We Don’t Need a Car Czar

Should a Car Czar Be Part of the Solution?

We have seen the CEO’s of the “Big Three” show up in Senate hearings begging for financial assistance.  Once they traveled by corporate jet and the second time via hybrid vehicles.

They are asking for billions of dollars in loans to that they can make up for their own failings as industry leaders.  It looks like the government might just provide some funds.  If they do one of the proposals is that there be a “Car Czar” appointed to represent the government and oversee these companies in order to ensure that they use these funds appropriately.  This could be a disaster.

By appointing a “Car Czar” the government would be, in effect, running the three corporations.  This is counter to everything that capitalism stands for.  We don’t need the government running automobile companies.  In fact, we should not want it.

Nor do I want to see legislators or bureaucrats trying to determine what automotive technology is the best solution for the evils of the internal combustion engine.

We have already seen what happens when a fuel substitute for gasoline is subsidized by well meaning governments.  Ethanol, on the surface, appeared to be promising.  That is until the production of corn for conversion to ethanol impacted the price of corn used for food products and animal feed.  Not to mention the reduction in available energy by volume that came with ethanol.

Not that it is a bad idea to search and hopefully find a replacement for the 100 plus year old technology that is currently the primary automotive propulsion – gasoline (yes, and diesel fuel).  Petroleum-based energy will not last forever so there is no time like the present to be investigating alternative.

Edison once told Henry Ford that in a few years he could develop a battery technology that would make the gasoline engine outmoded.  We are still searching for the best battery solution for cars.

No, a government Car Czar should not be running our car companies.  There is all ready a system in place for all businesses that should ensure that they are run appropriately.  It is the freedom for failure.  When business are run under a faulty model or with foolish management (or both) they will fail.  We have bankruptcy laws in place that give businesses a second or third chance.  But I do not want to see the government running private enterprise.  The two must be kept as separate as church and state.

Let the car companies find their way back to running profitable businesses.  A year or two ago they were able to show profits.  Right now their market has shrunk considerably.  People aren’t just avoiding buying certain cars; they can’t afford to buy much of any new cars.  Those that would usually get a loan to purchase a new car are finding out these days that in most cases they are out of luck trying to get a loan.

Let the car companies run themselves.  Let the boards wake up and smell the petroleum.  Have them find new or inspire existing leadership to get the companies back on track. 

Thinking Out of the Box

Now is the time to really think out of the box on the automobile business.  Do we really need the kind of dealer network where the big car companies use to just stuff the channel with inventory?  Should dealerships become much more involved in not just selling product, but market research?  Should the service centers become more closely aligned with the manufacturing side?  How can buyers influence the product and how can the car companies do a better job in design?

If the government wants to promote more energy efficient automobiles then the cost of gasoline must be at a level that make it profitable to design and produce alternatives.  Right now the cost of producing more energy efficient cars raises their true price to a level that is not acceptable by the buying public.  The CAFÉ (corporate average fuel economy) standards are not helping things.  Perhaps the government should artificially raise the cost of gasoline in this country.  All automotive fuel 87-89 octanes (using current pump formula) should cost $3.00 a gallon and all 91-93 octanes should cost $3.45 a gallon no matter what.  The difference between actual market price and the sale price would become tax revenue split between the federal government and the state governments.  This would keep the cost of gasoline high enough to inspire users to find more efficient vehicles and provide tax revenues that would or could be used to fund research as well as improved infrastructure.  Such a fixed price would allow users of cars to adjust their budgets without wondering if the cost of gasoline was going to sky rocket in the summer or become to cheap to care about in the winter.  It might seem expensive, but at least it would be a constant.  The fixed price should be good for five years and then revisited for appropriateness or revision.

Notice I have not included aviation, marine, or diesel fuels.  We need to be sure that commerce is facilitated by reasonable fuel costs.

The last thing I want is to see our federal legislature try to determine what technology is appropriate to replace petroleum-based fuels.

Should battery technology be it?  Should it be Lithium-Ion?  Nickel-Hydride? Lead-Acid? Something else?

Is public transportation really an efficient way to move people?   Does it really save fuel or the environment?  Why, in some environments, is their so much resistance to using public transportation?

Is the real issue that there are 6.5 billion humans on a planet that can only sustain 2 billion in equilibrium?

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2 Responses to We Don’t Need a Car Czar

  1. markitude says:

    Jim,

    Thought provoking piece as always. There are a lot of interrelated points in your post.

    Let’s start with the last, 6.5 Billion vs 2 Billion sustainable. Gasoline and oil are just one facet of the overall set of limited resources of the planet and though we use technology to prolong the inevitable, we will reach the point where there are more people than we can support. History has shown us that conflict for those resources will ensue and some balance will be restored – not a pleasant proposition, but one that is in the future unless we balance our budget .

    Public transportation would work best if development and the where and how people live, work, shop etc were planned in an orderly fashion as an element in an overall solution. But, reality is that people desire freedom, and the human condition seeks preservation of individual volition vs organization to function as an effecient cog in the greater whole. Fundamentally, our world is operating as a collection of individuals and that does not scale indefinitely – hence your 2B vs 6.5B issue.

    Car Czar – I agree with you. I think there are more evils with that as well – the government has demonstrated an inability to make real fact based decisions. Much of the legislation is junk. And, having the government tied into the big 3 may be another step toward socialization and protectionalism. If the big 3 domestics become part and parcel with the government, and still struggle, their struggles will be the government’s struggles, and human nature will set in. As “foreign” automotive competitors are now also built in plants here, it won’t be a simple case of inport tarrifs, but something could happen. I also don’t want to see our car choices wind up like our legislation – full of a bunch of pork in the form of bad ideas made into regulation and design.

    Year round gas prices, with taxes added to inflate the price? Jim, how can you argue free market in one breath and propose this in the next? NO! Gas prices are being manipulated as it is – there is no way to explain the metoeric rise and precipitous fall as the have in the last 5 years – India, China, other demands just don’t explain the rate. As the economoyg slows down, I agree there will be some reduction in use, but the prices are down more than 60%. The thinking of making gas artificially high just so that other technologies can appear competitive is flawed – that’s just lowering the bar and reducing the requirements for what is needed to pass as an alternate solution. That’s the same kind of thinking about ethanol subsidies. USe the Gas tax for research? We are in trouble now at local, state, and federal levels because the government (at all levels) does NOT use money for the purpose for which it was collected. Look around us here – they are complaining about our roads? Where is the existing gas tax going? Look at our vehicle taxes – it’s going to eduction, not trasportation, look at license tag fees. Property taxes? It’s going (lion’s share) to education as well. Not that I’m against education, but my point is that all existing signs point to the fact that additional tax collections almost never flow to where they were proposed.

    No, we need some real, free market innovation. Not the appearance of one created by more governmental tampering with the marketplace.

    Mark

  2. Jordan says:

    Just thought I’d mention that artificially inflating fuel prices by using tax doesn’t work. Coming from someone who lives in the country with the highest fuel prices in Europe and probably the world (Great Britain) I have not really seen any change in the cars we drive. Currently we are paying close to $5 a US gallon (and last year it was in excess of $10), the only time it bothers anyone is when the fuel duty goes up, but it is quickly forgotten.

    And there is also silly amounts of fuel duty imposed on diesel, it wasn’t the case at first, but a lot of people switched to diesel powered cars so the gov’t saw it as a money maker.

    There is also road tax which is now priced based on how much CO2 your car spits out and still few people will change their cars. I am happy with my 3.0l V6 which gets around 25MPG (imperial gallons).

    The only place you’ll see alternative fuelled cars is London (congestion charge aimed at cutting down on the cars in London is now a green tax) because your wallet gets rapped if you drive anything that doesn’t have batteries in it somewhere. Comically this is why you’ll see a lot of hybrid SUVs in London. If Chevy brought the Tahoe over here again sales of the hybrid model would be through the roof as hybrids automatically don’t pay road tax or congestion charge.

    But that hardly fixes the problem of moving away from oil dependence, it is just an attempt to try and stimulate new car sales. Much like trying to automatically make any vehicles over 18 years old listed as not road worthy.

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