Reinventing the American Auto Industry

So today we see that the Obama administration is essentially reading the riot act to GM and Chrysler, forcing out a CEO and imposing tough conditions on any further federal assistance.

If GM and/or Chrysler end up merging, folding, or becoming much smaller versions of their former selves, what opportunities might that present for entrepreneurs here in the U.S. to create an entirely new and vibrant auto industry, centered on new technologies and alternative fuels?

For a century, the auto industry that we know today has been basically riding the coattails of the vision of one entrepreneurial innovator named Henry Ford. Although enhanced by a legion of add-ons like computer-controlled ignition, fuel systems, and transmissions, emission control equipment, better safety features, and other refinements, the autos of today are still, at the core, based on the same old internal-combustion engine technology as the Model T.

Hello? Aren’t we just slightly overdue for something new?

What would an exciting, innovative reincarnation of the American automobile — a Purple Cow Car, to borrow the terminology of Seth Godin, one of my favorite business gurus — look like? Perhaps, with an outfit like Tesla Motors, we are already seeing a hint of what a new auto industry could look like. Meanwhile, here is my own wish list for a Purple Cow car:

--Should run on an inexpensive alternative fuel
--Should sell for a reasonable price — low enough for someone of average income to save enough cash in a reasonable amount of time to purchase outright, or at least to pay off in a short period, two years tops; this, in turn, would create an accessible used market for folks of below-average incomes
--Should require little routine maintenance

I have one additional wish that, since I’m not an engineer, I’m not sure is realistic. But leaving aside the atrocious gas mileage and arguably inferior safety profile, I really miss the cars of the 1960s and 1970s, mostly because it was feasible, and not very expensive, to perform do-it-yourself maintenance and repairs. Maybe with the right technology that could be a moot point, with 10 years and/or 100,000 miles of virtually maintenance free service life being a realistic target today.

I encourage you to comment on this post to add wishes of your own.

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Welcome!

Economics is often called "the dismal science." But our current crisis has taught us that it’s a science we all need to understand better. Over the past thirty years, the leaders we chose here in the U.S. implemented policies that created the conditions that made our current crisis possible.

Even now, it appears that we may not yet have learned our lesson. The public dialogue that frames the current crisis often seems inadequate and based on premises that may by now be very outdated, using the language of such old, simplistic dichotomies as liberalism vs. conservatism, socialism vs. capitalism, etc. Newsweek runs a story with the headline We Are All Socialists Now,” while conservative pundits continue to insist that all the government needs to do to get us out of the hole is cut taxes, cut spending, and get out of the way.

Both sides of this dichotomy are based on ideas that come from a very different world. Isn’t getting government out of the way, through such actions as deregulating financial markets and castrating anti-trust laws, exactly what we did, starting thirty years ago? And don’t those actions have a precise cause-effect relationship to the boom-and-bust cycles we’ve witnessed over three decades and, especially, to the the insane financial practices that gave rise to the current crisis?

But on the flip side, the vocabularies of socialism or New-Deal-style liberal democracy are just as inadequate to helping us comprehend and see our way out of the current predicament. If centralized planning proved ineffective in the 20th-century Soviet Union, just think how much more inadequate it is to the complex, fast-paced, technology-driven world we have today. Centralized planning isn’t what will get us out of this hole. What will get us out are the grass-roots efforts that individuals and organizations, out of sheer self-preservation. are already making to deal with the current situation, responding to such practical, everyday challenges as: How can I make sure that my family continues to have food on the table? How can I make sure my small business will have adequate cashflow to continue to operate? What innovative venture of my own could I launch to replace the income from the job I just lost?

Yet the chatter of the popular media seems to be locked into the framework of old ideas. That doesn’t mean, however, that there aren’t new ideas out there or that there aren’t contemporary thought leaders who, behind the scenes, are quietly influencing those currently vested with decision-making authority. So, the question is: who are the current thought leaders in economics, and what do they have to say? And will the ideas shaping the decisions of those we have placed at the helm help put our society, 30 years from now, in a better place than where we are now, a more stable place where we will be safer from the vagaries of the bubble-and-bust roller coasters of the past three decades?

This blog was conceived as a forum for exploring those very questions. Our current predicament shows that we need a better understanding of what we are assenting to through the authority we vest in our representatives. When our country bought into Ronald Reagan’s evangelism for low taxes, “free” markets, and deregulation, did we understand that the result would be allowing mega-banks to gamble all of our financial futures by placing risky bets on assets leveraged 30 to 1, or that we were creating an illusion of prosperity by building a debt-driven economy? Of course not. We cast our votes and acquiesced to the policies without understanding what we were getting ourselves into.

Let’s avoid making the same mistakes again. Let’s make sure we understand why we believe what we believe. Let’s make sure we truly know our leaders on both the dominant and opposition sides. And, perhaps more importantly, let’s make sure we know the thought leaders who are shaping their opinions, so that, when we exercise our democratic rights through our votes and through the ongoing feedback we provide to our chosen representatives, we are advocating for our own self-interest, from a fully informed context.

I’m not a credentialed expert on economics -- I’m just a reasonably well educated dude with some halfway-decent research skills and, I like to think, a knack for putting together a fairly readable English sentence. So it’s an exploratory undertaking for me, and I invite all interested to join me and, especially, to contribute to the discussion. Sphere: Related Content