Wednesday, February 25

An e-mail to CCL


Global auto-industry freak-out is scary and foolish: everyone trying to do everything to protect their auto industries is the surest way to kill all of them. The world needs fewer cars and they need to be produced at a slower rate--the process by which that will be achieved is called a recession. The best way to make it bigger is to stupidly try to fight it by throwing hundreds of billions to save an ultimately unsalvable industry, allowing them to continue to build cars that no one wants to buy so that we don't have to lay people off. I'm happy to give up on the whole scheme and let them build trains. We simply can't prop-up every auto-maker at it's current size, it's like a very expensive game of chicken where the winner is the one stupid enough to feed his auto-industry the most hand-outs. We would all be better off if we would all agree not to subsidize our auto-industries so that no one fails for making the financially prudent decision.
I'm sort of interested in Detroit's near-term problem, that they are going to liquidate their inventories of big SUVs that no one wants in order to finance some re-tooling or at least to achieve bankruptcy. I suppose they are going to unleash those cars on the world at low prices in any event, but the best we can hope for is that the deluge of cheap cars be smaller. To some, this is the reason for a bailout--allow them to finance a re-tooling by other means. But I still don't see how a bailout saves us from this.

I really don't understand the position that we should give GM $16 billion. I think the argument that 'it may be a badly-run, too-large, inefficient company peddling obsolete technology in an already too-big industry that's destine to fail, but at least it's American' is about all I understand. (though technically speaking, their 'American' ownership is virtually irrelevant given that 'owners' will receive less than nothing for those shares they bought). I don't think I'm over-estimating the intellect or perspective of the average voter. This one seems obvious. First reaction to the reality that GM wants $16 Billion ought to be "why the fuck is anyone building cars on a day like today?" I. just. don't. get. it.

Scorecard: Rail: $8 billion, Automobiles: $22 billion a few months ago + $16 billion now + enormous highway subsidies in stimulus package (which are NOT limited to repairing existing infrastructure) + indirect fuel subsidies by way of a half-century of bad foreign policy

But $8 Billion is better than nothing. The virtue of high speed rail is, all things considered, it's cheap.

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