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You Suck At Central Planning
Occasionally, one finds absolute gems floating around in the aether. Coyote Blog is one such, which yesterday uncovered this gem:
Those of us who accused Chrysler and GM of hyping their electric car programs merely as a honey trap to capture money from the Obama Administration were accused of being ridiculous cynics. But....
Chrysler has disbanded a team of engineers dedicated to rushing a range of electric vehicles to showrooms and dropped ambitious sales targets for battery-powered cars set as it was sliding toward bankruptcy and seeking government aid.
It will surprise no one, we expect, to learn that we considered the notion that Chrysler or GM would somehow remake themselves into "green automakers" overnight (in the auto business this translates to "several decades") the insane ramblings of redistribution-rationalists. It should surprise no one to learn that Chrysler and GM also considered the notion that Chrysler or GM would somehow remake themselves into "green automakers" overnight the insane ramblings of redistribution-rationalists. As Coyote Blog points out, after all that noise has anyone actually seen a triple digit city MPG Chevy Volt in the wild? Of course not.
The reality is that there are only two things that will get alternative technologies that may happen to be "greener" out and about.
- Getting them cheaper (even net switching costs) than the entrenched alternatives.
- Making the alternatives more expensive than expensive new technologies at the expense of... well... everyone.
Manipulating bankruptcy priorities and strong-arming management from the behind the marble facade of a federal building will get you nothing in the long-term if the economics don't support your endgame. Further, the moment you look away for 15 seconds to pass a sprawling healthcare bill the entire thing slips away from you thusly:
The move by Fiat SpA marks a major reversal for Chrysler, which had used its electric car program as part of the case for a $12.5 billion federal aid package.
As late as August, Chrysler took $70 million in grants from the U.S. Department of Energy to develop a test fleet of 220 hybrid pickup trucks and minivans, vehicles now scrapped in the sweeping turnaround plan for Chrysler announced this week by Fiat CEO Sergio Marchionne.
Defying economic realities requires constant vigilance (as you badger rational or semi-rational actors away from where incentives are pulling them) not to mention constant and massive cash injections to continually make up the shortfalls created by your stable disequilibrium. Does any of this sound familiar?
Pouring several trillion dollars of someone else's money into, for instance, keeping mortgage rates below their natural risk-adjusted equilibrium, works great. Until you run out of everyone else's money.
In the meantime, kudos to Chrysler. Kudos to Fiat. They managed to extract billions of dollars in exchange for a vague promise to do something politically yummy in the present "money is no object" climate. This should, however, make it sort of obvious that not only is the present administration easily characterized as a bunch of looting central planners, but also, given how easily Chrysler played them, that they absolutely suck at central planning.
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I still say people don't want overpriced battery, fan, solar powered death trap golf carts.
You're projecting. You assume that because you don't want one and the people you hang with don't want one that nobody does. Most people think like that. It's not intended as a slam. Perhaps you could tell us what you think in a year or two when the $DXY is in the 40s and gas is around $8/gallon.
My observation is that nobody ever wants a smaller more fuel efficient car until the price of gas becomes painful. Then, like the self-indulgent little children most of us are, we demand that the automakers roll one out in about a month.
Some people will never get it. On the plus side, if you look like your avatar, you don't have to get it.
Will they ever be able to make a vehicle that runs on silicone?
That depends on the Obama administration's sentencing guidelines for petroleum-based motorists.
I love mine.when gas is $6 a gallon, I'll love it even more.
I want one of those deathtraps.
If you look like your avatar, I agree with everything you have to say.
If you look like your avatar, I agree with everything you have to say.
Loving my Michigan built, gas powered '01 Aurora from General Motors. I got it to offend the folks who spurn Detroit while going from A to B. Unlike the imports, it's original(unlike Hyundai) and not underpowered(anything not Detroit at the same price).
You're going to have to try harder than just making gas expensive for the masses. Try digging in your resort town for some oil shale for example.
You're right. I want my Tesla roadster for $25k now damnit!
I would like to be exploded in a lithium battery fire please. I want it.
Pshaw, Marla. You're just a hater. Or a closet gasser, or whatever they will call this negativism..
The true reason for the GM/Chrysler bailout was to keep union workers employed, but of course they couldn't say that.
Given Michigan's unemployment rate, I'd say Marla's case was made yet again.
Unfortunately, there not going to do a good job of that either (long term). They (Management) are still behaving (decision making) in the manner that got them into this predicament, if not worse because they have the pattern of getting backstopped for idiotic behavior.
Rule #1 in climate change/energy policy: WE WILL BURN ALL THE OIL
Rule #1 in energy security: BAD GUYS HAVE THE CHEAP OIL
But hey, there's a pot of cash to be made so who cares if it does any good. Wars in Eurasia, $60,000 family cars...whatever...not gonna change the basic facts.
I don't understand why all the climate-change activists don't get:
"Rule #1 in climate change/energy policy: WE WILL BURN ALL THE OIL"
There is (and has been) no question in my mind that we (humanity) - if not the US then BRIC will stop converting oil into atmospheric CO2 exactly when there is no more oil left to extract and burn. The only thing that can stop this from happening would be a Black Swan such as a massive die-off or ultra-cheap fusion. We need to quit worrying about things like "Cap and Trade" and start doing some back of the envelope calculations on how to survive the INEVITABLE.
Actually there is one more step: Is there a way to avoid also burning all the coal?
Assume the oil's a lost cause (it's just too amazingly cheap to be able to take it around the planet for about the price of bottled water, interventions aside). If we burn that and the coal then we head for a 5x or 6x preindustrial GHG planet, which may be habitable but is certainly no place you'd want to go on purpose.
So it's a faceoff between the US and China over coal replacement technology. That's really all there is to it. Everything needs to be on the table, from nukes to CO2 capture to efficiency and renewables. But (!!!) can it be done for a price that the real world will accept? Enter the super-sized R&D gap and the awful, awful paucity of real understanding and FOCUS on the part of the world's governing forces.
And even then you'll probably need the adaptation debate/investment that you're talking about. Possibly we turn the ship around 4x...pretty rough still....
It is truly horrifying that you could probably fit all the people on Earth that realize this into a semi-mythical Dreamliner.
Just my humble li'l opinion.
+1000
France would be more than happy to sell us prefab nuclear power plants. It wouldn't be this painful if we had a government that would take action.
Screw that. We're sitting on an enormous reserve of energy in our coal beds. Let's use that while weaning ourselves off of oil instead. Maybe it's not a direct counterbalance from a GHG perspective, but it's a hell of a lot better from an energy security perspective.
I guess I don't make the cut for the Dreamliner, huh?
No, you're quite right--it's very hard to make a big enough dent in the oil volume to really fix the energy security issue, but in principle it could be done (although a very famous/forgotten Jimmy Carter boondoggle was started this way, on oil shale). Makes the GHG problem worse though. Easy to end up spending a lot and not solving either problem. But you'd have a chance.
A very devilish aspect of the transport side is the half dozen competing options to replace oil--hard to get that to settle down leading to the FOCUS problem again. Electricity's easier because you take it all on the grid. No need to fight over distribution infrastructure. That's why I like electric cars, preferably biodiesel PHEVs. Electrify there, decarbonize electric supply.
You can handle the CTL (coal-to-liquids) fuel lines for the first 'doomed prophets' Dreamliner flight...K?
One common set of calculations making the rounds suggests... you personally don't survive.
cougar
Depends on the timeline... ;-)
When I was younger and even more idealistic than I am now I used to work myself into a lather over what "We" were doing to the planet. I donated time and money to all kinds of causes, even worked for Greenpeace for a spell. Then one day I was off on a hyperbolic rant about big oil to my best friend John and he put it to me like this;
"You know that big meteor that rendered 90% of all the species on the planet extinct?"
Me: "ummmm an asteroid, but yeah, whatever."
John: "Just think of humanity as the current, slow-motion version of that asteroid."
Or, "How I learned to stop worrying and love overpopulation."
I remember the crisis of "peak oil" in 1973.
The US just paid the moving costs to get those jobs overseas. We don't need no stinkin jobs!
If Chrysler made an electric car expect to be electrocuted the first day it rains.
LOL
Fiatsler is the name of the new company in honor of the rather large amount of fiatscos the automaker has received from the American taxpayer.
Perhaps a future model can be named the Fiat Money.
Cars, meh. The incompetent, myopic management teams that "stayed the course" of these companies into irrelevance (and bankruptcy) by and large remain in place. I gave up on cars a while ago. Can we discuss an industry that has a future? Trains? Barges? Bicycles?
http://www.howstuffworks.com/teleportation.htm
Horses, hombre, horses. Lil House on the Prairie returns! Think Hugh Jackman can pull off Paw?
A classic case of just how f****** stupid the multitude of bailouts really were. In an economically sane world, GM and Chrysler would have suffered their deserved fates.. go bankrupt without getting a penny of taxpayer help. Now we get to reap the rewards of those incredibly stupid decisions....
It's called "moral hazard" and it's the new hotness in business models and government policy development....
Il battito del cuore di Amerika. Questo è oggi Chevrolet.
Of all the stupid interventionist moves we've made, this is the one where it's hardest to guess any conceivable end-game that would be politically palatable.
The federal government is literally going to keep most of the domestic car industry afloat with cash infusions while the make fewer worse cars and lose more and more money. How do you get out of that? Will it be easier to shut them down in the face of the unions five years from now? Ten? We're screwed.
Sure, cherrypick one bad-luck example out of the myriad of other programs... So typical. I see no mention of the results from:
-Cash For Clunkers
-Swine Flu Vaccinations
-Economic Reovery Act
- Medicare
- Social Security
- Post Office
- Katrina
- The entire Dept. of Education
- The SEC
- Ethanol
I've got to stop. My fingers are tired.
But...but... you can now go out and purchase your favorite war wagon in hybrid form. That must count for something? What about this:
http://www.hybridcars.com/files/puma-400.jpg
Guy sitting right next to me drove home behind a Volt a couple days ago. So, to answer your question, has anyone seen one in the wild? Yes, they have seen a Volt in the wild. Love this blog, and hate everything that everyone else hates (TBTF, bailouts, etc. etc. etc.). But on this subject of American cars, I have never bought an American car, but plan on only buying them in the future. One simple reason, I have watched the pain first hand sitting here in southeast Michigan the last 10 years. I know, I understand, they are ugly and are rated worse, almost always. I just think this is the time to start trying to get an area off its back. No, I'm not pro union, and I've owned 4 Maxima's, an Accord, and a Rav4, but I'm going to try my hardest to change. I sat in the Buick Lacrosse at the golf tourney, and I actually really liked it, and I'm only 34 years old.
Or, put another way, Central Planning Sucks.
PS. Thank you, central planners, for subsidizing ethanol. Though, I must inform you that it didn't quite work out. Tell Bernanke to start buying shares of PEIX & VSUNQ.PK directly.
The article is acting like the government is getting the shaft, but doesn't the FED own quite a bit of Chrysler and GM? Just goes to show you that they really care about saving the environment.
Right on Marla. Rock and roll. I love your writing style.
With apologies to Paul Krugman - it's not that you spend the money, it's what you spend said money on. That said, creating a cozy federal subsidy environment is a pre-requisite for operating a business in the global economy. Inducing subsidies from central planners is 25% of running a modern business, especially in fields without extensive federally-funded infrastructures.
No worries, mate. In due time there will be so many government employees that they will never have to "look away." They suck at central planning, but they excel at producing central planners.
a bunch of looting central planners
Yeah, they may suck at the central planning part, but you gotta admit they're f'ing FANTASTIC at the looting part.
Gawd this pisses me off. After allowing Obama to destroy 150 years of established contract law, we're right back to square one. Fuck this country.
FEMA sold $2.7 billion of FEMA mobile homes today in Arkansas.
Anybody dare to guess what that netted us taxpayers?
When do we line up and DEMAND better investment managers for future?
hahahahahahah,
classic, funniest question i have heard all day.
just a hint, u don't line up.....
As in "firing line", let me clarify this.
ive never owned a Crapsler and i never will
biggg pos
As Rosie asked this morning if the US government is going to extend jobless benefits for up to two years why not just put these folks on the government payroll? At least the unemployment rate will start to go down.
The good news is that Obama' Central Planners read Atlas Shrugged. The bad news is that they didn't get that the Central Planners were the bad guys.
I hope GM and Chrysler fail, that all their UAW members are permanently unemployed, and that Ron Gettlefinger is forced to fall on his (metaphorical) sword. I'll never buy one of their products no matter how green they are.
The only way socialism can be defeated is for it to visibly fail. Buy American, but make it a Ford, or Toyota, or Honda.
[quote]"given how easily Chrysler played them, that they absolutely suck at central planning." [/quote]
I suspect that the reason for the bailouts was political. I don't think it was to keep union members employed, as 125975 speculated, so much as to be able to tell the union members - and probably more importantly the public and private pension fund managers and the current and future pensioners who have an interest in those pension funds - that they had done something to help them out of their quandry. Economic results were not as important as political image. Image and sound-bites have trumped reality for quite a while now.
I don't think that Chrysler played the Administration; the goal was not green cars or saving Detroit jobs. I don't think the politicians cared much if jobs were actually created or green cars were actually produced so long as the public believed that the government was trying to help them keep their jobs and fix the economy. They sold their program. Mission accomplished (reference to Bush and his use of spin/image in contradiction to the underlying reality intentional). Regardless of the politician, results of the programs they support (or bash) are generally irrelevant.
(I don't think most pols in either party really care about enlarging government or shrinking government or pretty much anything they talk about. Virtually all of them will say whatever they think will get them votes in whatever district/state/nation is relevant to their continued power. That is their reality. Unless it affects how actually voters actually vote in the near future, our reality is irrelevant them.)
On the other hand, oen would think Fiat has made a living out of taking socialized funding, only to change strategic direction on a dime after keeping the loot.
What Italian company wouldn't do that, if given the opportunity?
The next disaster will be GM dropping a 1.4 liter turbo engine (with no internal engine modifications sans lower compression pistons!) into the Cobalt, which quite possibly has the worst chassis of any modern car produced outside Russia. Kabooms to follow....
It seems that no one remembers that GM produced 100,000 Saturn EV-1 cars in the early nineties and leased them to Los Angeles residents. Several stars had them Tom Hanks, Mel Gibson, but no one was allowed to buy them. After proving that they could meet all the clean air emission standards 15 years before the required due date,GM smashed all the cars in the Mojave desert, literally put them in a crusher, even though those leasing the cars begged to buy them. This is all documented and it was accomplished more than 15 years ago. There's a documentary, "Who Killed the Electric Car." By the way this was no golf cart.
Incorrect. Only 1,117 EV-1's were ever produced.
I suggest you check your facts at some site like Wikipedia.
I suggest you missed the point.
Incorrect. Only 1,117 EV-1's were ever produced.
I suggest you check your facts at some site like Wikipedia.
central planning usually sucks.
noooooooooooooooooooooooooooooo !!!!!!!!!!!!!!!!!!!!!!
the ugliness of the Chevy Volt is hurting my eyes .... make it go away ... oh ... wait
IMHO, government investment in Chrysler and GM was just a stalling tactic to prevent shock to an already comatose economy. Chrysler will probably finally succumb in 2010. GM can limp along, cutting more if needed.
I hate to sound protectionist once again, but as part of the Auto bailout program, the domestic car companies should have secured a Electric/Hybrid rebate deal with the government for 3 years. Upon purchase of a domestic auto company (sorry no foreign car companies) all electric or hybrid electric vehicle, the purchaser would be entitled to an immediate rebate and better financing terms. This would provide some incentive and protection for domestic car companies to invest in Electric and Hybrid technology. After 3 years the program would wind down, or be extended as the politicians deemed appropriate.
To make a fuel efficient vehicle basically it is all about weight and efficiency (rolling and wind). My idea for a GM company success story was not an electric vehicle, but an all Aluminum body compact car powered by a very small direct injected gasoline engine, or better yet a small turbo diesel engine. The project would be one of weight savings, everything on a diet, from wiring to wheel rims. Manual transmission. Simple, basic transportation at 50+ MPG made in the good old USA.
My marketing, youthful, fun, simple, myRIDE.
I would put the MPG after the name. Like myRIDE 50, or myRIDE 55, so every improvement in MPG would be shown on the nameplate. There would be a meter on the dash to show actual fuel consumption in real time, and on a trip basis, so you could learn to maximize efficiency by short shifting. All in good driving fun :)
Been reading warren's blog for years. His book BMOC is a pretty fun read too.
OKAY
We get a gov health care --- Why not a black market health care All you need is a few Docs & patients
We get a gov banking system ---Why doesn't someone invent (restart) a black market (free market banking system) --- You telling me some one would not want a bank that is transparent & plays by written rules -- Same for a stock market
We get Gov worthless currency -- Why doesnt someone with balls issue private currency --- gold backed
i know most of this would be illegal --- but that is why it is black market --- no one knows
Druden national Bank
Druden silver certificate
Druden stock certificate
Why do we need a corrupt government
Aren't there any smart honest businessmen
“Social (/financial) redeemer” -- the most satisfying form of narcissism.
We should use what we can afford. Peak oil is a fraud:Gas Resources Corporation - Houston, Texas
Great post, and as was said in the writeup, "this should surprise no one."
the ev-1 was a total success. they wouldn't sell them, and ended up crushing them. I love my 6cyl dodge ram. huge cab automatic trans 20mpg tows well, 116000 miles, no problems. maybe because the motor is mitsubishi ?
Meanwhile all teenage character groups of The pandora charms are promoted to High School.
Michigan unemployment is on the rise over the last month, but conditions vary throughout the state according to this heat map:
http://www.localetrends.com/st/mi_michigan_unemployment.php?MAP_TYPE=cur...