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The Best Science Writing Online 2012
Showcasing more than fifty of the most provocative, original, and significant online essays from 2011, The Best Science Writing Online 2012 will change the way...
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The debate about the future of the U.S. automobile industry exemplifies the shortcomings of U.S. public discussion about large-scale technological change. The auto industry has been widely vilified in recent months, with public opinion running strongly against government financial support for it. There has been an insistence on “letting free markets work” despite the fact that financial markets have collapsed in the worst crisis since the Great Depression. Environmentalist critics of the industry have understandably criticized the poor performance of the Big 3 automakers yet have not acknowledged the missing role of public policy and public finance in any lasting solution.
The critics have no doubt felt their frustrations building—justifiably—for decades. The industry fell into a trap of high costs, including unaffordable benefits and a morass of regulatory and contractual obligations (for example, related to dealerships) that enabled foreign producers to take a growing share of the U.S. market. Worse, the Big Three (Chrysler, Ford, and General Motors) continued to promote gas-guzzling SUVs while the risks to the climate and to U.S. energy security mounted. To some extent the industry is also paying the price for spiraling national health costs, which should be under better public control (and on the public budget), and for the nation’s inadequate fuel-efficiency policies and low gasoline taxes in comparison with Europe and Asia, which facilitated consumer demand for large vehicles. Yet many of the industry’s problems indeed result from its own strategic miscalculations.
Still, the scorn for the industry misses four crucial points. First, a collapse of the Big Three in the coming months would add another economic calamity to the crisis-roiled economy. Millions of jobs would be lost in places with very high unemployment and no offsetting job creation. Second, the automakers’ dire state is the result of the dramatic collapse of all domestic vehicle sales rather than the declining share of the U.S. industry in those sales. The Big Three were financially weak, to be sure, but they would not be at the precipice of bankruptcy were it not for the worst recession since the Great Depression. Conversely, with an overall economic recovery, the Big Three can be viable. Third, the public and political leadership bear huge co-responsibility with industry for the misguided SUV era, with its flagrant neglect of energy security, climate risks and unsustainable household borrowing.
Fourth, and most crucially, the changeover to high-mileage automobiles must be a public-private effort. To wait for the “free market” to bring it about is to wait forever. Major technological change, such as from internal combustion engines to electric vehicles recharged on a clean power grid or with hydrogen fuel cells, requires a massive infusion of public policy and public funding. Research and development depend on huge outlays, and many of the fruits of R&D should and in any event will become public goods rather than private intellectual property. That’s why public financing for R&D is so vital, and has been widely recognized and practiced by the U.S. government for a century in many industries, including aviation, computers, telephony, the Internet, drug development, advanced plant breeding, satellites, GPS and much, much more.
To sit back and bemoan the fact that the forthcoming Chevy Volt plug-in hybrid will have a first-year price tag of $40,000 is to miss the point. The costs of early-stage development and deployment are inevitably far above those that companies can realize in the long run. Public policy should help to promote this transition through such measures as the public-sector procurement of early models for official vehicle fleets, special tax and financing incentives for early purchasers and higher gasoline taxes that internalize the costs of climate change and oil import dependence.
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13 Comments
Add CommentWhy not mention a means to relieve the auto industry of its health car burden?
Reply | Report Abuse | Link to thisHealth Care Savings Accounts, for everyone from birth. They should be like retirement accounts, except funded by regular automatic savings, like payroll deductions, and could be used only for health care. If you saved more than you would likely need you should be able to roll over the extra into your retirement account, so you would never lose any money. You should also be able to roll over money into your children's’ accounts. Of course, inheritance taxes would apply but these taxes on these accounts should be used to fund accounts for the poor and supplement accounts of those few with severe or chronic illness who were unable to save enough.
In a few years enough would be saved that government would no longer need to fund health care and its roll could be limited to regulations to insure the money was properly safeguarded and spent; to control pharmaceutical company excesses, and insure the quality of care delivered.
Health Care Savings Accounts would improve two major weaknesses in our economy, our lack of savings and the need for industry to fund health care, which reduces its ability to compete in the world market. Similar regularly funded retirement accounts for everyone would solve the Social Security problem. It would become unnecessary and could eventually be phased out.
We will get what we want only if we pay for it ourselves. There is more to it, but if you grasp this concept, we can talk.
Let them go bankrupt! First chapter 11, then chapter 7. Then remove all legislation that has protected the oligopoly from competition. Then watch as people with ideas look for start out capital, and people who sold their stock last fall find them. Watch them buy factories at bankruptcy sales. Watch them hire former UAW members at wages that compete with non-members. Watch them hold initial public offerings of their stock. Watch them develop new technologies.
Reply | Report Abuse | Link to thisDo we need public investment? I don't believe so. Microsoft created DOS without it. Intel created CPU's without it. People once thought that only IBM and the government could create information technology. Baloney!
I believe that Mr. Sachs and would agree that once new automotive entrepreneurship creates new automotive technology, the government should buy it.
This could have been over with a decade a go if the car makers hadn't followed big oil back into wasteful cars after 1975. By 1986 we could have been making great electric cars. (11 year fleet replacement) Another moon race to get outside oil out of our politics. Car makers in America have always shoved their badly made, bad for the economy, cars down our throats. Japan made cars that lasted and ran cheaper. Now we need to get the electric car on the road to our salvation. We could re-do fleets of Cushman "Meter Maid" Three wheelers. Then the short haul Postal trucks. Make them all electric. Have shops nationwide do the work. Get this done and get experience in motors, batteries and controllers out into our hardworking, creative workforce. You could have a contest to see which design would get made.
Reply | Report Abuse | Link to thisYou start small. Getting people out of their cars is another solution. We need to reduce the number of cars. Two for every driver is a bit much. Let's get down to one for every two drivers.
The auto makers have more excuses than they have solutions. The three big auto makers could become one and start mass producing GM's hydrogen fuel cell battery on wheels and be gasoline free in less than five years. Incredible greed is the only thing stopping them from mass producing electric cars. Yahoo news published an article several months ago about an electric car that could get seven thousand miles on one gallon of gas and if they use solar panels to charge the battery, they would not need gas at all. The three big auto makers are such idiots that they should be placed in a handicap class and retrained on how to build cars.
Reply | Report Abuse | Link to this1) At present there are a number of small private companies that will convert your car to a hybrid; so to claim that this will require a vast infusion of capital is nonsense.
Reply | Report Abuse | Link to this2) These companies use presently available batteries; so, while improvement in battery technology will help it is not a necessity.
The delay is due to the US automobile manufacturers trying to cling to their old business model. It looks as though the only solution is to le them go bankrupt.
Dogma & ignorance always go hand in hand. This article epitomizes the shameful ignorance of the American people when it comes to business & competition. The only organizational structure that is more inefficient & difficult to manage than the corporation is the Federal Government. To suggest gov't is the solution is foolhardy - the gov't typically throws $ at problems, it does not solve them. The best role for the gov't is the continued funding of fundamental research.
Reply | Report Abuse | Link to thisManagement - corporate mgmt is largely driven by #'s (mostly accounting), thus it is hamstrung by short term thinking & its inability to deal with non-quantifiable factors - like the customer relationship. You get what you measure at the cost of what you need - mgmt by the #'s leads to #'s games, NOT process improvement.
Labor - the UAW continually behaved as if the union's interests were separate from that of the automakers. The jobs bank & high labor costs played a material role in locking the Big 3 into a 'volume or bust' cost structure that made them vulnerable to ANY disruption in demand.
Government - Simply put, gov't taxes & regulations are not applied equitably, thus they are anti-competitive. The corporate income tax (& business income taxes in general) is a miserable failure kept alive by the prejudice of the American people. We need to understand the competitive implications of business income taxes as opposed to the VAT which is used by EVERY other nation in the industrialized world.
If you are familiar with Deming, then you may be getting a hint of where I am trying to go with this. (Best I can do with 2,500 characters ...) If not, then I strongly encourage you to study up on him. Hint: it has nothing to do with SPC.
Final thought: The transition to green tech / alternative energy is now inevitable, not because of some expensive, brute force government program, but rather because of a confluence of economic factors (energy prices) & scientific innovation (new materials & manufacturing techniques).
... & because a relatively small portion of the population decided to study chemistry & materials science and pursue solutions to our problems. My hat is off to you, you are head & shoulders above the rest of us.
Another problem that is not mentioned in the article is the US car have bad engineering. A example I had a 1990 Toyota camery . The engine and transmission lasted for the life of the vehicle . The engine a transmission did not have to be rebuilt. The car had a 4 cly engine got 25 miles to the gallon.
Reply | Report Abuse | Link to thisI own now a chrysler minivan . The transmission failed at 125K miles . The engine was replaced in the case of the engine it was due to a accident (can't be counted )and overheated. A friend of mine had the same model van the transmission failed in the exact same manner. This points to a lack of engineering. This is the problem with Detriot they tend to relie too much on technology and complexity.
I had a 1992 mecury grand marquies worst car ever I owned . Engine was bad paint was bad differential was bad , breaks were bad. I never saw any bad quality in any american cars . I see the Japense cars have a better designed and engineering. I basicaly like american cars better they are more comfortable have better electrical systems and are nicer when new but wait a few years and the bad engineering shows up.
I've worked in auto-related industry for 30 years! I've watched as Detroit has committed suicide.
Reply | Report Abuse | Link to thisNo one held a gun to the heads of the big three--the signed their own suicide note. They've been on notice since 1974 that building Dinosaurs was idiocy.
Time for Bankruptcy.
The conversion to electric cars will require huge public investments?
Reply | Report Abuse | Link to thisThe French Aquitania regional council have funded the development of a series of electric cars, priced from £3,500 to £5,000. Why can't the world's big car makers do likewise? Perhaps it is because they only want to sell up-market models with big price tags? As car manufacturers expect local councils to fund their factories, the council can of course afford to build factories for the new green cars to be produced. Et Voila!
Mr. Sachs. Please go back to Europe, where your socialist ideas came from. They are neither Scientific, nor American. Seriously, history has shown that socialism always fails. It has NEVER worked. Socialism simply takes an imperfect system (market economy) and makes it WORSE. All your "scientific studies" are flawed because they were done by people with a vested interest in the results they show. Any statistician knows that if you want a study to show something, all you have to do is run 20 or so studies until you get the results you want, because every study makes conclusions with 95% certainty. Socialism has screwed us up enough. If you are so concerned about the auto industry, give them some of your hard-earned money and stop trying to get Washington to take mine.
Reply | Report Abuse | Link to thisI agree with Sachs's opinion regarding the need for public-private partnership in order to resolve the mess the auto sector has got itself into.
Reply | Report Abuse | Link to thisUnlike many who have commented I believe the need for public participation is to protect the interests of the public.
It is evident that the u.s. and Canadian big three are at least two years behind the Japanese in car design. This is in addition to many other factors that contributed to their present disaster.
To regain ground, and hence have a chance at long term sustainability, it is required that the rate of technological innovation and implement ion be dramatically increased.
A proven way to do this is to "Open-Up" the automobile industry. Rapid technology change and cost reductions resulted in the telecommunications and computer industrial sectors when "Open Systems Architecture" was introduced.The host companies also benefited in spite of very vocal initial opposition.
The series hybrid architecture of the Volt can be used as the best basis for such change. It only has power and control cables between each of its power train modules. This both simplifies interface specification and permits each module to have its own rate of technological change with minimum cross impact and cost of integration.
WE NEED to give our policy makers the technological information they need to make GOOD policies for us.
Sachs said "what" had to be done. Now lets drop down one level and describe from and scientific and engineering perspective "how" it can best be done. Do not leave this step out or the policy formulation folks will get it wrong. Our tax dollars will be spent for naught but we still have to pay.
Like most commentators in the media, Jeffrey Sachs in "Transforming the Auto Industry" seems to know very little about the US auto industry and misses the essential failing that has led to its long term market share and volume decline: mediocre cars.
Reply | Report Abuse | Link to thisHaving worked directly in the industry in the 70's and followed it since, I watched the denial by US auto executives of the need to produce better product than the competition. I observed at least 15 years go by before the quality deficiencies were acknowledged and it was recognized that quality is more than "fit and finish". They have been playing catch up for 30 plus years now and the result has been that the market has done what you would expect it to do, shifted its purchasing to manufacturers offering superior product, superior quality and superior value. It is not for nothing that the major market segments are dominated by Toyota and Honda, even segments invented by the US companies.
Yet, during most of this time, American vehicles were generally less expensive initially to the consumer than competitive vehicles. Unfortunately, their lesser durability, apparent quality and resulting resale value insured that their initial competitive price did not translate into real value that consumers recognized.
American vehicles have been improving steadily and the gap is closing, but they still lag. In addition, it takes a generation or more of a given model meeting the standards of the competition before the buyers are convinced. For the US auto industry to truly succeed, management needs a paradigm shift that results in their producing the best vehicles in their class by any measurement.
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Rick Robins
The engine was replaced in the case of the engine it was due to a accident (can't be counted )and overheated. A friend of mine had the same model van the transmission failed in the exact same manner. This points to a lack of engineering. This is the problem with Detriot they tend to relie too much on technology and complexity.
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Allen
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