I like to keep politics off of EcoModder, since I really feel like ecomodding is a non-political issue, even if there are some political reasons to get into. That’s why I am so hesitant to write this post: I don’t want to inject politics into a site that I think is better off without it. However, I think this issue is rather important and I tend to agree with the people I usually disagree with on this issue, so I think it’s also a fairly open topic as far as debate goes.

Why We Shouldn’t Bail Out the Big Three

For me, this all comes down to sustainability and good business practice. No one can say that Toyota and Honda haven’t made some big trucks and SUVs in their time, but these two automakers represent a smart strategy in North America. While the other automakers were focusing on development and production on high dollar SUVs, both of these companies dipped their toes in the water to get some of those profits. However, they remained focused on core quality and cutting edge environmental technology, likely aware that the SUV bubble was just that, a bubble.

When the bubble burst, both on gas prices and with the beginning of the global recession, it became this focus that sustained both of these companies, as well as the other Asian and European makes. The Big Three, who hadn’t invested in security, sustainability, or the base, has been left holding on to a pile of high dollar, undesirable vehicles. It’s not so much an issue of saving money, but creating products and technologies for the long term, which is something Honda and Toyota did with their hybrid systems 10 years or more ago. Right now the Big Three are just catching up to the next trend.

So, when it comes to finances, why should the government bail out the Big Three? The case was made for the banks because the world economy depends on the credit market, and however it may be being mismanaged, it’s still an important step to prevent massive collapse. Will an auto company dying create massive collapse? Let’s think about a few things:

• Bankruptcy exists for a reason. It is a time for companies to be protected from creditors to restructure their businesses radically. This is what the automakers need. Avoiding this seems like giving the crack addict some good advice instead of checking them into rehab. If they can’t restructure in bankruptcy why would they be doing better with billions in hand outs?
• There is plenty of evidence out there to say that a breakdown in the Big Three would create a lot of unemployment in the US. However, recessions are a time of industry consolidation. If one of the Big Three did go under, it would be the perfect time for one of the more well off automakers to buy the company or to at least take over some of the resources. It would be much cheaper for VW to renovate a GM plant in the US than to build a new one, and VW would employ people just like GM did.
• Automakers are going to cut jobs no matter what. In order to get this money they’re promising things like cutting brands, models, management, workers, union contracts, and dealerships. Even if they get the money a radical restructuring is going to end tens of thousands of jobs due to previous mismanagement. We shouldn’t be treating it as if the bailout will be securing anyone’s job at this point.

But finally, I’d just like to note, the Big Three dug their own grave. Even with the yen as strong as it is against the dollar and Japanese domestic auto sales slipping even before the recession, you don’t see Subaru asking the Japanese government for money. That’s because other car makers built a wide base and maintained quality throughout.

The Big Three are in a bad way. But they’re not there because of this recession. They have been slipping slowly for the last 3 decades and the recession may have sped up their decline by a handful of months or a year. This was inevitable and throwing money at the problem when they’re not even going to be selling any cars isn’t going to wipe the slate clean.

Feel free to disagree, but keep it civil. I’m not calling anyone stupid, and you shouldn’t need to either,

httpv://www.youtube.com/watch?v=dlL1u0YrlGE

No one is going to question that gas prices are high or that the economy is in rough shape, but evidently some people think that doesn’t mean we have to change at all. Just watch this political attack ad and see. Many Americans are already reducing their miles driven and changing the way they commute because of the current economy, but is that a bad thing?

I think not. In fact, it may very well be a good thing. I’m not a fan of the idea of global recession, but I can tell you from experience that after living in Japan where my commute consisted of walking, taking the train, and then biking, I not only saved money over driving, but was much more in shape, even though the effort was by no means strenuous.

So you tell me, do you think walking places is “wacky?” I certainly don’t.

PS: I’m not endorsing any candidates or parties here, I don’t even know where this ad is from besides PA, which I found out from this post at Treehugger, so please no “Barack Obama is my hero” or “John McCain is a maverick” comments!

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It may not be surprising that any politician from Illinois, the United States’ second largest corn-producing state, supports ethanol, but in Senator Obama’s case, this does come as a bit of a shock. I don’t like to inject EcoModder into political discussions very often, but when it comes down to our possible future president and his views on ethanol as a future fuel source, it’s important that we all be informed.

The reason I say that I am a little shocked by Obama’s support of ethanol  is that, however you feel about the man, you have to admit he is usually aware of the popular opinion held by those considered to be experts of whatever field. Those experts, at least the ones concerned with the economy and the environment, tend to believe that corn-based ethanol production isn’t exactly a winner. The main supporters of corn-based ethanol are, after all, farm lobbyists. One just doesn’t expect Obama, with his strong stances on lobbyists and special interests, to be one to buy into the mega-farm corn lobbying.

Here’s what the NYT has to say on that count:

Mr. Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.

As far as policy is concerned, Obama’s support for ethanol is based primarily on foreign policy and security concerns, not environmental ones. Supporting ethanol, he believes, is a way to divest money and interest from foreign and often hostile powers. With that money staying home not only will the US have greater energy independence, but will send less of its money abroad.

Senator McCain, on the other hand, is a staunch supporter of free trade and wants to end tariffs on foriegn ethanol as well as end subsidies to the US ethanol industry. Sure, McCain’s recent plan to secure $300 million for EV batteries doesn’t exactly smack of free trade, but he certainly doesn’t seem to believe in corn ethanol as a solution to the brewing energy crisis.

You can’t fault McCain for being inconsistent on ethanol, at least, because it seems he’s opposed it since longer than most of us knew about it, dating back to his failed 2000 primary election bid.

So where does this leave voters, people interested in the environment, economics, and the future of transportation in the US? While I have no interest in telling you who to vote for, it’s clear that even though McCain and Obama share the goal of energy independence and greenhouse gas reductions, they intend to go about it in very different ways. It is, in my view, not very likely that either candidate will be changing their opinions anytime soon.

While Obama will continue to support government intervention and ethanol, and McCain the opposite, it is also true that either individual, as President, will need to make compromises on their positions in order to create effective policy. It is here that all citizens, regardless of political affiliation, have the ability to influence the policy makers. My advice: vote for who you like and support the views you find important, because it doesn’t have to end at the ballot box.

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Image: Joe Crimmings