Michael Moore is a bad economist (for the most part)
On MichaelMoore.com, Michael Moore (who else?) lays out his (idiotic?) plan for what the government should do with GM. Here's an abridged version of his plan (and my econosnark-filled response):
1. Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices. Within months in Flint in 1942, GM halted all car production and immediately used the assembly lines to build planes, tanks and machine guns. The conversion took no time at all. Everyone pitched in. The fascists were defeated.
We are now in a different kind of war -- a war that we have conducted against the ecosystem and has been conducted by our very own corporate leaders. This current war has two fronts. One is headquartered in Detroit. The products built in the factories of GM, Ford and Chrysler are some of the greatest weapons of mass destruction responsible for global warming and the melting of our polar icecaps. The things we call "cars" may have been fun to drive, but they are like a million daggers into the heart of Mother Nature. To continue to build them would only lead to the ruin of our species and much of the planet.
But, imagine the methane if we were all still riding horses.
The other front in this war is being waged by the oil companies against you and me. They are committed to fleecing us whenever they can, and they have been reckless stewards of the finite amount of oil that is located under the surface of the earth.
WRONG! We fleece ourselves. Oil companies are just happy to wear the fleece.
They know they are sucking it bone dry. And like the lumber tycoons of the early 20th century who didn't give a damn about future generations as they tore down every forest they could get their hands on, these oil barons are not telling the public what they know to be true -- that there are only a few more decades of useable oil on this planet.
And as the end days of oil approach us, get ready for some very desperate people willing to kill and be killed just to get their hands on a gallon can of gasoline.
I'm going out tonight to rent Mad Max and learn how to handle this. On second thought, that would mean driving my evil-machine of death and destruction, er I mean car. Better, I'll use my HDTV and video on demand to learn how to save the planet Mel Gibson style.
President Obama, now that he has taken control of GM, needs to convert the factories to new and needed uses immediately.
Because government knows best.
2. Don't put another $30 billion into the coffers of GM to build cars. Instead, use that money to keep the current workforce -- and most of those who have been laid off -- employed so that they can build the new modes of 21st century transportation. Let them start the conversion work now.
Slight rewrite: Don't put another $30 billion into the coffers of GM to build cars. Instead let them sink or swim on their own. You know, like any other business that hasn't been bailed out recently.
3. Announce that we will have bullet trains criss-crossing this country in the next five years. Japan is celebrating the 45th anniversary of its first bullet train this year. Now they have dozens of them. Average speed: 165 mph. Average time a train is late: under 30 seconds. They have had these high speed trains for nearly five decades -- and we don't even have one! The fact that the technology already exists for us to go from New York to L.A. in 17 hours by train, and that we haven't used it, is criminal. Let's hire the unemployed to build the new high speed lines all over the country. Chicago to Detroit in less than two hours. Miami to DC in under 7 hours. Denver to Dallas in five and a half. This can be done and done now, inefficiently.
OK, I added the last word. But shouldn't we be asking ourselves why these things don't exist now? Maybe because people don't want them? That's the funny thing about markets--supply doesn't usually create demand. In the Field of Dreams "If you build it they will come" was a prophesy, not an economic theory.
4. Initiate a program to put light rail mass transit lines in all our large and medium-sized cities. Build those trains in the GM factories. And hire local people everywhere to install and run this system.
Not to sound reduntant, but isn't he being a little redundant?
5. For people in rural areas not served by the train lines, have the GM plants produce energy efficient clean buses.
How are those rural emplyees supposed to get to work? Horses? See snarky comment #1
6. For the time being, have some factories build hybrid or all-electric cars (and batteries). It will take a few years for people to get used to the new ways to transport ourselves, so if we're going to have automobiles, let's have kinder, gentler ones. We can be building these next month (do not believe anyone who tells you it will take years to retool the factories -- that simply isn't true).
Because forced production is always better than idle factories. Especially while we're waiting for the everyone in the U.S. to get used to Michael Moore's vision of the way things ought to be.
7. Transform some of the empty GM factories to facilities that build windmills, solar panels and other means of alternate forms of energy. We need tens of millions of solar panels right now. And there is an eager and skilled workforce who can build them.
That sound you just heard was my head slamming my desk.
We NEED tens of millions of solar panels?
If we really need them, someone will build them. But if we just build them, will who will buy them? Mr. Moore? The government? Wait don't answer that, I already have a headache.
8. Provide tax incentives for those who travel by hybrid car or bus or train. Also, credits for those who convert their home to alternative energy.
OK, I can almost buy this. One way to reduce the external costs of bad behavior is to subsidize good behavior. But another is get prices right and then sit back and watch the market do it's magic.
9. To help pay for this, impose a two-dollar tax on every gallon of gasoline. This will get people to switch to more energy saving cars or to use the new rail lines and rail cars the former autoworkers have built for them.
Now we're talking. But what Mr. moore misses is that point #9 is really the only one necessary. If we price gasoline at it's full social cost (including all of the environmental and other external costs of consumption), then that wonderful market that he seems to think is so unfixably broken will magically create incentives remarkably similar to his points 1-8. But believe it or not, this doesn't require 8 new government programs to force people to think like he does, just one: A gast tax.
Get the prices right, and the rest will follow. Sound simple? Good. Because it really is that simple. You see, people respond to incentives. And prices are the market's incentive signal. If that signal is wrong then decisions will be wrong. But if the signal is right...MAGIC. A $1-$2 tax on gas would provide incentives for:
- Reduced environmental harm from gas consumption
- and new modes of transportation
- including bullet trains
- and light rail
- and clean buses
- and hybrid and electric cars
- and alternative energy
- and conversion to alternative energies
all in one simple policy: A gas tax.
Those damn markets.
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