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Thursday, November 20, 2008

Two Letters on the Automobile Companies

I strongly agree with your correspondent, Michael Flaherty (Letters, Boston Globe, November 13, 2008). I would go further. As we are in a stage where government intervenes at will into the economy, it should do the right thing and compel each of the three biggest oil companies to merge with one of the big three automobile companies.

Each oil company has a division involved in the development of providing energy through renewable resources. The merger would strengthen the manufacturing arm of these divisions. Over a five year period the automobile companies could move over to building wind turbines, high efficiency batteries, and solar cell arrays, as well as fuel efficient cars.

The beauty is that no taxpayer money would be involved. We would all be winners

Sent to Boston Globe


Your lead editorial and your columnist, Bob Herbert (whom I usually agree with), try to make the case for a taxpayer bailout of the automobile industry (New York Times, November 15, 2008).

Such an intervention in the market would be wrong and ultimately ineffective. The bailout of Chrysler merely postponed the inevitable for 30 years.

Mr. Herbert puts the case most strongly; " The U.S. auto industry is the cornerstone of American manufacturing. It supports millions of jobs, directly or indirectly, in a vast array of businesses.

Start with the thousands of parts in each vehicle. They are produced by suppliers across the country, from one coast to the other. Those supplies have to be manufactured, packaged and transported. Truck drivers, railway systems and shipping companies are involved.

And, of course, there are dealers everywhere. And the auto repair industry. And the insurance industry. And vast systems of advertising supporting every kind of job you can imagine, from messengers to accountants to film makers and beyond. All of that advertising funnels absolutely crucial revenues to television, magazines, newspapers ­ you name it."

The problem is that all these people are engaged in supporting the 21st. century equivalent of buggy and buggy whip makers. Imagine what could be done in the sphere of renewable energy, in the sphere of public education, and in the sphere of infrastructure development if these resources were committed there.

The problem lies in the bridge between here and there. Allowing Detroit to collapse will be enormously disruptive. The solution lies not in propping up Detroit but to provide support for the workers, suppliers, and contractors who will lose their sources of income. First unemployment benefits must be boosted; second the government should take over the health care plans of those who lose their jobs as a first step in a national health care system; third, a Public Works Administration should begin a major investment in repairing, refurbishing and adding to the national infrastructure. Meanwhile new bottom up initiatives from the entrepreneurial people who are no longer bound by their shackles to Detroit, will emerge.

Yes, I have laid out a best case scenario but we are entering the era of the "Audacity of Hope."

Sent to the New York Times


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