Pushing String

December 7, 2008

"…guess I'll have to face the cold hard facts" --song by Del McCoury

The TV view of the CEOs of the three American car makers groveling at the feet of Congressional interrogators for a bailout has the feel of watching a quiz show when the contestant blows the answer to a simple question even when the audience is shouting the answer. Of course, these guys had already committed public hari-kari when they arrived for their first interview in their individual luxury corporate jets. By the second round, the Congressional scalp-takers were in no mood to be diverted by symbolic gestures like working for a dollar and selling the jets, and it will be interesting to see if the so-called "plans" each company has filed will be seen as something more substantial than a thinly-camouflaged bridge loan to the next multi-billion dollar handout a few months out.

It's pretty sobering when a company is described as "too big to fail." The fact that these manufacturers and their allied suppliers, distributors and sales outlets represent over three million jobs is enough to hesitate before succumbing to the temptation to just let them wither from the consequences of their poor decisions and their aggressive lobbying against higher fuel efficiency standards. I'll be candid--it is hard to be enthused about committing our financial resources to rescue an industry that has been so slow to change.

Let's face it--once Henry Ford made the automobile affordable to any American, it became the substitute for the horse (although some might say the outcome swapped one kind of pollution for another). Americans were freed to live far away from where they worked and could enjoy the freedom of movement and travel anywhere they liked without having to walk, ride a buggy or share mass transportation. Developers and real estate sales blossomed. Suburbs sprang up as people fled more crowded urban conditions. Tourism became an industry. The car was a prime enabler of an expanded American dream. Almost nobody saw anything particularly wrong with the increased dependence on the automobile, even though central business districts in almost every community across the country began to wither as their customers drove to the urban shopping malls and WalMart stores.

None of this would have been possible without cheap gasoline. Even though we had plenty of warning--political and natural--Americans took abundant, cheap gas for granted, and political leaders dismissed complaints about pollution and damage to the atmosphere as hysterical wolf cries from tree-huggers. Today, we find ourselves face to face with the unavoidable facts--that gasoline is neither in inexhaustible supply, nor will it ever again be cheap, and there are severe and immediate environmental consequential damages directly linked to use of the automobile.

There is little real choice--the near-term financial distress of the American automobile industry will be addressed in some fashion. It will be in the mix as the incoming Obama administration attempts to bring some order out of the chaos of failing industries, rising unemployment, energy development and souring public confidence. The discussion of a massive public works program will most certainly include highways as a major component.

A powerful means of promoting fuel conservation and discouraging abusive use of inefficient technologies is to tax the use of carbon-based fuels, and then use the proceeds to fund the infrastructure needed to support our national transportation system components (not only highways), and for development of alternative energy sources and new applications of alternate energy. This is not a new idea--many European countries have had such a system in place since the early 1990's. The time for an American carbon tax is here.

As a national economic development program emerges, it would seem important to look beyond the immediate crisis and to take the longer view. It makes no sense to subsidize any mode of transportation if it does not contribute to and conform with national standards for improved energy efficiency and resource conservation. That implies, of course, that such standards exist and that they make meaningful strides in reduction of dependence on carbon-based fuels. Further, one requirement of any bailout of the car makers should include a mandate to develop a lower-cost, efficient battery for powering non-gasoline motors.

Reaching these goals will take a monumental effort of salesmanship, appeal to self-interest and entrepreneurial skill. Such an undertaking will make pushing string look easy.

Charlie Crow © December 7, 2008