Auto Bailouts

By now most of us know that the U.S. is providing lots of money for auto dealers. Although I do support this move, in both countries (Canada and the U.S.), I don't think that we should do it blindly. Yes, I think there should be strings attached. (I would love to see the executive class pay it back out of their personal pockets, but that's not about to happen.) But we do need to look at why the bailout became necessary, and if there are any ways to prevent it from happening again.

When I was studying climate change (many) years ago, I remember one thing clearly: even at that time, we were suggesting ways that industries could change. My subject area was Bulgaria, a particularly inefficient country in Eastern Europe.  We came up with many suggestions to be able to improve their technology to be more efficient, because much of it was old-style Russian machinery that had been built prior to the cold war. Part of the reason it was inefficient was by design: the theory back then was that when you used more energy/material/whatever, you were helping to drive the economy. That's fine under a theory of infinite resources, but it is not reality. (The Communist State was good at avoiding reality.)

I learned a lot about strategies to protect the environment during that time, and theorized about applying them not only overseas, but to our countries as well. I remember that one of our suggestions was that the North American auto industry should be made to be more efficient: use less gas, get better mileage, have less impact on the environment. It was working in Japan. They were all those words that we are now SO familiar with, but this was a dozen years ago. Such rumblings have been around for decades.

I remember the responses. Who would implement these changes? The government? MORE standards? I was told that although such changes would be good, they had to be voluntary. Car manufacturers would respond as "market forces" dictated. There was no point in having the government mandate such changes: it would hurt the economy, cause job loss, it could even cause a recession. Do so gradually? It would never work. Instead, let the "invisible hand" of Adam Smith guide the market in the right direction. That's what our world was based on; to do any less was inefficient in itself.

We argued that there was no reason for companies to implement these ideas themselves; the world would degenerate into an all-consuming, materialist quagmire. The counter-argument was that when people were ready, they would cause the demand that would implement the shift in the auto industry. Industries followed what people wanted. It would be slow and easy, no jobs would be lost, and it would be the most efficient of all possible plans.

Is that what happened? We did the whole market thing; you and I lived (are living) through it. We let "market forces" (another word for greed) shift and turn for years; we waited for that "invisible hand" to take over and watched while SUVs and gas guzzlers got more and more popular. Then it hit. The "invisible hand" was not a gently guiding force: it was a slam in the gut. Popularity changed almost overnight. It was the equivalent of an economic earthquake. What few effects the industry had been able to implement were not nearly enough. Now they need a bailout; they need a lifeline. As I've said, I'm all in favour of this. We need to help not only the auto companies, but its dependent industries. It could be that this is a last-ditch effort that won't work, because the industry is already more dead than alive. But at least the bailout will help some of the other industries to get out of the way of a collapsing giant. It will help minimize the effects of unemployed job-seekers trying to find new work, all at the same time.

Would it have worked if we had taken our ideas to heart in the mid-90s and started to legislate improved efficiency and more research into sustainable methods of transportation? Perhaps not in the short run. We, the people, would have had to accept what was coming off the lines and let ourselves be educated. There certainly would have been some anger, some responses, some complaints. But would it have been this bad? The worst part is that if we had followed that course and avoided this mess, we would never know. We would be listening to the preachers of "free markets" and "invisible hands" right now, and thinking they had it all wrapped up. At least this way we can see the self-absorbed, greedy executives and their henchmen for what they really are.