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People keep asking me what I think about bailing out the U.S. car makers. I am unqualified to have an opinion on the economics of that question, and the experts seem divided. In situations such as this, where the experts disagree on the best path, I say use the limited supply of money someplace where the experts DO agree that it would help the economy, if there is such a place. I'm not claiming that withholding aid from the car makers would be the best solution. It's just the most rational decision when the best path can't be known.

And this got me thinking about why we have so many cars in the first place. Excess cars cause traffic, pollution, and dependence on foreign sources of oil. And who benefits most by this situation? Answer: car makers.

Suppose the government enacted laws that made it legal for anyone to be a taxi driver in his own car without a special taxi license. And suppose the income was non-taxable. The result would be cheap taxis and high availability. Every time you wanted to run an errand, and had an extra minute, you could choose to pick up a rider and cut your own driving expense in half. Technology will make it easy to match amateur taxi drivers with riders. And the market would keep prices low.

Now obviously there are lots of problems with this scheme, in terms of security, liability, and people puking in the back of your Hyundai. But compare that to our current problems: car expenses, traffic, pollution, global warming, and excess energy use. I think the universal taxi scheme comes out ahead.

None of this could happen while U.S. automakers are still in business. They would lobby to make sure the market for new cars stayed strong. And obviously the professional taxi drivers wouldn't like it. So they would lobby against it.

This sort of thought has been going through my mind lately because I think the current recession isn't going to be temporary. I think we're on the verge of a change as profound as the Industrial Revolution. Society will have to retool its expectations to meet the reality that there just won't be enough money to provide necessary services if we insist on consuming in an inefficient way.

The universal taxi theory won't happen because farsighted politicians changed laws. It will happen because people start doing it on their own in such numbers it will be impossible to prosecute, especially given the dwindling law enforcement budgets.

Likewise, the future includes legalized (de facto or literally) drugs and prostitution, out of budget necessity. There simply won't be enough tax money to chase that sort of perp. And say goodbye to speed limits in all but the most dangerous roads.
 
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Dec 12, 2008
Was shopping in a Costco waiting for my spouse checking out. I walked over to a car that was on display. It was a Buick Enclave Crossover SUV. Seats seven and was loaded with all the options and all wheel drive. Sticker was over 50 grand. The mph was 16 city 22 highway. Another guy was standing there looking at it. We looked at each other and both thought the same thing. No wonder Detroit is going in the toilet.

This sled was the ugliest tub we had seen. It looked like a bloated cow with a septic stomach. Compared to the foreign competition it was a humongous looser. Reminded us of the 50s and 60s barges Detroit use to make. If all the MBAs, PhDs and car techies at the Big Three could not see into the future and their Board of Directors let them build this monster they deserve to be taken over by someone. Guess the car could be bought for a whole lot less than sticker and it will haul 6 slugs and a driver.

I am not for big government but there are some things that need to be at least temporarily regulated until the market adjust to compensate for the stupidity and greed of a few people.
 
 
Dec 12, 2008
Hey. Other countries raise huge tariffs on imported cars so that their Locally Made Crappy Cars can survive.

We don't. Why is that? Well, we pretend to have a free market capitalist system going. That means when someone hangs out their shingle, it's up to the market and their skill as to whether they can stay afloat.

The big three carmakers, after laying off most of their workers within the united states borders and out-sourcing many of their vehicles to Japan already anyway, is now finding they can't compete?

Well, the government by and large uses American made vehicles. And most rental companies do too. And many big businesses as well. Add in the portion of the populace who simply can't help but buy a poorly desinged, poorly implemented, ugly, inefficient, over-priced gas hog... and your company is still going to go out of business?

Now, how could it be that in the land of the free and the home of the brave a company is not saved with tax dollars? We save everyone else's companies, don't we? No businesses are allowed to close because they make a crummy product, are poorly run, or were just a bad idea to begin with, right?

No, seriously, take the Pontiac Aztec, for example. I am quite certain some CEO's 5-year-old grandkid designed that 4-wheeled atrocity in crayon on the back of a placemat at Denny's. It's the ugliest piece of garbage since the AMC Pacer.

Sometime between now and the last day of work for that idiot currently deemed president of this part of the world, you will see more "oh no save us" in the news, and you will then see "back and forth" over whether it should happen, and then it will happen. Billions of dollars that were supposed to fund the operations of the nation you live in will go to companies that haven't tried to compete for decades. Yay.
 
 
Dec 12, 2008
You've got some out-there ideas, Scott. When you start talking about existential and conspiracy-theory issues, it's fun, but it gets on my nerves because it's useless.

But every so often you talk about relevant issues. And your ideas, with some refinement, could occasionally lead to some great breakthroughs! The problem is, even when it's relevant, it's only talk. Yes, you're a highly successful comic strip writer. Yes, you also gave speeches. And yes, you're pushing this file transfer service. But how much of this has a wide impact? Without question, your comics provoke more thought (and controversy) than this new business. That isn't enough. It's times like these when new ideas are called for. How are you going to make yourself heard in places that count?

Maybe you could go into consulting. Maybe you could add your blog to the Huffington Post, or write for the Daily Beast. Maybe you could get an editorial column for the online portion of a newspaper. You've done a lot, more successfully and with more ambition than most. Go for more.
 
 
Dec 12, 2008
Ride-share arrangements are nothing new, they just tend to be used for longer trips. Craigslist is full of people offering or requesting long distance rideshares, and campus bulletin boards predate that. Smart cell phones with GPS devices, some clever software, and it should be easy to do for short trips too.

As to the legality, I'm no lawyer, but it's probably not illegal to accept gas money for rides. By analogy, as a private pilot I'm precluded from accepting any more than a pro-rata share of expenses from passengers. Any more than that is considered flying for hire, and requires a commercial license.
 
 
Dec 12, 2008
The real question is - why is it illegal to take somebody by a car and accept some money as compensation? Isn't here something wrong?
 
 
Dec 12, 2008
In three cities, that I know of, Washington DC, Oakland, and Houston, ther are already amatuer transit operators in the so called "slug lines". Individuals line up in certain locations to get rides to and from work from willing drivers. This is sometimes called casual carpooling. Slugging potentially increases the highway capacity by 4 to 5 times the amount of a typical highway that is mostly filled with single occupant vehicles (SOV's). The neat things about this arrangement is that it is voluntary and occured spontaneously.

You can learn about the culture and evolving system of the Washington DC slugging community at www.slug-lines.com. It is a self-organizing complex system that any free market economist or fan of Hayek would be interested in.
 
 
+1 Rank Up Rank Down
Dec 12, 2008
Info from the overseas (Europe): US made cars are popular just in jokes here. Because they still use medieval ox-cart suspension technology. And the only thing uglier and more cheap looking than their exterior is their interior. And they have handling comparable only to canal boats. And Italians are able to pull more horse power from hairdryers than American car manufacturers from 5-liter V8 engines. Etc...

Also, all this with car companies bailout is not quite clear for us here?
It looks like your government wants that you all to pay for the cars because you didn't want to buy them, or what?
 
 
Dec 12, 2008
Well, Scott, what you, in your own typically humble way, are saying is that the preferred response to a government moving in a totalitarian direction is anarchy. Another brilliant solution from the creator of Dilbert!

Here's part of the equation that you're overlooking, as it pertains to the US car industry. GM, Ford and Chrysler are doing great overseas; it's in the US that they're getting hosed. There are a number of reasons for that: one big one is the government's eternal and never-ending regulations of the auto industry. CAFE standards, 5 MPH bumpers, et. al., ad nauseum. Couple that with the auto union's support by government, lovingly paid for by the incredible amount of money they contribute to Democrat political campaigns ($400M to Obama, for example), and the auto industry management is forced into providing pay and benefits that drive up the total hourly compensation of an auto employee to $70/hour. Plus almost full pay and benefits when they retire. That means a lot of them earn more money after they stop producing anything than they do when they're working.

How do you keep a business competitive with that kind of overhead? Answer: you don't. This kind of union/government interconnection is what has lead to the near-demise of many of the major industries - auto, airline, etc. The union contracts are iron-clad and the union bosses are immutable. The senate refused to vote for the bail-out bill last night because the unions refused to make any concessions in wages until their current contract expires in 2011, and wouldn't make any concessions at all in retirement benefits.

So the Senate said, "You're asking the hard-working Americans who are paying taxes to take their money and let you artificially keep your wages as high as they are now. Uh-uh. Ain't gonna happen." I say, good on 'em.

What you're positing, Scott, is really just a way of saying that the government has gotten too large, takes too much of our money, has over-regulated us into near bankruptcy, and has spent money we don't have to the tune of trillions of dollars that can't ever be paid back. Your solution is interesting: ignore the laws in numbers so large that the government can't prosecute everyone. That's called anarchy, and it's not a good idea. It will lead to the breakdown of society - is that what you're proposing?

I have to believe there's a better way. We need to slowly start reducing the amount of regulation, the size of government and its intrusion into our lives. Allow the people to keep more of their own money, and let the free market work more as it's supposed to. The economy will grow, which will increase federal revenues (lower tax rates but more money being taxed), which, with a smaller government, will start to reduce the federal debt.

Obama's solution is diametrically opposed. His solution is to nationalize as many businesses as he can get away with and move toward the old Soviet "central planning" model. Following that, he's going to borrow even more money that we can't pay back and produce a huge public works project to rebuild our roads, bridges and schools. Then, he's going to borrow even more money we don't have, and begin to nationalize the health care industry. His idea is that if he nationalizes everything and turns us into a socialist country, all he has to do to pay for it ultimately is to tax the so-called rich at a much higher rate. He's wrong, since there won't be any rich people any more except for actors and sports stars, but he really isn't looking that far ahead.

So beware of what you ask for, Scott. The way we're going, what you're going to get isn't anarchy. It's a revolution.
 
 
+3 Rank Up Rank Down
Dec 12, 2008
To your point of legalizing drugs and prostitution, most Libertarians believe they both should be legal because it's a person's choice and there should only be laws in place to keep the use of either from harming others. Just like alcohol. But another extremely compelling reason to do so is you legalize them, which shifts manufacturing to legit farmers (and helps countries like Colombia and Afghanistan) and to corporations away from drug lords, gangs, and pimps; you regulate them at the state level like alcohol, which helps keep them from becoming more dangerous; and you tax them providing a huge budget boost, especially in times like these. The end of federal alcohol prohibition was mainly to increase tax revenues. So, yes, there will be less money to enforce laws, but I think the increased revenue is more relevant and compelling.

And on your comment about less speed limits: don't forget that most small towns already raise a significant portion of their revenues from tickets. So, they can just catch more speeders and issue less warnings, justify their budget, AND pay for other services. I just see that happening more and more in more populous cities and counties rather than less.
 
 
Dec 12, 2008
The taxi system you describe is how it works in much of China. In Beijing, the bus service is excellent, so I didn't see people doing this; in other cities, It's common to stop and offer to give people a ride for money. Illegal, but common.

"I say use the limited supply of money someplace where the experts DO agree that it would help the economy."

As the $700 billion bailout showed, financial experts agree that the economy is best helped by giving money to financial experts.
 
 
+1 Rank Up Rank Down
Dec 12, 2008
Scott,

a very relevant post. i agree that not too far down the road, technology will make it easy n cheap to find a driver/rider headed in the direction you intend to go. and policing that will be about as useful as fighting the war on drugs and even less effective.

but technology will also eliminate the need for a cop to be present in order to deal you a speeding ticket. radars, speed guns, cameras and pre-paid toll cards embedded in the car are enough to make sure that speeding will keep getting fined.
 
 
+3 Rank Up Rank Down
Dec 12, 2008
My $0.02, This thing started with people with no money and lots of debt, having little or no way of paying back money were give loans so others could profit. Now we have businesses with no money and lots of debt, having little or no way of paying the money back asking for loans so few can profit. Maybe I'm being to simplistic but is seems like a train wreck in slow motion....
 
 
Dec 12, 2008
It has been pointed out that the bailout is not really for the companies, but for the unions.

The non-union car manufacturers are not suffering so bad, and that is because they do not have unions turning them from car-makers for consumers into job/benefit providers for workers.

The car makers can declare bankruptcy and diminish the union choke hold, perhaps becoming competitive again. But the unions don't want bankruptcy, they want the tax payers to keep paying the workers and union bosses in order to keep the fleecing going.

It has long been said that powerful unions diminish a companies ability to compete. That's not so bad as long as the company is allowed to go under when the leeches kill their host. But now, we're on the verge as tax payers of becoming a much larger host which will ultimately result in much more damage to the country.

BTW: you're wrong about speeding tickets. As long as the revenue from tickets exceeds the cost of having policemen writing speeding tickets, there will always be speeding tickets. If all the "real" policement are busy enforcing more important things, they can always hire more to enforce speeding that will always result in positive cash flow.
 
 
Dec 12, 2008
Hi Scott,

You should take a look at this TechCrunch post

http://www.techcrunch.com/2008/11/12/ill-never-let-canada-live-this-down/

about a Canadian startup that got fined for organizing a carpooling scheme. It seems that in Canada they have got plenty of legislation to protect the coach and taxi lobbies!

Regards.
 
 
Dec 12, 2008
once again you're pitching THX-1138

<SPOILER WARNING!>

the end of the movie is basically Logan's run except that the android "sandman" is called off the pursuit just seconds from capturing Robert Duval because the case had exceeded its budget.

</SPOILER>

I wouldn't do it even if it were legalized (not my thing) but the amount of resources shoveled into the furnace of fighting pot is beyond asinine - now meth, coke & opoiates[/oids] are ACTUALLY dangerous but even w/those I would suspect our current "strategy" is considerably less than economically optimal. not holding my breath, though (no pun intended)...
 
 
Dec 12, 2008
I say let them go under. The argument that X number of Americans are tangentially employed by the industry and will thus be harmed is just smoke and mirrors. The fact is, demand for cars won't go down anytime soon (barring an increase in public transport but that's a different argument).

Therefore, if GM, Chrysler and Ford close their doors, people will be buying a lot more Toyotas, Volkswagens and Hyundais. Those manufacturers require parts and services made by other "tangent" companies as well. In order to get them, those companies will either acquire experienced personnel from the "Big 3" tangent companies, or they'll acquire those companies outright and retool them to be able to supply the demand. Some companies will fail, and the industry will evolve through innovation and dominance of superior practices.

Which is how capitalism is supposed to work, right?

They only cry for a bailout when they're so disgustingly rich they think they can coerce the government. These same "private-jet-set" CEOs would be making the same argument if they were looking for approval to buy out their competition.
 
 
 
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