Creative Destruction & The Federal Bailout

2005 Dodge Durango

2005 Dodge Durango

On the heels of the Federal Bailout of Fannie Mae and Freddie Mac, the Detroit automakers drove into Washington in their largest SUV’s pleading for Federal Loan guarantees in order to “transition” to more energy efficient fleets. This is nonsense and would be a government payoff for years of stupidity on the part of the managements of the Big Three automakers. The great economist Joseph Schumpeter believed that almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail and almost always because they failed to innovate. He called this process Creative Destruction. To compare the management of Toyota and Chrysler over the past 15 years is to realize that Chrysler “deserves to die”. They brought their destruction on their own heads by spending more money on lobbyists to prevent the government from raising CAFE fuels standards than they did on R & D for efficient engines. As Schumpeter said, “This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.”¬†Toyota and Honda manufacture efficent cars in American factories employing American workers. What is it about Chrysler that makes it worthy of an American taxpayer bailout?

The ultimate exhaustion of the neoconservative philosophy that has ruled the Republican Party since the ascension of Ronald Reagan in 1980 is that it ended in building the greatest Corporate Welfare State in the history of this or any other Republic. By the time George Bush limps out of office we will have seen trillions of the tax payers money invested in propping up brain-dead bankers, automakers, airlines and military contractors.

If the American public and the press are unwilling to realize that the last 8 years of Republican rule was the greatest corporate raid on the treasury ever, then it will be as much the fault of the Democrats for their complicity and their refusal to make this the campaign issue, as it is the fault of McCain and Palin and their lobbyist managers who can’t wait¬†for their turn at the public trough.

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0 Responses to Creative Destruction & The Federal Bailout

  1. Morgan Warstler says:

    Jon, I’ll make a deal with you:

    1. We’ll both support no buyout of the automakers.
    2. You have to support Drill, Baby, Drill – just in case we’re right. There’s no harm here.
    3. Now that we have won the war in Iraq, you have to endorse using our foreign policy to encourage that OUR western oil companies – get the best contracts possible for Iraqi oil.
    4. Forget CAFE standards AND I’ll support $4 gasoline.

    That’s a good compromise, right?

  2. Morgan Warstler says:

    Jon, I’ll make a deal with you:

    1. We’ll both support no buyout of the automakers.
    2. You have to support Drill, Baby, Drill – just in case we’re right. There’s no harm here.
    3. Now that we have won the war in Iraq, you have to endorse using our foreign policy to encourage that OUR western oil companies – get the best contracts possible for Iraqi oil.
    4. Forget CAFE standards AND I’ll support $4 gasoline.

    That’s a good compromise, right?

  3. Armand Asante says:

    Wow.
    The war in Iraq is finally won!
    Now THAT’S a compromise.

  4. Armand Asante says:

    Wow.
    The war in Iraq is finally won!
    Now THAT’S a compromise.

  5. dragonmage06 says:

    The Democrats need to start spotlighting who’s actually caused all of the problems with our country and our economy. The Republicans are trying to hijack our message and pin the blame on the Dems, hoping that the American voter won’t think critically about whether Democrats or Republicans would be the best to create change in the government.

  6. dragonmage06 says:

    The Democrats need to start spotlighting who’s actually caused all of the problems with our country and our economy. The Republicans are trying to hijack our message and pin the blame on the Dems, hoping that the American voter won’t think critically about whether Democrats or Republicans would be the best to create change in the government.

  7. len bullard says:

    Here’s the problem: we are all creating the problems. We bought the SUVs, and as result, they kept making them. If you need to point a finger, look in the mirror.

    We’re going to have to rewire the culture. This is bigger than an election. Not to rain on your parade, but if McCain/Palin win, the problems are still there and we need to have a strategy for the rewiring. More Us vs Them isn’t going to get it done as Obama was saying on the O’Reilly interview.

    We have to rise above the Bitter Butter Battle and as cultural engineers, ask ourselves how we can go about this. Anyone remember “The Day After”? It had a profound effect. It may be games this time, but first we have to define the kind of mind shape that is the goal state of the process, then work out the steps.

    You have waaay overestimated the symbols you are using and underestimated the instability of the orbits in the domains. Same as 2004. It’s coming down to the soccer moms. You tried to entice them with Exotic Smarts. They prefer familiar smarts. When the mammals are frightened, they go conservative and familiar.

  8. len bullard says:

    Here’s the problem: we are all creating the problems. We bought the SUVs, and as result, they kept making them. If you need to point a finger, look in the mirror.

    We’re going to have to rewire the culture. This is bigger than an election. Not to rain on your parade, but if McCain/Palin win, the problems are still there and we need to have a strategy for the rewiring. More Us vs Them isn’t going to get it done as Obama was saying on the O’Reilly interview.

    We have to rise above the Bitter Butter Battle and as cultural engineers, ask ourselves how we can go about this. Anyone remember “The Day After”? It had a profound effect. It may be games this time, but first we have to define the kind of mind shape that is the goal state of the process, then work out the steps.

    You have waaay overestimated the symbols you are using and underestimated the instability of the orbits in the domains. Same as 2004. It’s coming down to the soccer moms. You tried to entice them with Exotic Smarts. They prefer familiar smarts. When the mammals are frightened, they go conservative and familiar.

  9. Rick Turner says:

    Well, Len, maybe you bought an SUV, but I drive a ’95 Saturn that gets 2.5 mpg more than it was rated at thirteen years ago (highway), and the sad thing is that the new Saturns of it’s style are still rated at 32 mpg…which is really stupid. Morgan, CAFE standards are great thing and should be improved for national security reasons, and I dare say if they had been, perhaps Detroit would not be hitting on you and me for bailouts. Theauto capitalists have been lining their pockets for so long on such short term money, they’ve forgotten their responsibilities to their stockholders. Screw ‘em. They might as well have been building Yugos. Let Toyota take over.

  10. Rick Turner says:

    Well, Len, maybe you bought an SUV, but I drive a ’95 Saturn that gets 2.5 mpg more than it was rated at thirteen years ago (highway), and the sad thing is that the new Saturns of it’s style are still rated at 32 mpg…which is really stupid. Morgan, CAFE standards are great thing and should be improved for national security reasons, and I dare say if they had been, perhaps Detroit would not be hitting on you and me for bailouts. Theauto capitalists have been lining their pockets for so long on such short term money, they’ve forgotten their responsibilities to their stockholders. Screw ‘em. They might as well have been building Yugos. Let Toyota take over.

  11. Morgan Warstler says:

    Rick, the point is, if I go along with $4 min, the price is high enough to move the market. We don’t need government setting friggin standards.

  12. Morgan Warstler says:

    Rick, the point is, if I go along with $4 min, the price is high enough to move the market. We don’t need government setting friggin standards.

  13. Roger McNamee says:

    On the math, Jon is right about the corporate raid on the Treasury.

    The problem that we have is that our economy has been harvested for 30 years . . . with no re-investment. As a result, infrastructure is collapsing everywhere. The power grid can no longer support California without brown outs. The roads, bridges and levees of America are way past their sell-by dates. And American high school students can’t find China on a map, much less understand why China matters.

    What this country needs is a twenty-year program to Rebuild America. There are three benefits to this idea:

    * Infrastructure building is a full employment program with high paying jobs. Full employment will get the economy rolling again and end the nonsense about immigration.
    * Rebuild America touches all 454 congressional districts
    * It will enable sovereign wealth funds to invest in American assets that they can’t screw with later. (Watch them try to take their bridge home.)

    On the growth front, we have an opportunity to make CleanTech an American industry. Over a generation, we can not only create wealth and jobs, we can alter the global strategic balance to our benefit by undermining the economic foundation of Russia and the OPEC nations. This will be most effective if we combine it with a determined effort at conservation.

  14. Roger McNamee says:

    On the math, Jon is right about the corporate raid on the Treasury.

    The problem that we have is that our economy has been harvested for 30 years . . . with no re-investment. As a result, infrastructure is collapsing everywhere. The power grid can no longer support California without brown outs. The roads, bridges and levees of America are way past their sell-by dates. And American high school students can’t find China on a map, much less understand why China matters.

    What this country needs is a twenty-year program to Rebuild America. There are three benefits to this idea:

    * Infrastructure building is a full employment program with high paying jobs. Full employment will get the economy rolling again and end the nonsense about immigration.
    * Rebuild America touches all 454 congressional districts
    * It will enable sovereign wealth funds to invest in American assets that they can’t screw with later. (Watch them try to take their bridge home.)

    On the growth front, we have an opportunity to make CleanTech an American industry. Over a generation, we can not only create wealth and jobs, we can alter the global strategic balance to our benefit by undermining the economic foundation of Russia and the OPEC nations. This will be most effective if we combine it with a determined effort at conservation.

  15. len bullard says:

    Rick:

    I drive a Ford Taurus and the wife drives a Focus. The Saturn I owned before that had a manufacturing defect and blew a head every 5000 miles (part of a run with a known design problem). I needed the six for the family and the Focus for the neighborhood runs. Cost, performance, lifecycle, all good. On the other side of the hill from where I live is the Toyota plant that makes Tundra engines. I’ve had good luck with Fords. They aren’t the best, but the drive trains and the engines keep on keeping on and they are within the family budget. There is an Aerostar parked in the driveway seldom used but paid for and kept because to replace to hauling capacity would cost a mint. I miss my MicroBus sometimes.

    It isn’t Us Vs Them (Us versus Japanese). It is a mindset, a wiring diagram, and if it can’t be self-rewired, events will take over. The Japanese adapt smart in the auto industry. In the computer industry, they suck. And so it goes.

    Slowly we do seem to be self-correcting. After 24 years of the environmentalists being laughed at by the same generation that first put on the armbands to celebrate Earth Day, Green is Good again.

    The question is, will it last and can we move fast enough? Wired Magazine had an interesting article about the increase in ‘sadness’ as ecosystem failures have unfolded in Australia. They had a word for it that I forget, but it was essentially homesickness; that as irreversible changes became noticeable, the nostalgia became social depression.

    That’s something for the artists to notice.

  16. len bullard says:

    Rick:

    I drive a Ford Taurus and the wife drives a Focus. The Saturn I owned before that had a manufacturing defect and blew a head every 5000 miles (part of a run with a known design problem). I needed the six for the family and the Focus for the neighborhood runs. Cost, performance, lifecycle, all good. On the other side of the hill from where I live is the Toyota plant that makes Tundra engines. I’ve had good luck with Fords. They aren’t the best, but the drive trains and the engines keep on keeping on and they are within the family budget. There is an Aerostar parked in the driveway seldom used but paid for and kept because to replace to hauling capacity would cost a mint. I miss my MicroBus sometimes.

    It isn’t Us Vs Them (Us versus Japanese). It is a mindset, a wiring diagram, and if it can’t be self-rewired, events will take over. The Japanese adapt smart in the auto industry. In the computer industry, they suck. And so it goes.

    Slowly we do seem to be self-correcting. After 24 years of the environmentalists being laughed at by the same generation that first put on the armbands to celebrate Earth Day, Green is Good again.

    The question is, will it last and can we move fast enough? Wired Magazine had an interesting article about the increase in ‘sadness’ as ecosystem failures have unfolded in Australia. They had a word for it that I forget, but it was essentially homesickness; that as irreversible changes became noticeable, the nostalgia became social depression.

    That’s something for the artists to notice.

  17. Alex Bowles says:

    I think Jon is dead on when he talks about the GOP having reached a point of philosophic exhaustion, where principled and enlightened leadership is eclipsed by shameless and destructive bids for power. The outright lying has gotten especially bad. Obama said “hey, you can’t just make stuff up.” Actually, Barack, they can. That’s how they win.

    But the Democrats in congress aren’t much better. Larry Lessig has gone out of his way to demonstrate that the institution itself is fundamentally corrupt – and corrupting. He points out that, as a nation, we will ALWAYS have challenges – that life is too dynamic for problems to ever end. What we need is a mechanism for dealing with them. This is the whole point of Congress – theoretically ‘the worlds greatest deliberative body.’

    But in reality, this is where things fall apart. It’s become a mechanism for single interest groups to put their own desires ahead of all others, and a means for self-centered interests to deflect pressure (like CAFE standards) that they’re too lazy, stupid, short sighted or craven to handle (while keeping the market tilted against those who may effectively challenge them).

    It bears noting that the single most persistent supporter of the Detroit agenda is Carl Levin (D, MI) who has done whatever he can to water down CAFE standards, allow SUVs to be classified as ‘trucks’ and therefore subject to lower mileage rules, etc. Of course, his site says he ‘supports’ legislation to raise standards to 35 mpg by 2020, but come on, Honda is making cars that get that at least that right now, and they’re eating Detroit’s lunch because those jackasses have FOUGHT to stay uncompetitive for another 12 years.

    The thing is, Levin is by no means the worst. Exhibit A is Barney Frank (also D, MA) who has been the most ardent defender of Fannie and Freddie to date – to the point where he has been able to siphon off as much as $500,000,000 per year from EACH as an ‘affordable housing fund’ that politicians can dole out as they see fit.

    No wonder the operations cratered – nothing subject to market discipline can survive when it’s subject to this level of open graft. The parallels between the way certain congressmen operate and organized crime are becoming clearer by the day.

    Larry Lessig has made a great start with his Change Congress movement (http://change-congress.org/), though unfortunately, he hasn’t included gerrymandering in his list of fundamental problems. He is horrified at the power special interests have gained, though he doesn’t seem to have recognized the fundamental corruption (politicians picking voters, and not vice versa) that has allowed this state of affairs to develop in the first place.

    I’ve sent him a note asking why, and will keep folks here posted on updates. In the meantime, just remember what Obama has to contend with if and when he reaches DC. It isn’t pretty. And if you look at the two biggest bail-out messes today, the rot is coming from with Obama’s own party.

    Personally, I’m encouraged by the measure of independence he’s managed to preserve. Lord knows he’s going to need it.

  18. Alex Bowles says:

    I think Jon is dead on when he talks about the GOP having reached a point of philosophic exhaustion, where principled and enlightened leadership is eclipsed by shameless and destructive bids for power. The outright lying has gotten especially bad. Obama said “hey, you can’t just make stuff up.” Actually, Barack, they can. That’s how they win.

    But the Democrats in congress aren’t much better. Larry Lessig has gone out of his way to demonstrate that the institution itself is fundamentally corrupt – and corrupting. He points out that, as a nation, we will ALWAYS have challenges – that life is too dynamic for problems to ever end. What we need is a mechanism for dealing with them. This is the whole point of Congress – theoretically ‘the worlds greatest deliberative body.’

    But in reality, this is where things fall apart. It’s become a mechanism for single interest groups to put their own desires ahead of all others, and a means for self-centered interests to deflect pressure (like CAFE standards) that they’re too lazy, stupid, short sighted or craven to handle (while keeping the market tilted against those who may effectively challenge them).

    It bears noting that the single most persistent supporter of the Detroit agenda is Carl Levin (D, MI) who has done whatever he can to water down CAFE standards, allow SUVs to be classified as ‘trucks’ and therefore subject to lower mileage rules, etc. Of course, his site says he ‘supports’ legislation to raise standards to 35 mpg by 2020, but come on, Honda is making cars that get that at least that right now, and they’re eating Detroit’s lunch because those jackasses have FOUGHT to stay uncompetitive for another 12 years.

    The thing is, Levin is by no means the worst. Exhibit A is Barney Frank (also D, MA) who has been the most ardent defender of Fannie and Freddie to date – to the point where he has been able to siphon off as much as $500,000,000 per year from EACH as an ‘affordable housing fund’ that politicians can dole out as they see fit.

    No wonder the operations cratered – nothing subject to market discipline can survive when it’s subject to this level of open graft. The parallels between the way certain congressmen operate and organized crime are becoming clearer by the day.

    Larry Lessig has made a great start with his Change Congress movement (http://change-congress.org/), though unfortunately, he hasn’t included gerrymandering in his list of fundamental problems. He is horrified at the power special interests have gained, though he doesn’t seem to have recognized the fundamental corruption (politicians picking voters, and not vice versa) that has allowed this state of affairs to develop in the first place.

    I’ve sent him a note asking why, and will keep folks here posted on updates. In the meantime, just remember what Obama has to contend with if and when he reaches DC. It isn’t pretty. And if you look at the two biggest bail-out messes today, the rot is coming from with Obama’s own party.

    Personally, I’m encouraged by the measure of independence he’s managed to preserve. Lord knows he’s going to need it.

  19. Alex Bowles says:

    Morgan,

    You seem to be very unclear on the concept of CAFE standards – they exist as environmental protections, and were created because there is no market discipline that can correct destructive behavior.

    They do not reflect a failure to understand free-market principles. Rather, they represent a clear understanding of the limits. If it’s cheaper to pollute, then that’s what individuals will do, even if it’s not in their long-term, collective best interest.

    Had Detroit respected this basic law of economics and nature, they would have accepted the necessity for CAFE provisions, and managed their operations accordingly. Instead, in their unmitigated arrogance, they thought they could bend the law (and, perhaps, the laws of physics as well) to protect their own, very short-term interests. Obviously, their sustained detachment from reality is coming back to haunt them, big time.

    A more respectful attitude about the world and the society they operated in would have focused them on another law of nature: the need for constant evolution. Instead, they deliberately cut the feedback loops that could have guided the direction for their own development, landing them where they are now: dinosaurs forced by $4 gas to sprout wings overnight.

    Nature always bats last.

  20. Alex Bowles says:

    Morgan,

    You seem to be very unclear on the concept of CAFE standards – they exist as environmental protections, and were created because there is no market discipline that can correct destructive behavior.

    They do not reflect a failure to understand free-market principles. Rather, they represent a clear understanding of the limits. If it’s cheaper to pollute, then that’s what individuals will do, even if it’s not in their long-term, collective best interest.

    Had Detroit respected this basic law of economics and nature, they would have accepted the necessity for CAFE provisions, and managed their operations accordingly. Instead, in their unmitigated arrogance, they thought they could bend the law (and, perhaps, the laws of physics as well) to protect their own, very short-term interests. Obviously, their sustained detachment from reality is coming back to haunt them, big time.

    A more respectful attitude about the world and the society they operated in would have focused them on another law of nature: the need for constant evolution. Instead, they deliberately cut the feedback loops that could have guided the direction for their own development, landing them where they are now: dinosaurs forced by $4 gas to sprout wings overnight.

    Nature always bats last.

  21. Jon Taplin says:

    Roger- I agree that a Rebuild America Program is desperately needed. Coming from someonelike you, who has built so many businesses, I assume you see this as a public/private partnership? Correct?

    If that’s so then could we create the public pool of money with something akin to Tom Friedman’s Freedom Energy Tax of $1 a gallon? Then if we distribute 80% the tax rtevenue back to the states to use on infrastructure projects and keep 20% in a fund for alternative energy R & D, we get the job lift you are talking about.

  22. Jon Taplin says:

    Roger- I agree that a Rebuild America Program is desperately needed. Coming from someonelike you, who has built so many businesses, I assume you see this as a public/private partnership? Correct?

    If that’s so then could we create the public pool of money with something akin to Tom Friedman’s Freedom Energy Tax of $1 a gallon? Then if we distribute 80% the tax rtevenue back to the states to use on infrastructure projects and keep 20% in a fund for alternative energy R & D, we get the job lift you are talking about.

  23. Alex Bowles says:

    Sorry, I should have said ‘destructive behavior of this kind’ – specifically, the unfetterered exploitation of economic externalities, like a paper mill freely dumping it’s toxic waste in a river because it has no reason to worry about repercussions to – or from – folks living downstream.

    Being the good libertarian that you are, Morgan, you should be the first to recognize that my right to swing my fist ends at your nose. But of course, not everybody respects this basic principle. Ergo, the law. And that’s CAFE.

  24. Alex Bowles says:

    Sorry, I should have said ‘destructive behavior of this kind’ – specifically, the unfetterered exploitation of economic externalities, like a paper mill freely dumping it’s toxic waste in a river because it has no reason to worry about repercussions to – or from – folks living downstream.

    Being the good libertarian that you are, Morgan, you should be the first to recognize that my right to swing my fist ends at your nose. But of course, not everybody respects this basic principle. Ergo, the law. And that’s CAFE.

  25. len bullard says:

    Jon:

    How do you stop the states from redirecting the funds away from infrastructure? I agree that something where the Federal mandates are funded is essential. It will be tough to sell higher taxes, but the idea is sound as long as the mandate is funded.

    Second, how to work a Federal plan such that the infrastructure is homegeneous where necessary but flexible to take advantage of the local environment (eg, rivers are abundant here in Dixie, wind is abundant in Texas).

    Third: how to keep the money from evaporating in the Beltway. I’ve seen several large Federal initiatives in my career that start out with a focused goal that get diluted by repeated application of consultants-sell-paper-by-the-pound processes. This is particularly true if the initiatives

    a) outlast administrations
    b) engender their own bureaucracy
    c) don’t make the vendor responsible for proving the concept before it is sold

    OTW, this is exciting.

  26. len bullard says:

    Jon:

    How do you stop the states from redirecting the funds away from infrastructure? I agree that something where the Federal mandates are funded is essential. It will be tough to sell higher taxes, but the idea is sound as long as the mandate is funded.

    Second, how to work a Federal plan such that the infrastructure is homegeneous where necessary but flexible to take advantage of the local environment (eg, rivers are abundant here in Dixie, wind is abundant in Texas).

    Third: how to keep the money from evaporating in the Beltway. I’ve seen several large Federal initiatives in my career that start out with a focused goal that get diluted by repeated application of consultants-sell-paper-by-the-pound processes. This is particularly true if the initiatives

    a) outlast administrations
    b) engender their own bureaucracy
    c) don’t make the vendor responsible for proving the concept before it is sold

    OTW, this is exciting.

  27. Morgan Warstler says:

    Alex, if gas costs $4, you don’t need CAFE… people just go buy fuel efficient cars.

    I’m NOT nodding towards the environment, I’m only willing to support the gas tax, if our SOLE purpose and reason for it, is to stop importing as much foreign oil.

    That’s why I’m saying drill everywhere. We need to drive the the REAL cost of gas down, even though we’ll still pay $4.

    I want it to be $4, not +1$, so that it co-opts Jon’s point, so that JON HAS INCENTIVE to drill baby drill, the more we drill, the cheaper the real price is, the more goes into his 80/20 fund.

    If it is just +1$ Jon, doesn’t have to accept drilling as part of the solution. that’s stupid and greedy. we’ll see if he compromises.

    It aligns everyone’s basic interests, no one gets too much of what they want, all are left wanting, that’s what makes a good compromise.

  28. Morgan Warstler says:

    Alex, if gas costs $4, you don’t need CAFE… people just go buy fuel efficient cars.

    I’m NOT nodding towards the environment, I’m only willing to support the gas tax, if our SOLE purpose and reason for it, is to stop importing as much foreign oil.

    That’s why I’m saying drill everywhere. We need to drive the the REAL cost of gas down, even though we’ll still pay $4.

    I want it to be $4, not +1$, so that it co-opts Jon’s point, so that JON HAS INCENTIVE to drill baby drill, the more we drill, the cheaper the real price is, the more goes into his 80/20 fund.

    If it is just +1$ Jon, doesn’t have to accept drilling as part of the solution. that’s stupid and greedy. we’ll see if he compromises.

    It aligns everyone’s basic interests, no one gets too much of what they want, all are left wanting, that’s what makes a good compromise.

  29. Jon Taplin says:

    Len- The Federal government makes block grants specifically allocated for education today, and has not had a problem with the funds being redirected.

    Second- The whole idea of distributing it to the states is to let local experimentation figure out the best use of the money for local energy saving infrastructure. New Federalism

    Third- I cannot believe that we couldn’t figure out a way to send the money straight to the state. Since the money is collected at the pump and the local station owner already is paying some gas tax revenue to the local state, couldn’t the 80 cents on the dollar go automatically into the state coffers and the 20 cents be sent to the feds?

  30. Jon Taplin says:

    Len- The Federal government makes block grants specifically allocated for education today, and has not had a problem with the funds being redirected.

    Second- The whole idea of distributing it to the states is to let local experimentation figure out the best use of the money for local energy saving infrastructure. New Federalism

    Third- I cannot believe that we couldn’t figure out a way to send the money straight to the state. Since the money is collected at the pump and the local station owner already is paying some gas tax revenue to the local state, couldn’t the 80 cents on the dollar go automatically into the state coffers and the 20 cents be sent to the feds?

  31. len bullard says:

    There will be some problems with the pedagogy and the subjects. Do you agree with a need for an emphasis on science and math? I’ve an English degree and it pays, but if we are going to compete, we have to stop focusing on turning kids into athletes and entertainers and start getting more engineers. Just my opinion.

    We need to make much better use of the web as a means to share teaching strategies (pedagogy) and push the teaching. Most universities are doing that already (why I have broadband: son couldn’t go to college without it). I digress…

    They will send it to the States, but in some States, the most corrupt government entities are the roads and transportation entities. That said, Darwinian evolution I suppose.

    But funded mandates are the right idea. The road systems are easier, I think, than electrical and water utilities. The need for innovation isn’t as great as the need for refurbishing. Energy is tougher because we have to re-engineer that into a different kind of system.

    And we need to rethink technical standards. But that’s a whole different long and tendentious thread.

    You do keep me in deep thought these days.

  32. len bullard says:

    There will be some problems with the pedagogy and the subjects. Do you agree with a need for an emphasis on science and math? I’ve an English degree and it pays, but if we are going to compete, we have to stop focusing on turning kids into athletes and entertainers and start getting more engineers. Just my opinion.

    We need to make much better use of the web as a means to share teaching strategies (pedagogy) and push the teaching. Most universities are doing that already (why I have broadband: son couldn’t go to college without it). I digress…

    They will send it to the States, but in some States, the most corrupt government entities are the roads and transportation entities. That said, Darwinian evolution I suppose.

    But funded mandates are the right idea. The road systems are easier, I think, than electrical and water utilities. The need for innovation isn’t as great as the need for refurbishing. Energy is tougher because we have to re-engineer that into a different kind of system.

    And we need to rethink technical standards. But that’s a whole different long and tendentious thread.

    You do keep me in deep thought these days.

  33. Alex Bowles says:

    Morgan,

    Again, you surprise me. Given how spineless and corruptible we’ve seen Congress to be, do you really believe they could impose an enormous fuel tax, and make it stick?

    What we’re seeing now is the kind of correction that only the market can provide. Unfortunately for a lot of folks, Congress has been persuaded to protect people from market pressure in general. So now, pressure has become a total shock.

    Again, there’s nothing inappropriate about establishing efficiency standards when a lack of efficiency pollutes the atmosphere for everybody.

    What GM doesn’t dare admit is that if they’d accepted these requirements, instead of fighting them tooth and nail, they wouldn’t be so unprepared when the inevitable price shock in the fuel supply finally arrived.

  34. Alex Bowles says:

    Morgan,

    Again, you surprise me. Given how spineless and corruptible we’ve seen Congress to be, do you really believe they could impose an enormous fuel tax, and make it stick?

    What we’re seeing now is the kind of correction that only the market can provide. Unfortunately for a lot of folks, Congress has been persuaded to protect people from market pressure in general. So now, pressure has become a total shock.

    Again, there’s nothing inappropriate about establishing efficiency standards when a lack of efficiency pollutes the atmosphere for everybody.

    What GM doesn’t dare admit is that if they’d accepted these requirements, instead of fighting them tooth and nail, they wouldn’t be so unprepared when the inevitable price shock in the fuel supply finally arrived.

  35. Morgan Warstler says:

    Alex,

    I am a huge believer in flat / consumption taxes. I’m not advocating NEW taxes, I expect if you pass this, it negates other tax increases.

    The point is, by setting a $4 price, when the real cost goes UP, the money that goes to Jon’s fund goes DOWN. Jon’s goals benefit when the real costs go down.

    So FINALLY, Jon’s side is on the side of;

    1. Drill everywhere.
    2. Open up Iraq, take full advantage of the war we just fought.
    3. Strategic efforts to weaken OPEC.

    My strategy ALIGNS all our interests. This is how you make good political policy across the aisle. Long term, we all agree.

  36. Morgan Warstler says:

    Alex,

    I am a huge believer in flat / consumption taxes. I’m not advocating NEW taxes, I expect if you pass this, it negates other tax increases.

    The point is, by setting a $4 price, when the real cost goes UP, the money that goes to Jon’s fund goes DOWN. Jon’s goals benefit when the real costs go down.

    So FINALLY, Jon’s side is on the side of;

    1. Drill everywhere.
    2. Open up Iraq, take full advantage of the war we just fought.
    3. Strategic efforts to weaken OPEC.

    My strategy ALIGNS all our interests. This is how you make good political policy across the aisle. Long term, we all agree.

  37. Rick Turner says:

    Open up Iraq with what? A can opener? They pretty much want us out, and they’re working out oil leases with whomever they choose. It’s not up to us, and I don’t think the rest of the world is going to let us just steal the oil as you’d prefer.

    Drill everywhere with what rigs? Did you not read the reports about there not being enough rigs to cover current oil leases, much less new territory to be “opened up”? It would take three to five years to build up greater ship building capacity (that’s who builds the off shore rigs, for instance) to bring more oil rigs into service. The companies that build these monsters are years back ordered already. This political posturing about opening up more areas to drill is just bullshit because there isn’t the gear to drill, pump, and especially refine more oil coming on fast enough to offset the dramatic increase in demand from China and India.

    Get real, Morgan.

  38. Rick Turner says:

    Open up Iraq with what? A can opener? They pretty much want us out, and they’re working out oil leases with whomever they choose. It’s not up to us, and I don’t think the rest of the world is going to let us just steal the oil as you’d prefer.

    Drill everywhere with what rigs? Did you not read the reports about there not being enough rigs to cover current oil leases, much less new territory to be “opened up”? It would take three to five years to build up greater ship building capacity (that’s who builds the off shore rigs, for instance) to bring more oil rigs into service. The companies that build these monsters are years back ordered already. This political posturing about opening up more areas to drill is just bullshit because there isn’t the gear to drill, pump, and especially refine more oil coming on fast enough to offset the dramatic increase in demand from China and India.

    Get real, Morgan.

  39. Ok, forget CAFE standards, how about letting the market move the industry. Can’t we have the US Government stipulate that ONLY higher fuel efficiency/hybrid can be purchased by Federal Government offices and administrations. Seems that the Fed probably buys enough vehicles over a 5 year period that that ought to send a message to the big 3 auto makers. Slim down the fuel usage or the Fed will by Toyotas, Hondas and Subarus made in America by American workers. The states and cities could join in by stipulating the same. Large cities could also stipulate that taxis must meet certain fuel standards to get their medallions. Let that demand effect supply in the market

  40. Ok, forget CAFE standards, how about letting the market move the industry. Can’t we have the US Government stipulate that ONLY higher fuel efficiency/hybrid can be purchased by Federal Government offices and administrations. Seems that the Fed probably buys enough vehicles over a 5 year period that that ought to send a message to the big 3 auto makers. Slim down the fuel usage or the Fed will by Toyotas, Hondas and Subarus made in America by American workers. The states and cities could join in by stipulating the same. Large cities could also stipulate that taxis must meet certain fuel standards to get their medallions. Let that demand effect supply in the market

  41. Jon Taplin says:

    Tony- This would be an important help.

    Morgan- Got to say I agree with you that pushing throught he gas tax would be more important than a CAFE standard. But I would phase in the $1 / gallon tax and leave it there even if gas prices went up. That in itself would weaken OPEC. AS to negotiating with the Iraq Oil ministry, I will leave that to the very highly paid lawyers of Exxon and Chevron.

  42. Jon Taplin says:

    Tony- This would be an important help.

    Morgan- Got to say I agree with you that pushing throught he gas tax would be more important than a CAFE standard. But I would phase in the $1 / gallon tax and leave it there even if gas prices went up. That in itself would weaken OPEC. AS to negotiating with the Iraq Oil ministry, I will leave that to the very highly paid lawyers of Exxon and Chevron.

  43. len says:

    Tony is right. Something I pointed out before: control of procurements is the absolute best way for the government to influence markets. Seeing to it that mass transit vehicles are converted with incentives to the states will help too.

  44. len says:

    Tony is right. Something I pointed out before: control of procurements is the absolute best way for the government to influence markets. Seeing to it that mass transit vehicles are converted with incentives to the states will help too.

  45. Rick Turner says:

    But Jon, the pirate Morgan wants to steal the oil; it’s much more fun; he thinks himself a regular Johnny Depp. Arrrgh!

  46. Rick Turner says:

    But Jon, the pirate Morgan wants to steal the oil; it’s much more fun; he thinks himself a regular Johnny Depp. Arrrgh!

  47. Morgan Warstler says:

    Rick you are daydreaming. Go find Jon’s last post about China getting an oil “contract.”

    He was dead wrong. I proved it with info from his own source for god’s sake.

    Iraq’s oil will flow with rev share agreements, run by Western Oil companies. For the next 20 years, MAXIMUM production will the only goal, OPEC be damned.

    —-

    Sorry Jon, can’t go along with +1$, you have to pick a number – $4 is nice one, AND politically doable.

    You can have EVERYTHING between the real cost and $4.

    I think if you roll this around in your mind for a while, suddenly, you KNOW, that announcing new production, drops the price, OVERNIGHT.

    You’ll also KNOW Iraq is going to pay your goals serious tax dividends if we don’t go wobbly on our involvement there.

    I can totally support 110% your $4 gallon, but +$1 is a non-starter.

    If you want support for taxes, our interests have to be aligned.

    If you don’t do the deal this way, the right and red state dems, will toss out the +1$, as the price soars.

    You get half a loaf, you want it or not?

    Imagine, the $1.50 per gallon margins you could have for years, with a maximium production attitude AND people using less gas at $4.

    How can you say no?

  48. Morgan Warstler says:

    Rick you are daydreaming. Go find Jon’s last post about China getting an oil “contract.”

    He was dead wrong. I proved it with info from his own source for god’s sake.

    Iraq’s oil will flow with rev share agreements, run by Western Oil companies. For the next 20 years, MAXIMUM production will the only goal, OPEC be damned.

    —-

    Sorry Jon, can’t go along with +1$, you have to pick a number – $4 is nice one, AND politically doable.

    You can have EVERYTHING between the real cost and $4.

    I think if you roll this around in your mind for a while, suddenly, you KNOW, that announcing new production, drops the price, OVERNIGHT.

    You’ll also KNOW Iraq is going to pay your goals serious tax dividends if we don’t go wobbly on our involvement there.

    I can totally support 110% your $4 gallon, but +$1 is a non-starter.

    If you want support for taxes, our interests have to be aligned.

    If you don’t do the deal this way, the right and red state dems, will toss out the +1$, as the price soars.

    You get half a loaf, you want it or not?

    Imagine, the $1.50 per gallon margins you could have for years, with a maximium production attitude AND people using less gas at $4.

    How can you say no?

  49. Phil says:

    You have to have both consumption taxes and standards for the auto industry. Either one alone is too easy to get around.

    Taxes are great, until OPEC gets threatened, then what happens to the cost of oil? That’s their market solution. An high consumption taxes are always under threat from Presidents or candidates looking to score points.

    CAFE standards are ridiculously easy to get around. Go try to find fuel economy information for Ford Super Duty trucks, or even the Excursion. You won’t, aside from anecdotal numbers, because Ford found a loophole that allowed them to sell medium/heavy duty truck chassis as light trucks and passenger vehicles, respectively, which exempted them either from having to publish mileage information or apply those vehicles to their CAFE numbers. Add in some nice tax incentives from the Shrub administration, and you have millions of “undocumented” land yachts on the road.

    By the way, I owned one, an F-350. It was 20 feet long, had a GVW of 9,900 lbs, and got 9 mpg if I was nice to it. I now drive a Tercel :-)

  50. Phil says:

    You have to have both consumption taxes and standards for the auto industry. Either one alone is too easy to get around.

    Taxes are great, until OPEC gets threatened, then what happens to the cost of oil? That’s their market solution. An high consumption taxes are always under threat from Presidents or candidates looking to score points.

    CAFE standards are ridiculously easy to get around. Go try to find fuel economy information for Ford Super Duty trucks, or even the Excursion. You won’t, aside from anecdotal numbers, because Ford found a loophole that allowed them to sell medium/heavy duty truck chassis as light trucks and passenger vehicles, respectively, which exempted them either from having to publish mileage information or apply those vehicles to their CAFE numbers. Add in some nice tax incentives from the Shrub administration, and you have millions of “undocumented” land yachts on the road.

    By the way, I owned one, an F-350. It was 20 feet long, had a GVW of 9,900 lbs, and got 9 mpg if I was nice to it. I now drive a Tercel :-)

  51. len bullard says:

    OPEC announced production cuts this morning to maintain higher prices and, said, to encourage alternative fuel development.

    Not sure I believe that but so it goes. One way or another, we are forced on to the path of energy redevelopment. Tickets for NASCAR will soon cost more than a night at the opera.

  52. len bullard says:

    OPEC announced production cuts this morning to maintain higher prices and, said, to encourage alternative fuel development.

    Not sure I believe that but so it goes. One way or another, we are forced on to the path of energy redevelopment. Tickets for NASCAR will soon cost more than a night at the opera.

  53. Alex Bowles says:

    Phil,

    You can thank Carl Levin (D, MI) for the loophole. And it’s not just big trucks, it’s been SUVs of all stripes, which is where the profits reside.

    Folks like you, with the Tercel, are what’s pushing the Big 3 over the brink. Thanks to the free passes they were able to get from Senator Levin, these dinosaurs have become totally anemic, while Levin’s base of indivadual voters has been decimated; an addled workforce unable to compete with operations opening in the Sun and Cotton Belts.

    In the end, Congressional corruption serves no one.

  54. Alex Bowles says:

    Phil,

    You can thank Carl Levin (D, MI) for the loophole. And it’s not just big trucks, it’s been SUVs of all stripes, which is where the profits reside.

    Folks like you, with the Tercel, are what’s pushing the Big 3 over the brink. Thanks to the free passes they were able to get from Senator Levin, these dinosaurs have become totally anemic, while Levin’s base of indivadual voters has been decimated; an addled workforce unable to compete with operations opening in the Sun and Cotton Belts.

    In the end, Congressional corruption serves no one.

  55. Phil says:

    Thanks for the correction Alex; it was an off-the-cuff accusation on my part (I was trying to dash off the post before I left for work).

    Anyway, my larger point was that we need to maintain incentives both for automakers to produce fuel efficient cars, and for the public to buy them (or not, if we’re smart about upgrading public transportation infrastructure).

    I think our goal should be to give people a choice of not owning a car at all (or at least not driving the one they do own), if they don’t want to. More and cleaner buses/trolleys/etc, overhaul the hackney system in major cities, get serious about licensing (harder to get, easier to lose), explore innovative solutions such as the ZipCar system.

    Just across the border in New Hampshire, they are planning to spend somewhere north of $700BN on the I93 widening project, an environmental disaster that most estimates figure will ease–not eliminate–congestion only until around 2020, at best.

  56. Phil says:

    Thanks for the correction Alex; it was an off-the-cuff accusation on my part (I was trying to dash off the post before I left for work).

    Anyway, my larger point was that we need to maintain incentives both for automakers to produce fuel efficient cars, and for the public to buy them (or not, if we’re smart about upgrading public transportation infrastructure).

    I think our goal should be to give people a choice of not owning a car at all (or at least not driving the one they do own), if they don’t want to. More and cleaner buses/trolleys/etc, overhaul the hackney system in major cities, get serious about licensing (harder to get, easier to lose), explore innovative solutions such as the ZipCar system.

    Just across the border in New Hampshire, they are planning to spend somewhere north of $700BN on the I93 widening project, an environmental disaster that most estimates figure will ease–not eliminate–congestion only until around 2020, at best.

  57. Phil says:

    Sorry, that should have been $700M, not $700BN.

    Still “wicked stoopid” money though.

  58. Phil says:

    Sorry, that should have been $700M, not $700BN.

    Still “wicked stoopid” money though.

  59. richard Hodkinson says:

    Ah yes, in the car industry, Small IS Beautiful indeed.

  60. richard Hodkinson says:

    Ah yes, in the car industry, Small IS Beautiful indeed.

  61. Alex Bowles says:

    Phil – I think you’re right about the bigger picture and CAFE standards. Levin has a lead role, but he’s still one of many. And you’re dead on about taxes. That whole ‘summer vacation’ from taxes that McCain pushed was just straight pandering.

    And your driver training idea is exceptionally good. Smarter drivers can have a significant effect on traffic flow, not to mention fuel consumption and safety. Instead, we keep it stupid and fatten the lanes.

    Sounds like a civic coronary slowly starting to happen.

  62. Alex Bowles says:

    Phil – I think you’re right about the bigger picture and CAFE standards. Levin has a lead role, but he’s still one of many. And you’re dead on about taxes. That whole ‘summer vacation’ from taxes that McCain pushed was just straight pandering.

    And your driver training idea is exceptionally good. Smarter drivers can have a significant effect on traffic flow, not to mention fuel consumption and safety. Instead, we keep it stupid and fatten the lanes.

    Sounds like a civic coronary slowly starting to happen.

  63. Marzolf says:

    Wouldn’t want to disrupt the flow of this fine conversation, but would like to point out that agriculture in the US is largely fuel based. The number of active farmers per county has been going down for a long time. Mechanization has supported this. Put fuel at $4/gal and I’m parking my tractor, working on my own kitchen garden and let the rest of you find your own food.

  64. Marzolf says:

    Wouldn’t want to disrupt the flow of this fine conversation, but would like to point out that agriculture in the US is largely fuel based. The number of active farmers per county has been going down for a long time. Mechanization has supported this. Put fuel at $4/gal and I’m parking my tractor, working on my own kitchen garden and let the rest of you find your own food.

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