detroit's auto industry was able to destroy public transit was the massive subsidies and pro-auto policies of our government.
There is no way that the private auto could have taken over as it did without the weight of policy and taxpayer's money, in creating one very tilted playing field. The transit companies could not compete with heavily subsidized auto competition, fostered by the largest highway system in the world and the housing programs of the 50s and 60s that put the weight of federal housing subsidies behind the development of auto suburbs while redlining all city neighborhoods and ripping them to shreds with interstate highways that destroyed their fine-grained networks of residents and commerce.
Transit and long-distance rail did not die natural deaths from free market forces- they were deliberately murdered by the weight of policies, implemented with billions in public expenditures, whose repercussions cascaded and amplified down through decades, with effects that no group of people, no matter how brilliant, or knowledgeable, could foresee.
Auto dependence and life in auto suburbs never did make economic sense, and sans the massive subsidies that made it possible, we might not have 90% of our population living in places where they literally cannot live without a car.
Let it die. The best thing that could happen to Detroit is to at last give up on the auto industry and confront the fact that the economy there will have to rebuilt on a completely different platform for the region to succeed. I feel badly for the soon-to-be displaced workers, but money spent flogging the corpse of the auto industry is money, and jobs, taken from elsewhere, notably from emerging industries that cannot now hope to raise capital and whose products and services will be badly needed in a very altered landscape from that we've dwelled in for the past 60 years.
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