Saturday, February 14, 2009

A Post-Auto-Industrial Society

This morning's Wall Street Journal features a front-page report on the progress with the General Motors automotive bailout: "GM to Offer Two Choices: Bankruptcy or More Aid" (the full essay is available here).

GM's basically demanding more money, billions more. The Detroit car manufacturer is "too big to fail," as some argued late last year as the firm headed into possible bankruptcy. The prognosis heading into GM's March 31 deadline for a viable restructuring plan doesn't look good, and those working on various contingencies "say progress has been slowed by the fact the Obama administration has yet to appoint a 'car czar,' as envisioned by the bailout program."

I haven't followed the auto bailout all that closely, just enough to note that I leased a new Honda Civic in December, where I asked, "
What Happened to Buy American?" But the latest New York Review has a thought-provoking essay that's worth a look, especially for its intellectual honesty regarding the purposes and rationales for government intervention in the American automobile sector: "Can We Transform the Auto-Industrial Society?"

The author is
Emma Rothschild, who is the Director of the Joint Centre for History and Economics at King's College, Cambridge, and the Jeremy and Jane Knowles Professor of History at Harvard University.

Here's this from
the essay:

The present and impending disorder of the automobile companies is a reminder, even more than the decline of the housing and banking industries, of the desolation of the Great Depression. It is a reminder, too, of economic history, or of the rise and decline of industrial destinies. When the listing of the "Fortune 500" began in 1955, General Motors was the largest American corporation, and it was one of the three largest, measured in revenues, every year until 2007. GM was the "largest industrial corporation in the world," in its own description of 1989, and it was engaged, at the time, in "the most massive reindustrialization program ever attempted." It was an incarnation of American economic change, as a GM vice-president suggested during the earlier automotive crisis of 1973: "To say that a company that has successfully grown over a period of 65 years—a period marked by two world wars and a major economic depression—will suddenly be unable to adapt to the changing challenge...flies in the face of common sense"; it "denies history."
This next section is particularly interesting for me, having grown up in Southern California, the car-culture capital of the world:

The automobile industry has been one of the losers in the new American economy. US consumers spent less on new automobiles in 2007 than they spent on "brokerage charges and investment counselling"; in 1979, they had spent ten times as much. In 1979, the share of the auto industry in US GDP was more than twice that of the securities and information services industries together; in 2007, it had been reduced to less than a quarter of their share ....

But the auto-industrial society, with its distinctive organization of American space, cities, highways, social entitlement, and energy use, has continued to flourish. Some 90 percent of Americans drove to work in 2007, 76 percent of them alone. Less than 5 percent went to work by public transportation. The people who used public transportation were much more likely than other Americans to be black or poor; they were more likely to be women than men; most of them lived in New York, Washington, D.C., and Chicago. The states in which population has increased most rapidly—Utah, Arizona, Texas, Nevada —have low population densities, and low rates of public transportation use.

The relative decline of public transport has been attributed to the very long-term preferences of Americans for being alone in cars, or for being free to go anywhere and at any time, or for living without other people in close proximity; to investments in the interstate highway system; and to the enduring patterns of American zoning and land use. But 80 percent of the US population still lives in metropolitan areas, and some 30 percent in the densely populated city centers. The pattern of land use in the expanding cities of the South and West—which have had the most rapid population growth, with very few people per square kilometer—was itself established over the period that has elapsed since the energy crisis of the 1970s. It is a consequence of prices as well as preferences, and of the changing distribution of public expenditure, or public partiality.
I've had my own car since I was 17 years-old. My home is just a couple-of-minutes walking distance from the local Metrolink station, although there's currently no commuter route directly to my college in Long Beach. If there was, I likely would opt for public transportation at least some of the time, but I would always be a car owner, as would the overwhelming number of people I know. So, any shift toward a "post-auto-industrial" society has to be not just predicated on economic and environal considerations and justifications, but on normative-cultural ones as well.

And this is what's interesting about Rothchild's essay. She comes out explicity in favor of a broader social-cultural transformation to a new transportation-infrastructural public order:
An enduring bailout, or a new deal for Detroit ... would be an investment in ending the auto-industrial society of the late twentieth century. This would involve innovation in public transportation, and in the infrastructure that would enable people to work at home or close to home. It would engage the information industries in making public transport more convenient, more enticing, and more secure. It would be open to the sorts of improvements that have been suggested in the expansion of rail and bus transportation in China, Japan, and France, for example, and in India by the information technology services companies. It would be an investment, even, in the old promise of "automotive" freedom, of owning a car but not having to use it, and of being able to go anywhere at any time, in Asia as in America. The improved public transport would be used for routine travel, such as the "work, school, and medical/dental trips" on which public transit use is already concentrated, according to the National Household Travel Survey. The new hybrid vehicles, in a post-auto-industrial society, would be available for the other trips that the survey describes as "family, personal," or "social, recreation, eat meal."
So, the question for us to think about is now that the Democrats have passed the largest economic bailout in American history, what's next?

Rothschild notes that the Obama-Biden campaign's initial energy plan adopted catastrophic language on climate change and energy dependence. But it's increasingly clear that the more dire warnings on anthropomorphic climate change
have been hoaxes. Interestingly, Rothschild focuses on the transformation to a post-auto-industrial society as a program that is in essence predicated on the expansion of civil rights and economic equality, as seen above in the discussion of the proportion of black Americans and the poor who rely on public transportation.

And this brings me back to the issue of honesty and integrity.

The Obama administration and the Democratic majority in Congress, within a month of the accession of the new regime in Washington, have demonstrated that democratic deliberation on the direction of public policy is out. The Obama-Democratic-left wants a redistribution of society's resources but they're not willing to justify it on pragmatic political grounds. The case can be made, easily, for bailing out the states and providing more money for education, health care, unemployment, and other areas hard hit by the deepening recession, and Americans will support that. But the left wants
a general transformation of society to a European social-welfare state (if not a Brezhnevite-Soviet command model), and the increasing nationalization of industry - way beyond anything we've seen in the last year's bipartisan financial bailouts - can be seen intuitively as right around the corner. The administration has already included funding for high-speed rail in the "stimulus" boondoggle - and of course transportation enhancement is infrastructure - but so little of the administration's advocacy for greater public spending has been sold in such a way.

The Republicans have an opportunity here. A real stimulus of the economy would be energy deregulation - from Alaska and off-shore drilling to the discovery and exploitation of new supplies, perhaps in
the 800 billion barrels of proven shale oil reserves in the Rockies - as well as public-spirited transportation infrastructure-spending focused on explicity non-pork-barrel expenditures that serve to increase economic competitiveness AND facilitate economic opportunity among the traditionally disadvantaged. This is something that GOP partisans should consider, in some variation of public-private balance, using the overarching umbrella-rationale of honesty and transparency in moving this country forward to the next generation of post-industrial society.


Norm said...

Wow, Emma Rothschild, a blast from the past!! I remember reading her first book while on my daily commute from the Bronx to Manhattan on the D train: "Paradise Lost: The Decline of The Auto-Industrial Age". I checked out the pic on her link and she got old, I don't know how but I did not !!! The book got lots of great reviews back then.

In her book she argued that GM was an industrial dinosaur, unable to react quickly to economic and societal changes. She called for building the infrastructure of efficient and cheap mass transportation systems. She was right.

So I think the USA should take up my suggestion that I made back in 1974. Which was that NYC has a bunch of subway lines. We should go to the end of the lines and start digging and building until we connected our subways to the entire country. Imagine getting on your neighborhood stop, anywhere in America, and taking the express to Manhattan. Watch the closing doors !

Donald Douglas said...

Thanks for commenting, Norm!

Norm said...

BTW, if I may add my two cents. I think it is a big mistake to bailout these companies and avoid bankruptcy.
The bankruptcy court is probably the best route for GM to survive and have a chance of renewed success.
The laws are there to help GM.

A bailout is just the Democrats leading us further down the road to
socialism. Does anyone here think that our Congress can actually run American industry ?

Donald Douglas said...

I'm interested in how the administration spins things, Norm. If the Democrats take up a bailout, who will the justify it, as this will be the second round?

Grace Explosion said...

Our policies in this nation are WRONG. We have had so much "creeping socialism" and the favoring of foreign nations over domestic business and production through our tax structures over the last few decades that we have hit "critical mass".

We were right at the point of "critical mass" where the framework of our economic system that was built by our Government's policies had gone so far leftists -- that we were on the brink of the meltdown of our entire economic system. We NEEDED to elect Republicans (or Libertarians) who would have reconstructed (like Reagan did) the framework of the economic system designed by Government. Instead, we elected a far left communist and gave him a liberal Democrat super-majority. Can you hear the bell toll, America?? It tolls for thee. We reached critical mass and exceeded it in the passing of this "Porkulus Package". There is NO WAY to avoid a Great Depression (other than a major breakthrough in innovation from the private sector in energy creation or something of that nature to drastically drive down the costs of labor and production to create "space" for PROFIT). TOO MUCH PROFIT has been drawn out of the private sector by the framework of Government policies and their influence and power over the private sector. TOO MUCH CAPITAL has been drawn out of the capital supplies of business and individuals in the private sector by the framework of Government policies and their influence and power over the private sector.

The nation's economy is like a plane that was running on one engine - the other engine weak - and the Porkulus Package has blown the engine. She's going down!! The plane is just about to hit rapid descent from the loss of the final engine... and crash in an explosive burst of flames. Survivors?? Let's not discuss that right now.

We don't have PRODUCTION in the manufacturing system because the Government has robbed and pillaged TOO MUCH in actual CAPITAL AND PROFIT from individuals and businesses - AS WELL AS the "opportunity cost" individuals and businesses are paying unseen through the constriction of the economy as the result of Government choking out the private sector by the framework of Government policies and their influence and power over the private sector.

GOVERNMENT is responsible for everything we are seeing occurring in the private sector in the chokehold that growing Government has gained on the private sector economy.

IGNORANT PEOPLE have no clue when they greedily think that the unions can demand more, the welfare recipients can demand more, Government can grow, taxes can remain at the current level and grow, regulations against innovation and the production of this nation can grow (in various ways), and WE CAN REMAIN A WEALTHY NATION. NO WE CANNOT!!! People are ignorant and uneducated BECAUSE they have been educated by ignoramuses in the MSM and the liberal educational system. They don't understand the BASICS but think they are smart. They're blind and ignorant. They don't understand basic principles.

Bottom-line, the American people are not going to be able to buy cars or have disposable income to support a service sector economy. None of the REAL PROBLEMS in the Government-boondoggled framework of this economy have been corrected. More demands have been placed on the economy (by the Porkulus Package) ignoring the fact that Government has a chokehold on REAL PRODUCTION (GDP figures are a crock) in this nation's economy. The iceberg has struck the Titanic. I wish people could understand basic concepts and did not engage in the grandiose thinking of liberalism that has no functional practical basis in economic system reality.

Wishful thinking is what grows Government. It's delusional by nature and grandiose: insane.