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Obama to Big Three: Get it together

On Monday, Senator Barack Obama (D-IL) made his first campaign stop in Michigan. In a speech at the Detroit Economic Club, Obama took the U.S. auto industry to task for paying too little attention to building efficient cars, and too much attention to building faster, bigger cars. That definitely aren't fuel efficient.

In addition to scolding the U.S. auto industry for lagging behind their foreign competitors, Obama presented some relatively concrete plans for addressing the challenge of reinvigorating the auto industry while forcing it to be responsive to global realities like climate change and our substantial oil addiction. From the speech:

Our goal is not to destroy the industry, but to help bring it into the 21st Century. So if the auto industry is prepared to step up to its responsibilities, then we as a country should be prepared to help.

Obama's plan involves increasing fuel efficiency gradually over the next 15 years to the point where all U.S. cars and trucks get 40 miles to the gallon, and providing federal dollars to help defray healthcare costs at the big three, which are enormous. This plan is similar to legislation Obama originally introduced in 2005, dubbed "Healthcare for Hybrids". On April 18 of this year, Obama reintroduced that legislation, along with Representative Jay Inslee (D-WA), as - are you ready for it? - the "Healthcare for Hybrids Act."


This is, I think, the most significant policy statement on the subject from a presidential candidate so far. That's good. But I don't think it goes far enough. As someone who lives in Michigan, I don't want to see the big three continue with their nosedive. But they need to take more responsibility, and it shouldn't necessarily be with taxpayer money. Their executives make huge amounts of money, and seem to be regularly rewarded for failure. If they can't design cars that are good looking, affordable, and energy efficient, they need to find some new engineers.

And 40 MPG by 2022 isn't enough. It's got to be more like 50 MPG by 2014. Also, the federal gas tax has been 18.4 cents per gallon since 2005. It's time to raise it to 50 cents per gallon, phased in over several years, and devote that money to developing more sustainable, fuel efficient transportation alternatives.


If they can't design cars that are good looking, affordable, and energy efficient, they need to find some new engineers.

Poorly run companies that make bad products will be replaced by better run companies with better products (if government stays out of it).

Hey John, that's a pretty simple application of supply and demand, especially as it relates to the auto industry which has a particularly large start-up cost and significant regulation benefitting EXISTING companies. Haven't you seen the movie Tucker?

But the US goverment can and should regulate certain elements of most industry. If not, Lake Eerie would still be on fire and kids would be dying by the thousands under ill-fitting seat belts. Moderate, sensible regulation is not bad for the economy.

You can't regulate failing companies into success.

No, but you can regulate profitable companies into being better citizens. That's what this is about. One cost of doing business in the best country in the world is you have to work toward better fuel efficiency. Another cost may be to lower emissions or to improve safety in your product. That's better for everyone.

That said, I am NOT for heavy regulation of industry. I agree that many product improvements come via competition and having a diverse playing field. That does not mean it's a free-for-all because we all know there are plenty of companies who couldn't give a shit about improving their product or ensuring customer satisfaction. They tend to stock Dollar Stores.

Obama wants to reward terribly run companies with government money to increase fuel efficiency of cars To me, that makes no sense. If the idea is to reduce oil dependence, why not spend that money encouraging startups that could revolutionize the industry. You said that current regulation benefits existing corporations (I agree). This is just more of the same.

But that's part of my point above. The auto industry is not really conducive to a mom and pop start-up operation. R&D alone costs millions, production is incredibly expensive, and marketing is just plain stupid expensive. It's like deregulating the telecom industry but not forcing AT&T to give competitors access to phone lines that have been built over 100 years of development.

Like it or not, we have a couple large companies with the capital and the production capabilities to mass produce enough cars to meet demand. Encouraging them to design and sell cars that are more fuel efficient and less polluting seems to me to be a good idea.

Where's Mac to support (or refute) my points!?!?!

Getting back to my original point, if no one wants to buy the damn cars, why does it matter if they are fuel efficient or not?

Well, I wouldn't say NOBODY, GM is number two in world sales and Ford, while declining in sales, is still cranking out at a steady pace. Imagine if every F-150 (still the best selling truck in America) had a fuel efficiency rating of 40 mpg. That's a longshot, I know, but imagine...

Higher fuel efficiency standards would apply to all car manufacturers who sell in the states. As it stands, states, particularly California, are pursuing their own fuel efficiency standards. That's a tremendous headache for every car manufacturer. And, you can support new and different approaches, while at the same time giving the major car companies incentives to move to more fuel efficient cars. It's not one or the other.

Regulation is good. The idea that companies will voluntarily do what's right, in the absence of direction from a regulatory agency, is contrary to historical fact.

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