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GM will declare bankruptcy today according to numerous reports. We the People will own more than 70% of the car company at a cost of $50 billion. Fifty billion dollars We the People spent to prevent this bankruptcy. Wasted.
Government can only give to one group by taking resources from someone else. This time, We the People should demand something valuable in return.
After emerging from bankruptcy GM will focus much more on the subcompact, energy efficient cars that the President and Congress want. The President and Congress expect taxes, incentives, and regulations, to drive consumers to buy these cars.
It will take taxes, regulations, and incentives, to sell these cars because there are too many American car buyers that want what the so-called American automakers have been producing. That’s why the American car makers still own roughly 54% of the car market despite the incredible technical advances and the better underlying financial models the foreign manufacturers enjoy. We keep reading and hearing about problems at GM and Chrysler, yet those car manufacturers built and sold an awful lot of cars and trucks that Americans love.
The Big Three automakers have obviously done very well designing, building, and marketing cars that many Americans want to buy.
Taxation, regulation, and government incentives will create a whole new set of problems for automakers, taxpayers, and car buyers. This plan will not help put American made alternative energy vehicles unto our roads. That won’t happen until manufacturers develop alternative energy vehicles that Americans want to buy. Instead, we will have cars that politicians and environmentalists want us to own. This plan will drive buyers to foreign automakers for their better quality, energy efficient cars. Further, it will increase automobile accident deaths particularly among low income people that can’t afford larger cars. I envision a whole new set of taxes, regulations, and incentives to deal with that inequality.
There is a better way to drive innovation of alternative energy vehicles, but only if we’re willing to learn from history.
On October 22, 1707 four British naval ships ran aground killing more than 2,000 men. The accident was one of many shipping disasters attributed to the lack of Longitude, the inability for sailors to determine their location at sea, according to Dava Sobel in her excellent book, Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time.
The 1707 accident caused the British to face up to the huge cost in lives and treasure they faced if they could not solve the longitude problem. They understood that the first nation to solve longitude would dominate the high seas. They also realized that they faced a major national security risk if another major sea power developed the solution before they did.
The Longitude problem is incredibly similar to the modern challenges we face leading to a need for energy alternatives.
On land, navigators could determine longitude by comparing the time as determined by the position of the sun to the time according to a clock set to the time at their point of departure. Clocks didn’t work at sea however, because the motion of the waves threw off the clocks sensitive mechanism.
To find a solution to the Longitude problem, the British king and parliament did not take over the shipping industry and tax and regulate shipping to force an answer. Instead, in 1714 the British Parliament offered a 20,000 pound reward to the person that developed a solution. That was a lot of money.
English clockmaker John Harrison dedicated his life’s work to developing a solution; a clock that could maintain time throughout an ocean voyage. Harrison, the genius with neither formal education nor an apprenticeship succeeded. He is often credited with the success of Britain as a naval power and therefore as an empire.
With that history in mind, imagine if the $50 billion wasted on GM had instead been offered to a company or individual that developed a full-sized automobile that ran on something other than fossil fuel and that could be built in large volumes at a reasonable cost. I write this remembering a news story about a Georgia Tech student that developed a way to run his car on the grease from a cafeteria fryer. There are thousands of examples just like that student. What if we gave them money? Heck, what if We the People, the involuntary GM shareholders, voted to offer GM plants, tools, technology, and other assets to worthy entrepreneurs to develop alternative energy vehicles?
Nah! Forget about it. Folding the giant GM bureaucracy under the Federal Government is a much better way to quickly bring to market high quality, alternative energy vehicles that will excite the American car buyer.
Can I have another glass of the Kool-Aid please?
