Posted by
john on Friday, December 05, 2008 10:06:18 PM
The Chevy Volt is GM's forthcoming plug-in hybrid. It will have to be re-charged for 6 hours to provide 40 miles of gasoline-free driving. It is acknowledged to be unsalable without multiple government subsidies. With subsidies, it will be priced at $40K, at which it will still be a money-loser. Recall, Detroit is pilloried for selling vehicles that still can be made and sold profitably. Nevertheless, the omniscient Obamalama wants to condition a UAW bailout on a mandate that Detroit made more "green" cars. Hmmm. If consumers wanted "green" cars, would a mandate be necessary? More specifically, if consumers wanted Detroit's "green" cars, would such a mandate be necessary?
As Holman Jenkins gloomily describes the above scenario, "Washington here is just marching Detroit deeper into an unsustainable business model, requiring ever more interventions in the future." Mr. Jenkins further speculates, with good reason, that on this path, nationalization is the next stop. How'd that turn out for British Leyland? I'm seeing years, if not decades, of massive taxpayer subsidies to keep Michigan afloat, at a huge cost to GDP growth and the nation's fiscal health, leading ultimately to a sale (re-privatization) to healthy foreign-based makers, upon condition that massive deregulation occurs.
Mr. Jenkins suggests (again) that we ought to just scrap CAFE altogether and allow Detroit to produce a product mix that will maximize profitability - rather than being forced by CAFE rules to build excess small cars in UAW plants. Remarkably, the less we hear from Washington about reforming CAFE - a 1970s relic that pre-dates the explosion of high-mileage Japanese sales - the more we hear about "conditions" (i.e., micromanaging) to Detroit from Washington. Has anyone considered that this is a big reason why Detroit landed in this unfriendly place to begin with?
Folks, the same people who created the housing bubble and bust are now going to run Detroit. Thus we have the Chevy Volt, a very imperfect vehicle, which nevertheless serves as a most worthy exemplar not only of where Detroit is headed in this brave new world of Washington control, but also of what is in store for the greater economy. As I mentioned on Tom Sullivan's show some weeks ago, all thinking people should know where this road ends. It's called stagflation - if not serfdom.