Don't force green cars on automakers
While automakers were on Capitol Hill begging for financial relief, a key supporter in the House lost his clout. Commentator David Frum says the new leadership should avoid micro-managing the industry.
David Frum (Marketplace)
More on Auto Industry, Politics
TEXT OF COMMENTARY
KAI RYSSDAL: Detroit's problems come during interesting political times. The Big Three CEOs are due back in Washington next Tuesday. They're going to deliver the bailout justification that House and Senate leaders asked them for.
Meanwhile, power within Congress is shifting. Advocates for the industrial economy are losing some of there clout. Commentator David Frum worries that could mean big changes for the Big Three.
DAVID FRUM: While President-elect Barack Obama was collecting applause for his accomplished and centrist economic team, House Democrats were sending a very different kind of signal.
The House Democratic caucus has voted to eject John Dingell of Michigan from the chairmanship of the House Energy and Commerce Committee and to replace him with Henry Waxman of California.
The 82-year-old Dingell is often thought of as the last New Dealer. A proud wearer of the union label, but also a staunch defender of gun rights. A leader on civil rights but unpersuaded on global warming, Dingell was above all else the great congressional champion of industrial America.
Waxman is literally the congressman from Hollywood. For him, environmental issues have always come first.
As automakers beg for aid from Washington, the passage of the most powerful gavel in the House of Representatives to Waxman from Dingell signals a radical change of orientation. Speaker Pelosi has already spoken of making aid to the car industry conditional on a switch to high-mileage vehicles. New York Senator Chuck Schumer says of the auto industry's future: "We already know what that future is: The plug-in hybrid electric car."
It's impressive that a career politician would be so certain of the future of an industry in which he never worked a day in his life.
Observers used to distinguish between "old Democrats" like Dingell, who still believed in government control, and "new Democrats" who supposedly understood markets. But while Waxman may be a generation younger than Dingell, his thinking is no more modern. Waxman and his associates in Congress are just as ready to dictate and regulate and micro-manage as the old New Deal wing. They just dictate and regulate and micro-manage for very different purposes.
Here's a market alternative: raise gas taxes. Then let consumers and producers figure out for themselves how best to conserve. Maybe the answer will turn out to be as simple as smaller cars, closer neighborhoods, and more walking. Or maybe it will be as futuristic as personal space packs. We don't know. And since we don't know, we shouldn't be dictating to industry as if we did.
RYSSDAL: David Frum is a resident fellow at the American Enterprise Institute. His most recent book is "Comeback: Conservatism That Can Win Again."
Comments
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From Charlottesville, VA, 11/30/2008
David Frum's opinion piece is as clever as it is disingenuous. Yes, raising the gas tax is surely a good idea -- one that many NPR listeners can get behind. But Frum's immediate goal is to deflect criticism and reform away from the auto industry. Are we really to believe Frum and the American Enterprise Institute would support a gas tax down the line? Or might this simply be another stalling tactic of the sort long practiced by the Big 3 and their reliable friend, John Dingell?
Two related questions: 1) What makes raising gas taxes a "market alternative" to regulation? (Both are forms of government intervention in the "free" market). 2) Why aren't Frum and his pals at AEP outraged by the OTHER kind of free-market meddling, huge government bailouts for large corporations? Ah, yes: socialism for the rich has never been a problem for this crew.
From Atlanta, GA, 11/27/2008
If Henry Waxman holding the gavel at Energy & Commerce makes Frum and his ilk nervous, Waxman must surely be the better choice. GM, Ford and Chrysler have proven time and again that they cannot be trusted to do the right thing by customers, workers and the planet. Why shouldn't Congress tell them how to manage their businesses? They've shown their incompetence and dishonesty at doing it themselves.
Frum has a vested interest in preventing government from doing anything to regulate business -- the very philosophy that brought us the subprime mortgage debacle and its resulting crisis in the finance industry, as well as Detroit's problems. No one has any business listening to him now, or indeed to anyone from the American Enterprise Institute or similar right-wing, pro-business (read: anti-worker, anti-environment, anti-consumer) think tanks and pressure groups.
11/27/2008
I was startled to read the unanimity of views regarding raising the gas tax. Mr. Frum of the American Enterprise Institute, an organization that bitterlly fought all tax policy as interfering the "free market" is a convert. And, to my great surprise, westerners and easterners agree - raise gas taxes. We should build on this moment and do what is completely rational - raise gas taxes now. Invest the proceeds (like the Social Security Trust Fund) into weaning us off of carbon based transportation fuels. But one commenter was correct, without a directive to spend the money on transportation, it will be wasted. (It is sobering to note that of the billions spent by tobacco companies to settle the state and federal lawsuits, on three percent (3%) was spent on anti-smoking programs.)
I can't imagine a more catastrophic threat to our freedom and survival than global warming. Raising the gas tax is a modest step to put us on the right path.
From Colorado Springs, CO, 11/27/2008
It sounds like a good idea to raise gasoline tax. The problem is that whenever there is money around, Congress will use it to spend on pork barrel projects, i.e. wasteful government "projects". Maybe someone or group could specify how the taxes are to be used.
One way to really help and ignite business activities in the transportation / auto industry is to have specifications and standards that are analogous to standards available to the computer or electronics industry.
For example, for those in the know about the infancy of desktop computer industry, when IBM invented the ISA bus, it allows many companies to engineer new products for the IBM desktop computer as well as allow for more competition. This leads to cheaper and cheaper computer. Thus more sales.
Thereafter, the computer industry realize that everyone gains when they develop standards. Those companies which continue with their proprietary standards eventually disappear.
If we have mechanical, electrical, and electronics standards for automobile like those that was done in the computer industry, the government can help generate a lot of activities from many companies or start-ups developing and inventing technologies for the standardized platforms.
When there are standardized automobile platforms, investors know there will be a market for such items.
Standardized automobile platforms would eventually mean cheaper and better automobiles. It also mean better designs in form and functions, due to increased competition.
It also allow for lower cost of entry into such markets when new ideas came along.
An example of standardize platform would be the frame of the vehicle of a given class size or application.
Standards would allow any company in that market category to design their automobile frame, such that its frame can be plugged into another automobile that meets the same standard.
Establishment of automobile mechanical "plug and play" standards for vehicles of various class can and should be done.
IF there are new auto technologies or vehicle class, then, another standard can be established, hopefully with backward compatibility in mind.
From san diego, CA, 11/26/2008
A gas tax is a no brainer. It's why Europe has cars built by GM and Ford, almost identicle to ours, that get 60 mpg. It's inexcusable for Ford and GM to not offer us the same choices. That's why if we offer Detroit any bailout, it must also come with strings attached. Otherwise, there are a few innovative start ups much more deserving of a taxpayer subsidy, ready to move in and make a killing. When Detroits firing, they'll be hiring. Here's another idea: there's a plug in hybrid being built to get 300 mpg; use the bailout money to buy the patent and make it public property.
From Las Vegas, NV, 11/26/2008
I was frustrated by Frum's piece, until I found myself agreeing with his conclusion. A gas tax is the right thing to do on many levels.
The best two-step plan for Detroit: 1) help the Big Three retool to build greener cars, and 2) use a gas tax and an upward ratcheting of fuel prices to insure those smaller cars are marketable.
A gas tax is also the right thing to do for our kids and grandkids and their planet.
From West Linn, OR, 11/26/2008
While I don't often find myself agreeing with Mr. Frum, his proposed alternative to regulating fuel-saving technology is right on. Legislators (or bureaucrats) have no expertise qualifying them to pick technological winners and losers. In the long run, a healthy fuel tax will facilitate better solutions. It will also provide a healthy source of revenue with which to restore infrastructure, build world-class mass transit and help retire our burgeoning debt.
Of course there will be some problems in the short-term. Initially a gas tax would be regressive, in that lower income Americans are more likely to own older gas-guzzling land yachts. That could be fixed with a progressive credit to assist low-income motorists with gas purchases. Over time, the problem would take care of itself as the old land yachts are scrapped, and the newer more fuel-efficient vehicles would filter their way down to the used vehicle market where lower-income motorists would purchase them. Then the gas tax would become progressive, as only the wealthy would be willing to pay high fuel prices to drive larger or high performance vehicles, which consume more fuel.
While Senator Schumer may think that we already know what the best technology will be, the jury is still out on the long-term benefits of plug-in hybrids. What about battery life (and cost)? What about disposal of toxic batteries? What about the fact that we would become reliant upon a different group of unfriendly foreign powers for the critical natural elements (like cobalt) required by these new-technology batteries?
By the way, electricity is not free, or necessarily environmentally friendly. What will be the source of all that electricity provided by those 'Plug in' connections — coal?
We don't have to look back very far to find another example of lawmakers getting it wrong in trying to pick energy technology. Within just the last year, legislators decided that ethanol would be the solution to our energy dependence, and subsidized a big growth in corn-based ethanol development. They failed to realize the dramatic impact it would have on world food prices, and resultant hunger.
We should look towards the model of the Europeans in using fuel tax to encourage energy efficiency. This time, Mr. Frum has it right.
From Pittsburgh, PA, 11/26/2008
As someone deeply in love with cars for the last 69 of his 79 years, I always thought I knew where cars were going - what the next direction in the market would be - and I was usually right. Today I haven't a clue. But I think David Frum is right. We should start by raising the gas tax - say 50¢ per gallon - and then listen closely and watch where the market takes us. Markets are thoughtful that way.
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