If Government Could Envision the Benefits of a World with Less Cars

Last week, I left my Washington home, walked to the nearby Metro station, rode a train downtown, walked to the National Press Club, and settled in to hear Steven Rattner, former head of the Obama administration's auto task force, declare that "no one has yet invented a substitute for the automobile."

This was like declaring in an airport terminal one's hope that man may someday enjoy heavier-than-air powered flight, but most of the heads in the audience nodded in agreement.

Rattner was there to speak on the topic of the administration's automobile bailout and rehabilitation strategy. He was hopeful but realistic; he recognized that General Motors (MTLQQ.PK) and Chrysler face an uphill battle, but he believes that the government was able to do enough to give the firms a shot at returning to profitability.

Why that should be a concern of the government is another question altogether, and it's not one with which Rattner really engaged. Understandably, I think, the administration agreed that GM and Chrysler really shouldn't be allowed to fail in the depths of recession.

And then I believe they determined that if they were going to keep propping up the companies, they ought to at least shepherd them through a balance sheet-clearing bankruptcy and reorganization, in the hopes that the companies might eventually make money.

But what Rattner was careful not to address was this: Saving the car companies will not protect American automakers' market share, will not save the city of Detroit, and will not really save that many jobs.

The line I quote in the first paragraph was made in the context of an argument about annual auto sales, and why sales totals are likely to return to levels typically observed before the recession. Sales of light vehicles grew to a peak of 17 million in 2005 before declining and then plummeting to their current level, in the neighborhood of 9 million (save for the month of August, thanks to "cash for "clunkers).

According to Rattner, GM will break even at a level around 16.5 million car sales. Maybe we'll get there. Population continues to grow.

On the other hand, households may find themselves holding on to automobiles longer (particularly since household debts may remain a problem for the next decade). They may also find themselves buying fewer cars. America is aging, and households with retirees may not want a car for each commuter. More families might opt for one vehicle, and use car-sharing services when another vehicle is necessary.

But now we find ourselves in a world in which GM shareholders -- among which number you and me and every other taxpayer -- need sales to move above 16.5 million to get the company back to profitability. That's a strange place for us to want to be.

If, given the option to buy as many automobiles as they want, Americans choose to buy fewer than they did before, we should cheer. Cars are expensive and largely used as production goods rather than consumption goods -- people buy them because they need them to do other things, like work and buy food. If they then find that they don't need them as much, a lot of revenue is freed which can be used on debt service, health care, better food and homes, education, and entertainment goods.

A world in which Americans are as happy with one car or no cars as they are with two or three is a better one, just as a world in which companies can produce more goods with less energy or machinery is a better one.

The transition is a difficult one for workers in the automobile industry who find themselves needing a new line of work, but nothing in the reconstitution of GM and Chrysler will change that. Manufacturing processes continue to become less labor-intensive. That's a technological trend that the government is powerless to reverse. The question, then, is how best to facilitate transitions into new fields.

And here, the bailout looks somewhat counterproductive. Today a shuttered car plant in Delaware will be converted for use by a producer of electric vehicles. The decline of GM opens up production possibilities for other enterprises, and the impeding of that decline frustrates them.

It also prevents policymakers from seeing beyond the automobile. As David Alpert wrote yesterday (and Sarah Goodyear noted today):

I've been meeting with elected officials in the region about transportation and development issues. One representative from Montgomery County recently expressed a general sentiment among area leaders that "we have to do something" to accommodate increased traffic between the American Legion Bridge and I-270. After all, Virginia is building HOT lanes that will bring more cars onto the Beltway, and Maryland is pushing for more lanes on 270 north of Rockville. Logically, this person said, the state and the county will probably have to connect the two with additional HOT lanes through Potomac and Bethesda.

Later in the conversation, when discussing Gaithersburg West, I noted the potential for biotech development at White Oak. That location is already a life sciences hub. It's closer to both DC and Baltimore, reducing the likely commutes for people working there versus Gaithersburg West. It's also in a part of Montgomery County with far fewer jobs than people, unlike the 270 corridor.

What it lacks, like Gaithersburg West, is good transit. There is an inactive proposal to build a Purple Line spur up New Hampshire or Route 29 to the area. Why not revive the idea? When I brought it up, the representative jokingly said something like, "I'd like some of what you're smoking." And in fact, with many transit projects including the Purple Line, Baltimore Red Line, and Corridor Cities Transitway already vying for funds, it would be very difficult to add a Purple Line spur to White Oak.

That's the conventional wisdom among most elected officials. We "have to do something" to add road capacity. But transit projects are so difficult as to be nearly laughable. Yet freeway projects are not cheap. As we saw from ACT's alternative plan for the I-270 corridor, you can build a lot of transit for the price of some freeway lanes. It's just that leaders are too accustomed to viewing road capacity as a necessity and transit as a luxury.

There is a terrible chicken-and-egg problem to transportation planning, in which planners express regret that there is so little transit demand and so much traffic before building new roads. They have to accommodate the demand they've got! But you can't have transit demand if you don't have transit, and if you don't recognize that, then you're doomed to keep building roads forever. No one in the mind of the planners has yet invented a substitute for the automobile.

But of course, that's not true. There are many substitutes for the personal auto. And now that households seem to be warming to them, the government finds itself looking at the shift as a problem to be solved, rather than a welcome trend to be encouraged.

It's fine to try and alleviate the pain of a major economic transition, but if officials don't understand that the transition is just that, and not a temporary slump, they may attempt to turn the palliative into a barrier to change. If you think there's no substitute for the automobile, then the decline of the auto industry looks like running headlong off a cliff.

But in reality, there is something just fine on the other side of the transition: A world in which people drive less and don't mind it. Maybe officials blind to that possibility will eventually stumble into it nonetheless. It would be much better for all concerned -- including those dependent on the auto industry for their welfare -- if the government managed to see it and chart a course for it.

Comments

[Roger Knights:]

I like the idea of "personal rapid transit" -- a lightweight, small-module, wide-coverage monorail -- here's the link to Wikipedia's article: en.wikipedia.org/wiki/...

PS: The title line should read, "... with FEWER Cars"

Oct 28 03:59 AM

[bluesky123:]

An intermediate solution is electric cars. Today in the German newspaper "Sueddeutsche Zeitung" is an article "oohing and aahing" about the new super car "Tesla" from Menlo Park. It goes 0 to 60 in 3.9 seconds. They are saying "why is it that Mercedes and BMW didn't build this car? Why is it that BMW and Mercedes said it would take another 10 years before such a 100% electric super car could be built?" They are all blown away by American ingenuity once again emerging from another Silicon Valley garage. Daimler has now taken a 10% stake in the company and Tesla opened its first European show room in London and the 2nd in Munich - BMW's home turf. Here's yet another one of the many examples of American ingenuity. This is how you build a recovery. Innovate your way forwards. The US auto industry has much to learn from Menlo Park. Menlo Park has nothing to learn from Detroit. Tesla's $49,000 family sedan is reported to be ready within 2 years. You can slice it any way you want from here to the moon. America recovers through innovation. There is no other way forward. Zero. But we can of course all talk about it for another 2 years.

Oct 28 04:37 AM

[Tony Petroski:]

I still recall the old news reports from Peking. In the background was the huge figure of Chairman Mao and in the plaza and on the street fronting the Forbidden Palace were many people, great masses of them, riding bicycles back and forth wearing green Mao suits with their cute little Mao hats.

Flash forward to 2010. In Beijing, there's still the huge figure of Chairman Mao, but instead of bicycles in the street you see brand-new cars made by GM and Ford driving back and forth with smiling people wearing the latest fashions out of Paris and Milan.

Meantime, back in Washington D.C., a large billboard of Barack Obama looks out over a few cars and a large number of bicycles driving back and forth, their riders wearing Mao and Che T-shirts.

My word how I envy the Chinese.

Oct 28 05:09 PM

[Snitzer:]

Selling cars is like selling perfume, you promote an image rather than a product. If one honestly balanced costs of ownership (insurance, loan, depreciation, cost of loan, taxes and fuel) against mass transit (if available) then the car is a loser. The problem is the availability of mass transit. To fill the needs of potential riders mass transit must be widely available, clean, secure, afford a small degree of privacy (semi-private cabins?), run on time and go where people want/need to go, and go there cheap. We could do this, we should do this, but first we really need to take (here in America, anyways) our love affair with the car to divorce court.

Oct 29 02:44 AM