An e-mail to CCL

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
(priceless?).

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

Greatest Generation?

Kurt Vonnegut, Jr. encouraged his writing students to make awful things happen to their characters to show the reader what they’re made of. But this recession—and it will be bad—is not enough to prove our greatness.

First, this will be nothing compared to the Great Depression. Unemployment in some areas reached 40% and many people were unemployed for nearly a decade—breadlines and soup kitchens marked New York City and malnutrition was a serious concern. More than that, my grandparents' generation earned their greatness not simply by becoming wealthy again, but by leaving their depression-afflicted towns to fight in an enormous war and emerging in a world free of fascism as the singular super-power. They unlocked the power of nuclear chain reactions, rebuilt Europe and Japan, and—within a decade—saw the yokes of colonialism collapse. Sure, this was not entirely their doing. They watched historical trends come to fruition. But it was a time of greatness. It’s difficult to fathom the permanent and far-reaching consequences of their lives.

The point is greatness requires more than returning to 3% GDP growth. It is unlikely we will earn our greatness by expanding our geopolitical dominance. We have to offer permanent solutions to big problems and turn pages of history. I can think of a few goals that might enable us to earn our greatness:

First, and perhaps this is obvious, we ought to make it our national business to pioneer great technological progress. There was a time when the brightest minds and organizations of a generation worked to cure polio or put men on the moon. Now, they trade derivatives. I’ll be the first to argue that trading derivatives has social value up to a point, but only up to a point and maybe this depression will help us draw that line and reconsider the social norm of following all the other bright boys to Wall Street. There are great technological problems to be solved and it will take great-big subsidies, leadership, and creativity to solve them. Alternative energies, disease, climate change, global transportation are proper challenges for us to assert our greatness in a way that has a lasting impact around the world.

Second, our generation is well-positioned to earn its greatness bolstering international law. I am weakly optimistic that this will have renewed importance under the Obama administration and as the U.S. finds long-term solutions to our situation in Iraq. The first step to bolstering international law would be obeying it. And the first step there would be closing Guantanamo, which seems like it’s going to happen. The U.S. can hope to reclaim the moral high ground and strengthening international organizations—thinking beyond the pathetic shape of the UN or the IMF—would be an accomplishment we can point to in 60 years.

And third: the most important work Americans can do while we endure this depression is reflect on our lifestyles. We are the wealthiest nation around and we spend it living in great big houses in the suburbs, driving big pieces of steel that weigh thirty times our body weight to run quotidian errands. We support a medieval monarchy to afford this situation but even so it’s not easy to sustain what is probably the greatest misuse of resources in history. This model is being mimicked in the suburbs of Beijing today, Bombay tomorrow, and Brazzaville after that. It isn’t working and we need to admit it. Fixing this problem will require more than a miracle technology. We need to restructure the way we live and accomplish things.

All signs point to major government works under this administration both because we need them and because we need a massive stimulus package. Jason Furman says it will be on the scale of Eisenhower’s interstate highway project. But please, let’s not build more roads.