Who Needs Detroit?

super_record_cassetteI can have all my transportation needs met in Vicenza, Italy.  If congress would just forward me about 0.0001% of that bailout money, I could upgrade my bike with the new Campagnolo Super Record 11-speed system.  That’s 11 sprockets on the rear X 2 on the front, for a 22-speed setup.  Who needs internal combustion?  With this, I can tackle any hill.

But until the economy improves, I guess I’ll just have to limp along with my lowly 9-speed (X 3) setup.

Seriously, I am concerned about the workers in Detroit.  Mitt Romney says it’s their fault for wanting health insurance and the retirement pension they were promised.  He says the automakers should use the bankruptcy laws to absolve themselves of those burdensome obligations.  Part of the competitive disadvantage Detroit has is our system of health care.  The Republicans have always resisted publicly-funded health care (that’s why they hated their own candidate, McCain)–and now they are blaming workers for wanting health benefits from their employers.

But I say, who would we be saving Detroit for, if not for the workers?  And I do seriously hope some of the funds will be used to develop sustainable transportation options.

Why couldn’t Detroit compete with Italy in producing precision bicycle parts?

Save the Dinosaurs!

anatosau

Is the saying still true, “What’s good for General Motors is good for America”?

Now that the car companies are asking for us to bail them out, like we did the Wall Street high rollers, it could be a good opportunity to retool our transportation system.

In the 1950s president Eisenhower made a momentous decision.  In the name of national security, he used the power of imminent domain to nationalize thousands of miles of farm land and build the Interstate Highway system.  The national security interest was the transportation of troops.

This experiment in socialized transportation was a huge success.  It turned out to be a great subsidy to the automobile industry.  The auto companies thrived, suburbs sprouted, boosting the construction industry–and the middle class emerged realizing the American dream for a whole generation.  These programs of governments subsidies and centralized planning produced a level of prosperity no one could have imagined.  There was only one problem.  It relied on an unlimited supply of cheap petroleum–and fifty years ago, who could have imagined that the supply of fossil fuel was limited?

Our dependence on automobiles–and therefore on oil from unstable countries–has produced a national security nightmare.

Don’t let the temporary cheap gas prices fool you.  As soon as the world economy begins to recover, oil will resume its ascent to $200.00 per barrel.  The reason is simple.  There are ten times as many people in China and India as there are in the US; and they all want to drive cars like we do.  And who can blame them?  The problem is, that there is not enough oil in the world to supply them and us.

We could use this opportunity to retool the factories in Detroit, Ohio, Kansas City, and other places to produce mass transportation: high speed train cars, clean bio-diesel hybrid buses, trolley cars, bicycle lanes.  We could improve our health, simplify our lives, clean up our air, and revitalize our economies.

Or we could try to save the automobile–the dinosaur of our age.

The End of Voodoo Economics

AllPosters.com

AllPosters.com

Well, I hope we have been rescued from economic meltdown; I hope I won’t be out in the street selling pencils next month.

I remember the election campaign of 1980; The father of our current president was seeking the nomination of the Republican party.  He called Ronald Reagan’s economic plan “voodoo economics.”  Regan of course, prevailed, and his philosophy is now sometimes called Reaganomics.  Reaganomics is the economic theory and practice that has prevailed for the past 28 years.  The key elements of Reaganomics have been deregulation, deficit spending, and income redistribution.

First, a disclaimer: economics is messy and complicated.  In fact the current economic crisis is based on economic instruments so complicated even the banks that own them don’t understand them.  So what follows are the memories and reflections of a marginal participant in the U.S. economy, not those of an expert.

DEREGULATION

One of the basic principles of American democracy is the balance of power.  Our political creed is based on a fear and loathing of tyranny, a belief that the concentration of power in any one source or segment is dangerous.  Reaganomics is based on a fear of government–which is genuinely part of our heritage: That government is best which governs least.  But with Regan this became absolute: Jefferson with a vengeance.  President Bush can still recite the words, “I’m from the government, I’m here to help” as a self-evident joke (and verified by hurricane Katrina).

Anyone who has ever dealt with a bureaucracy can understand this side of Reaganomics.  But the other side is an unbounded confidence in the good will and ability to do good of the free market.  There is no attempt to balance the evils of big government vs. the evils of big business.  Reaganomic diehards would see no irony in the words, “I’m from the global oil company” or “I’m from your HMO, and I’m here to help.”

Regulations were designed primarily to protect the public against three dangers: reckless gambling with other people’s money in the financial markets, the loss of genuinely free markets through concentration of power in monopolies, and damage to the air, water and other natural resources we all depend on.  Reagan and his disciples saw environmental protection as a threat to the free markets.  They managed to portray those who wanted to conserve nontoxic air and water for their children as a crazy bunch of deranged tree hugging Luddites who wanted to stop progress.

In response to the energy crisis of the 1970s, President Carter initiated a series of energy-saving programs that actually worked.  By the 1980s and 90s the price of oil had plummeted–to the point that we got fat and lazy and started driving gas-guzzlers again.  But that’s another story.

One of Carter’s projects was to install solar panels on the White House.  One of Ronald Reagan’s first acts as president was to remove them.  They were a reminder of the need to conserve, of the fact that resources are finite–and as such they did not convey the kind of optimism he wanted to mark his presidency.

So, for nearly the past thirty years, regulations have been rolled back or swept under the rug–and it worked.  It produced a booming economic bubble.

But now the bubble has burst and some of the financial gambling turned out to be losing bets.  Now Congress has to provide a security net for the Wall Street high rollers.