White House Explores Aid for Auto Deal

I am disappointed to learn that the Administration is considering giving additional aid to the Automobile industry (White House Explores Aid for Auto Deal, New York Times, October 28, 2008: A1). An industry that, at least in Europe, has the technology to give us very fuel efficient cars but whose members have not seen fit to adopt this technology in the United States. As a result their sales have plummeted in the era of high gasoline prices.

The Administration, in its recent rejection of market forces, has forgotten the one thing that, in spite of its faults, the market does reasonably well: picking winners and losers.The market does this much better than politicians who are manipulated by industry lobbyists. Foot-dragging Detroit has proved to be a loser. The industry is no place for Government money to be invested.

There is a place for government money: to improve unemployment benefits for laid-off workers; to provide widely available retraining opportunities for laid-off workers; and to finance early retirement opportunities for older workers.

To encourage the development of non-fossil fuel energy, the federal gasoline tax should be raised. I can just see in ten years time the re-tooled former plants of the auto companies and their suppliers turning out wind turbines and photo-voltaic cells. This will lead to a true renaissance of Detroit.

Sent to the New York Times