What comes around goes around?

This is a cross-post from Grist.org. I thought that the Economic Populist readers might be interested in the intersection between manufacturing and the environment -- please tell me what you think

How to save Detroit

Irony of ironies, the one set of products that could save G.M. is the one that G.M. destroyed -- the electric trolley systems of America. According to the well-known research of Bradford Snell, G.M. killed the electric trolley, because in 1922 they decided that the only way to increase car sales was to eliminate the competition, decent public transit. So they bought systems, pressured railroads and banks, bought public officials, did whatever they could to replace electric -- I'll repeat that, electric -- transportation with oil-based transportation.

And now, with oil obviously volatile and with a limited life as an affordable product, the entire country is stuck with living patterns and sprawl, dependent on the oil-sucking automobile. Irony number one -- if there was a set of decent electric public transit systems in the country, the demand for oil would be much lower, and the car companies (and the rest of the economy) would not be in as much trouble.

Irony number 2, of course, is that the car companies have also been busy killing the electric car.

But the biggest irony may be that the Big 3 could be revived by building a new generation of electric trolleys, or light rail, or high-speed trains, or electric bus rapid transit. As Paul Goodman points out in the N.Y. Times,

The Obama administration should ask the companies, as a condition of financial assistance, to begin shifting from being just automakers to becoming innovative "transportmakers."...As transportmakers, the companies could produce vehicles for high-speed train and bus systems that would improve our travel options, reduce global warming, conserve energy, minimize accidents and generally improve the way we live.

Harvey Wasserman argues that "GM Must Re-Make the Mass Transit System it Murdered". That should certainly be part of an agreement that the Federal government makes if it is to load G.M., Ford, and Chrysler a large loan. But as Louis Uchitelle shows in an article in the New York Times about the automobile industry, the market for cars may be declining in the United States:

In an industry capable of making 17 million cars a year, sales have dropped to an annual rate of only 10 million vehicles made here.

"None of the Big Three — and perhaps not the transplants — can make money at 10 million," Mr. Luria said. "The transplants are O.K. at 12 million and the Big Three at 15 million or so."

Annual sales of autos and light trucks have been at least 15 million through most of the last decade.

I'm not optimistic that all of a sudden Washington D.C. or the Obama Administration will understand that the main reason we are dependent on foreign oil, feeling the effects of rising oil prices, and so incredibly vulnerable, is because we don't have a decent electric alternative within our transportation system. But it would certainly be history's sweet revenge if the industry that did so much to give us an unsustainable society became part of the solution to our environmental and economic woes.



Great post

Thanks for adding to EP!

Yeah, the history of the big 3 as well as big oil is they crushed alternative energies over and over and also crushed public transport and planning.

I don't know what's going to happen here. I know if the big 3 go down, that is going to cause a wave of economic pain and possibly cause an economic tsunami that bowls over everything else in it's path.

At the same time, allowing them to just go on with their ill-conceived business models, management and also against the US interests is insane.

One thing is GM is selling Aeros in China for $1100 dollars.
They are all out there trying to capture the Chinese market.
Well, what the hell kind of profit margin can that possibly be, never mind just how much more pollution and oil demand does that cause?

Plus all of that business is outside of the US, I believe including most manufacture so what does that mean to US workers and another question is does GM have profits offshore that are affecting it's corporate bottom line inside the United States?

Thanks Robert

I hope this helps in some small way.

Well, one possible silver lining here is that people seem to be paying attention to manufacturing. There seems to be a very rudimentary understanding that if the car companies fail, manufacturing will be in deep doo-doo, and that that is a bad thing. Which I think it is.

The ideological problem is that in other countries, such as Japan and South Korea to name just two, the central government would jump in with two feet if this sort of thing happened (not that they're error-free, by any means). But since the United States has less experience with this sort of thing (except via the Pentagon), it's going to have to grope around for a while.

One thing I don't really understand -- why are they collapsing now? They survived the 1982 recession, much less the Depression, is the problem that they've been spilling blood for years before this?



Move back to a production economy from a services and consumer economy. I sure don't want to turn into Great Britain.

In the middle column, I've pulled in other blogs which are usually fast moving of content, plus based in economic reality and also focused on manufacturing, trade. The group most interesting is the Trade Reform Coalition. They are amazingly bi-partisan, clearly focused on getting better business conditions for their industry sectors.

A minor change could go a long way

We already have computerized automatic transmissions. Well, it's just a small step (very small) from that to hybrid electric drive trains, which one rather extravagant example proves can drastically reduce fuel usage in any vehicle. Once you do that, you simply replace the engine with a constant-run multi-liquid-fuel generator, and suddenly, you've turned a hummer into something America will buy again.

Maximum jobs, not maximum profits.

GM running web ads or someone is

stating the statistics of a study of the loss in GDP, massive unemployment and so on if the big 3 are forced into bankruptcy.

They are really working it. I think they should get it and then a major restructuring some sort of alignment to the national interest should be done.