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A Short Film About Detroit - and a crazy idea for the recession.

October 15th, 2008 link to (permalink)

Embedding disabled on this, however here is the link.

Why am I choosing to highlight this film? The US car industry is essentially bankrupt, and Detroit is already the equivalent of a failed state within a contracting economy. The median price of a house in Detroit is, staggeringly, less than $10,000. Surely, with a deep prolonged recession it is beyond hope?

The financial sector has been saved by the government, but too late to prevent significant in the ‘real economy’, there will, as a result, be a need for massive government spending to stave off the effects of unemployment. This either happens naturally through conflict or war, or via the preferable alternative of things like the New Deal.

So what should the New Deal Light, New New Deal, or Deal 2.0, or whatever look like? It will have to employ lots of people and will therefore be some kind of large scale industrial project, but it will also have to have a strategic benefit of the type that has the kind of long term return that only governments can consider. In America’s case this obviously will have to do with energy, and more specifically portable energy, and even more specifically portable energy that solves a fundamental problem with the way America uses energy. American planning inextricably revolves around cars more than any other nation on earth, this is a problem that the government can realistically help solve, and only now will it have the stomach to do so.

As Paul Kedrosky predicts, clean tech. “was just given a two-year window to gestate before the major economies worldwide turn higher and begin driving energy prices straight up.”

So my hypothetical proposal is this: nationalize GM and Ford and create a plan to subsidize switch the majority of all cars on the road to the most fuel efficient form possible, using a pragmatic combination of goal driven R&D and industrial scale production, in a realistic timeframe, using whatever means is necessary, and with the zeal of the Apollo Moon Shot.

Is this a crazy idea?

tags: business

9 responses so far »

  • les : Oct 15, 2008 at 6:17 pm

    no, i don’t think it’s crazy at all. in fact, this is a very opportune moment in time for what you’re proposing, along with other similar measures that would call for a kind of directed public investment on a large scale, comparable to the public works projects of the roosevelt administration, like the tva, for example, however, i think the focus should not be so much on the automobile, but expanding forms of public transportation. i mean, if we’re going to wean ourselves off of oil, perhaps we should wean ourselves off of the automobile as well, which, by the way, would also have real positive benefits for all those of us who live in cities.

    of course, the question remains, in whose favor would a nationalization of this type be? and how could it be put under forms of democratic control and accountability? and, of course, how could we make it more permanent, how would we keep it as a kind of public trust, rather than just an emergency measure? but that would mean something like social ownership, or at least working toward that end, which i myself am in favor of.

    by the way, good video. thanks for the link.

  • Eric : Oct 15, 2008 at 11:35 pm

    @admin: Sounds cogent, all things considered.

    @Les: no no no…the question is “How can we dismantle it once its done?”

  • Tom Foremski : Oct 16, 2008 at 1:22 am

    Nice choice Dave. A peek into our collective future… At least Detroiters had somewhere else to go, we probably won’t.

  • Michael in SF : Oct 18, 2008 at 12:00 am

    If we’re gonna spend for the future, perpetuating cars is insane. Walking and transit, rebuilding walkable communities and transit to connect them, is key. The problem with cars is accommodating them physically. From the video posted, the BEAUTIFUL train station died because of cars.

    Thanks for the great site.

  • admin : Oct 18, 2008 at 2:26 pm

    @Michael. Large swathes of the US (unlike SF) are simply not viable without cars. Communities that are walkable or have viable public transport are often extremely attractive communities, but when suburbs were built, they were often places to escape the squalor and environmental pollution of cities. Now they are the polluters, but environmentally neutral personal transportation would go a long way towards helping people and the environment.

    There seems to be little point in imagining what could have been or what might be better, unless you want to nuke the majority of US towns and start from scratch.

  • ZF : Oct 19, 2008 at 7:59 am

    To those of us who remember how nationalization worked in practice during the twentieth century, your plan here seems built on ignorance.

    The longer nationalization lasts, the more it is characterized by enormous misallocation of funds to romantic but hopelessly unrealistic projects, by slow and unresponsive service and by obsolete technology, because the staff run the show and they can’t be bothered to change, and relentlessly block any move towards increased efficiency that would reduce their numbers. If the nationalizations occur on a large enough scale, the whole economy quickly falls under the control of the bosses of the public employee unions. A less impressive and more narrowly self-interested bunch of ‘managers’, by the way, can hardly be imagined. See for example the chaos produced in the UK by the 1970’s (the reason I and a lot of other Brits emigrated to the USA).

    Most of the time it doesn’t seem to matter much that the way schoolteachers in the US and Europe teach history, social studies and, increasingly, science is an extended multi-year hymn of praise for the addled notion of having everything run by the government. At moments like this though, it seems like all those decades of indoctrination could do some real damage. Your own unexamined assumptions here are a good example.

    After a ‘bubble’ in which inflated asset prices are driven to unrealistic levels, usually by over-optimism, an economy operated by private companies will suffer a brief downturn in output as people and assets shift into more productive activities, and then go back to raising the long term income level of both us and our children. As it did after 1982 and 2002. The only way to really screw this up is by having the government grab huge portions of the economy and start playing with them at random, as happened after 1933.

  • admin : Oct 19, 2008 at 4:56 pm

    @ZF Contrary to what you might think from the post. I may actually agree with you, under normal circumstances. I emigrated to the US for similar reasons. British Leyland, Len Murray etc., perish the thought that we would ever return to a society like that.

    But in the US and the UK, recently, there was a similar level of extreme libertarian ideology that thought that everything could be market driven. Not everything can be market driven or we would still have people making money out of slavery, and we would be ruled by another country because we wouldn’t have had an army to stop them. I don’t like extremists and I’m suspicious of ideology. The thought of someone being attached to libertarianism as an ideology seems oxymoronic. Given that we need regulation to prevent things like slave trading, child prostitution etc. we need a balanced view between what the rules are and the free market.

    We have just nationalized banks and insurance companies, its deplorable but it looks plausible that it had to be done. We ended up here not because we had too much regulation or too little, but because we had a combination of deregulation while keeping some rules. These rules ranged from interest rate control to acknowledging that child sex trafficking corporations are not a good idea. If you buy the idea that rules like these are necessary then the ideological day-dream that we have a Capitalist (with a big C) free market, and the deregulation that occurred as a result create an incomplete and imperfect economic system.

    You either have rules or you don’t. If you don’t you have a primitive society and if you do, you better acknowledge the fact and manage them properly. We are victims of the latter. I’d rather have rules than nationalization, but now we are where we are lets do the something to finish this up and cauterize the wound that is at the heart of America’s potential near and long-term future crises - unemployment and oil addition.

    I am suggesting that this deplorable thing, nationalizing things, should go one tiny bit further than it has already and should be done to GM and Ford. One of them will end up filing for Chapter 11 anyway, eventually ditching debt on the tax payer and rebooting.

    Nationalized car companies on a save America, save the world mission, could end up pissing away a fortune, but to be honest the necrotic world of privatized healthcare in the US and its army paper pushers, lobbyists and litigation paralyzed doctors, already does that brilliantly, so its not a problem confined to the public sector.

    Oil and unemployment are big problems that can cause things like wars. Here is a way to fight a war without killing people, and to do it with minimal money wasting and bureaucracy would require the most able capitalists.

    How is this different from Bloomberg who is seeking to change the law to extend his tenure in the public sector as NYC mayor on account of his ability to run local government as well as he did his business, in a time of fiscal crisis?

  • Monkey Muffins : Oct 20, 2008 at 3:16 am

    Since the current financial debacle is but a symptom of a much larger problem, this idea won’t work.

    George Monbiot recently hit the nailhead dead center:

    “The economic crisis is petty by comparison to the nature crunch. But they have the same cause.”

    [...]

    “The financial crisis for which we must now pay so heavily prefigures the real collapse, when humanity bumps against its ecological limits.”

    [...]

    “The two crises have the same cause. In both cases, those who exploit the resource have demanded impossible rates of return and invoked debts that can never be repaid. In both cases we denied the likely consequences. I used to believe that collective denial was peculiar to climate change. Now I know that it’s the first response to every impending dislocation.”

    - From, This Is What Denial Does, http://www.monbiot.com/archives/2008/10/14/this-is-what-denial-does

    The only approach that has any chance harkens back to Schumacher’s Small Is Beautiful. I would expand to say, “small and slow are beautiful”: a cultural sea-change of titanic proportions.

    Our entire Western/American way of life is science fiction based on the myth of infinite growth on a finite planet: unrealistic, irrational and unsustainable not to mention rapacious and destructive in the extreme.

    John Michael Greer recently spoke to the abstract quality of such beliefs:

    http://thearchdruidreport.blogspot.com/2008/10/my-decision-some-two-and-half-years-ago.html

    Personally, I think Erich Fromm said it best in The Psychology Of Normalcy (1954):

    “What is so deceptive about the state of mind of the members of a society is the ‘consensual validation’ of their concepts. It is naively assumed that the fact that the majority of people share certain ideas or feelings proves the validity of these ideas and feelings. Nothing is further from the truth. Consensual validation as such has no bearing whatsoever on reason or mental health. Just as there is a ‘folie à deux’ there is a ‘folie à millions.’ The fact that millions of people share the same vices does not make them virtuous, the fact that they share so many errors does not make the errors to be truths, and the fact that millions of people share the same forms of mental pathology does not make them sane.”

    So fear not fellow conspicuous consumer, our mutually agreed upon science fiction will not go gentle into that good night.

    As Kirkpatrick Sale observed:

    “Jared Diamond’s recent book detailing the ways societies collapse suggests that American society, or industrial civilization as a whole, once it is aware of the dangers of its current course, can learn from the failures of the past and avoid their fates. But it will never happen, and for a reason Diamond himself understands.

    “As he says, in his analysis of the doomed Norse society on Greenland that collapsed in the early 15th century: ‘The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity.’ If this is so, and his examples would seem to prove it, then we can isolate the values of American society that have been responsible for its greatest triumphs and know that we will cling to them no matter what. They are, in one rough mixture, capitalism, individualism, nationalism, technophilia, and humanism (as the dominance of humans over nature). There is no chance whatever, no matter how grave and obvious the threat, that as a society that we will abandon those.

    “Hence no chance to escape the collapse of empire.”
    - From, Imperial Entropy, http://www.energybulletin.net/node/4474 (*)
    ______________________________________________

    (*) Unfortunately I must post a disclaimer about EnergyBulletin.net.

    They insist on publishing the likes of Carolyn Baker and Michael Ruppert, 2 FEBL snake-oil-salespeople of the worst kind. They promulgate and market the easily debunked urban legend “nine-eleven-was-an-inside-job” as well as a host of other mythological products.

    Let it be known that I loathe such people, their agendas and their business and I place no stock in their lies.

    Why EnergyBulletin.net insists on publishing their ilk is beyond me. It’s counterproductive and offensive.

  • Sisyphus : Oct 22, 2008 at 9:44 pm

    “nationalize GM and Ford”

    Nationalization is essentially theft by the state.

    And let’s not forget that the government has such a marvelous track record as it is.

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