I'm just about sick of it! Bailout, bankruptcy, consumer confidence... WHATEVER! The bottom line is that we're living in FEAR. We're afraid to face the music. We're afraid to take responsibility. Afraid of loss.
But what, really, do we have to lose? Our way of life? Our standard of living? Our "stuff"?
Fear has been woven into our lives, like never before, ever since Sept 11th, 2001. The Bush administration has taken this event, and orchestrated the biggest, most elaborate fear campaign for the last 8 years that has driven the "blinders-on" general American public into perpetual hysteria, panic and stagnation while big business (war profiteers benefiting from no-bid contract awards, no oversight and a blind eye from GAO), especially OIL COMPANIES have reaped the biggest ever profits since the rape and pillage days of the Crusades.
Now they want us to believe that the "bankruptcy" of one, two or all of the Big 3 would cause a ripple-effect so damaging to the car-buying public that NO ONE would ever buy an American car again. We should all be so scared!
As my grandfather would say, "The horse shit is knee deep in there!"
Personally, I'm thinking we should be more worried about the health of a company MAKING THE PARTS for a vehicle, than for the company putting the vehicle together. Why? Because the quality of parts and pieces determines the overall functionality and reliability of the vehicle.
Choose your cliché... "A chain is only as strong as its weakest link", "Garbage in, garbage out", and on and on.
You see, what the general public doesn't fully understand is that American car makers, and every car maker, are mostly designers and assemblers of components! And right now, robots do most of any car assembly. Sure, people still do it all the time- shade tree mechanics, home-build "projects", hot rods, etc., but truthfully, any monkey can be trained to assemble a vehicle. I'm not saying there aren't smart people on the assembly line, but putting a car together is a learned process. It's nothing more than a jigsaw puzzle.
However, those pieces and parts are made EVERYWHERE... foreign and domestic- specifically by our neighbors to the immediate north (Canada) and south (Mexico). Other parts, mostly electronics, are made in China and other Asian nations.
“Made in America”, anymore, really means “Assembled in America”. And sometimes not even that!
OK, remember the conglomerate Delphi (http://delphi.com/)? They filed for Bankruptcy in 2005 (http://www.nytimes.com/2005/10/09/business/09delphi.html). To look at the intricate, purposely complicated, tangled web of incomprehensible "bad decisions", just review the time line at http://en.wikipedia.org/wiki/Delphi_Corporation
You can’t tell me this doesn’t have any effect on the quality of American automobiles!
Where was Delphi's bailout? Where was the government concern for the protection of consumer confidence? Where was Washington on that one?
In reality, consumer confidence is misplaced on "brand". This is fostered by emotion. And emotion is, for better or worse, influenced by marketing and social pressures.
If you have any doubt of this, ask yourself why companies, of all types, spend hundreds of millions on market research, advertising and understanding/molding consumer behavior.
There was an article a number of years ago I read that described a theory of why many of the dinosaurs went extinct. The concept was that the super-predators had grown so big, and so all-consuming, that they literally ate themselves out of their ability to sustain their own existence. They consumed all, and there was nothing left to eat. So they starved to death.
This concept is transferable to any entity that requires consumption for growth- an animal, a business, a country, an economy, a society, or even a person or family. Consumption to the point of extinction is, in a word, STUPID! Aren’t we smarter than dinosaurs?
ENOUGH! What, really, do we have to lose? What are we afraid of?
We’re all food for worms. We will all die someday. We are only here for 66.12 years on average (http://en.wikipedia.org/wiki/Life_expectancy). We can’t take it with us. Everything will be left to those who come after us.
Short-term thinking and “band-aid” fixes are bad policy. We need to make every decision with this in mind.
Right now, the nature of human development is finally at a critical mass- both in economic and financial consumption, as well as the sustainability of our ability to guarantee our own survival.
The big will fall. There will be reorganization. People will be financially hurt. People will suffer.
But people will still survive. They will survive, grow stronger, grow smarter, and learn to focus attention on areas of real importance- specifically figuring out what is truly necessary for sustainable existence.
Greed is going away; it needs to. Fear is going away; it needs to. The Big 3 are going away; they need to.
I'm not saying we don't need car makers. I'm saying we need sustainable, smart car makers.
Let Detroit file for bankruptcy. Force the car makers to reorganize. Allow them to get mean and lean. Allow them to embrace human capital and resources in a sustainable way, not in an entitled mentality.
Car makers won’t go away. They will get better!
Think of bankruptcy like chemo therapy; we must constructively destroy the infrastructure in order to rebuild a healthier existence.
Then once it’s “cured”, Detroit needs to eat a smart, organic, balanced, healthy and sustainable diet to maintain it’s longevity.
Consumer confidence in a car maker isn't governed by whether or not it is "bankrupt", but by how it is bankrupted- how the marketing and advertising machine "spins" the event.
If our leaders tell us that bankruptcy will cause a decline in consumer confidence, then we will lose confidence. If they tell us to stand strong, and support our auto industry through this tough, YET NECESSARY, step in their development, growth and survival, THEN WE WILL STAND STRONG.
It's all about attitude. About what we're willing to do. About what we're not afraid to face. About being smart.
If we fail to act, we are doomed to accept whatever happens to us. If we act in confidence, we command our future and accept responsibility for our actions.
Friday, December 19, 2008
Tuesday, December 16, 2008
detroit is all talk
If you haven't seen the docu-tainment (documentary-entertainment) film titled "Who Killed the Electric Car", you've got to. Period. If you have seen it already, then you probably know where I'm going with this conversation.
The pending auto bailout for Detroit's big 3 is nothing more than a band-aid for a much larger, and grotesque ailment- specifically GM's uncanny ability to talk the talk, but not walk the walk.
HISTORY
GM acquired 51% of Sweeden's car maker Saab in 1990. To be fair, Saab is much more than a car maker. Since 1937, Saab has been one of the world's most innovative builders of civilian and military aircraft, heavy trucks, buses, and other technology. Saab was the first car maker to turbo charge a production passenger car in 1978, giving a standard 2.0 liter 4cyl engine the power and performance of 6 or 8 cylinders, yet maintaining the fuel economy of the smallest Asian imports. Since then, Saab has led the way in powerful fuel efficient automobiles.
Jump to 1985 where Saab introduces the EV-1 (Experimental Vehicle One: http://en.wikipedia.org/wiki/Saab_EV-1). So advanced and cool looking, this car was even featured "as is" in the second Back to the Future movie. Beyond that, this car featured 66 PV solar cells on the all-glass roof that powered a ventilation system and a 285HP 4cyl, 16 valve turbo charged engine capable of pushing the car 0-16 in 5.9 seconds. Take that, Lotus!
OK, so GM acquires Saab in 1990, and by 1996, had hijacked the EV-1 brand name. It took the name, slapped it on a hap-hazard effort at putting an electric vehicle on the road, and ultimately bastardized the brand.
Here’s how: The GM EV-1, leased through Saturn dealerships in California and Arizona, was an unmitigated disaster, not because the cars weren't up to task, but because GM had no intention of continuing support for the cars past their 3 year leases. Further, GM “robbed” the Nickle Metal Hydride battery technology from a small battery maker, Ovonic Battery Co, it “partnered” with, and then sold the patents to Texaco in 2000. What does an oil company want with rechargeable battery technology? http://www.allbusiness.com/company-activities-management/company-structures/9321068-1.html
Also during this time, GM's engineers imposed their Detroit Will on the design and engineering of the Saab product line. Consequently, beginning in 1994, the NG (new generation) Saab began a major decline in quality and customer satisfaction. By 1999, GM handed the majority of design work back to Saab, and there was a resurgence of innovation and quality.
A NEW AGE
In the early 2000s, Saab begins experimenting with biofuels, specifically, E85 ethanol "dual fuel" engines. Jump to 2006 and Saab showcases its 310HP "BioPower" touring sedan (aka, stationwagon!) powered by, you guessed it, a 2.0 liter 4cyl turbo charged engine. Super efficient, super clean and super fast. Did I mention it has the cargo/payload capacity of most SUVs!
Then in 2007, Saab goes one step further showcasing a 100% ethanol powered hybrid-electric convertible at the Detroit auto show. The engine was the standard Saab 4cyl turbo, but get this, the hybrid-electric components were all GM! This car reportedly can be operated on battery alone, or with battery/engine working together.
Oh, did I mention that Saab has sold 100,000 BioPower cars in Sweeden! In other words, Detroit not only has the technology, but it has the ability and resources to put this stuff on the road.
TODAY
So where am I going with all this?
How about... GM is at it again! They killed the EV-1, and now with the market and economy in the toilet (including the pending auto-bailout), even though they say they want to be “clean and green”, they are willing to toss aside Saab and everything it has achieved. Additionally, GM is looking at allowing the Saturn brand to go away as well. FYI, Saturn has the most fuel efficient hybrid SUV on the market today. http://blogs.consumerreports.org/cars/2008/12/saab-volvo-satu.html
Enough already! It’s time for the Big 3 and the UAW (which is holding Detroit hostage) to step aside, and allow the smaller, more nimble, less burdened, and truly innovative companies take the helm for our transportation future!
Detroit, you say you want to build more fuel efficient cars, lower emissions and help build a greener future. You talk it, now walk it... or take a hike!
The pending auto bailout for Detroit's big 3 is nothing more than a band-aid for a much larger, and grotesque ailment- specifically GM's uncanny ability to talk the talk, but not walk the walk.
HISTORY
GM acquired 51% of Sweeden's car maker Saab in 1990. To be fair, Saab is much more than a car maker. Since 1937, Saab has been one of the world's most innovative builders of civilian and military aircraft, heavy trucks, buses, and other technology. Saab was the first car maker to turbo charge a production passenger car in 1978, giving a standard 2.0 liter 4cyl engine the power and performance of 6 or 8 cylinders, yet maintaining the fuel economy of the smallest Asian imports. Since then, Saab has led the way in powerful fuel efficient automobiles.
Jump to 1985 where Saab introduces the EV-1 (Experimental Vehicle One: http://en.wikipedia.org/wiki/Saab_EV-1). So advanced and cool looking, this car was even featured "as is" in the second Back to the Future movie. Beyond that, this car featured 66 PV solar cells on the all-glass roof that powered a ventilation system and a 285HP 4cyl, 16 valve turbo charged engine capable of pushing the car 0-16 in 5.9 seconds. Take that, Lotus!
OK, so GM acquires Saab in 1990, and by 1996, had hijacked the EV-1 brand name. It took the name, slapped it on a hap-hazard effort at putting an electric vehicle on the road, and ultimately bastardized the brand.
Here’s how: The GM EV-1, leased through Saturn dealerships in California and Arizona, was an unmitigated disaster, not because the cars weren't up to task, but because GM had no intention of continuing support for the cars past their 3 year leases. Further, GM “robbed” the Nickle Metal Hydride battery technology from a small battery maker, Ovonic Battery Co, it “partnered” with, and then sold the patents to Texaco in 2000. What does an oil company want with rechargeable battery technology? http://www.allbusiness.com/company-activities-management/company-structures/9321068-1.html
Also during this time, GM's engineers imposed their Detroit Will on the design and engineering of the Saab product line. Consequently, beginning in 1994, the NG (new generation) Saab began a major decline in quality and customer satisfaction. By 1999, GM handed the majority of design work back to Saab, and there was a resurgence of innovation and quality.
A NEW AGE
In the early 2000s, Saab begins experimenting with biofuels, specifically, E85 ethanol "dual fuel" engines. Jump to 2006 and Saab showcases its 310HP "BioPower" touring sedan (aka, stationwagon!) powered by, you guessed it, a 2.0 liter 4cyl turbo charged engine. Super efficient, super clean and super fast. Did I mention it has the cargo/payload capacity of most SUVs!
Then in 2007, Saab goes one step further showcasing a 100% ethanol powered hybrid-electric convertible at the Detroit auto show. The engine was the standard Saab 4cyl turbo, but get this, the hybrid-electric components were all GM! This car reportedly can be operated on battery alone, or with battery/engine working together.
Oh, did I mention that Saab has sold 100,000 BioPower cars in Sweeden! In other words, Detroit not only has the technology, but it has the ability and resources to put this stuff on the road.
TODAY
So where am I going with all this?
How about... GM is at it again! They killed the EV-1, and now with the market and economy in the toilet (including the pending auto-bailout), even though they say they want to be “clean and green”, they are willing to toss aside Saab and everything it has achieved. Additionally, GM is looking at allowing the Saturn brand to go away as well. FYI, Saturn has the most fuel efficient hybrid SUV on the market today. http://blogs.consumerreports.org/cars/2008/12/saab-volvo-satu.html
Enough already! It’s time for the Big 3 and the UAW (which is holding Detroit hostage) to step aside, and allow the smaller, more nimble, less burdened, and truly innovative companies take the helm for our transportation future!
Detroit, you say you want to build more fuel efficient cars, lower emissions and help build a greener future. You talk it, now walk it... or take a hike!
Sunday, December 7, 2008
EV initiatives- what's it gonna' take? (a preliminary discussion)
Ford said that we could have any color car we wanted, as long as that color was black! Just like in every aspect of life (relationships, investments, whatever), there is a give-and-take necessary (in this case, compromise between manufacturer and consumer) to achieve maximum ROI.
Market forces will eventually prevail. People won't buy EVs if they aren't compatible with the charging system. Do you think the auto industry would have grown like it had if "gasoline" hadn't been standardized? So it's in the car makers best interest to "universalize" their designs as much as possible for maximum manufacturing efficiencies, maximum sales potential and maximum profit. This is called "Optimization"- finding the right mix of inputs that allow for maximum benefit to everyone in the loop.
I’m guessing a big part of the bp initiative is to standardize both the "vehicle side" and "dock side" connections. Similar to USB, connections will be cross-platform regardless of vehicle make/model. In other words, regardless of battery design, the important thing is for the connectors to be universal. I'm sure bp probably has a business unit specifically set up for producing, selling and distributing these components to car makers such that, regardless of the battery design, the vehicle can utilize the charging system.
As for the battery exchange program, yes, this poses specific design concerns in terms of "fit". But regardless, not everyone will want to subscribe to battery exchange (just like some people still don't subscribe to text messaging). In other words, if I don't have a car with the type of battery used in the system, I won't want to pay for that service. But you better believe I want my vehicle to have the right plug-in.
However, there is always a solution. Just like each vehicle became standardized on gasoline, maybe the one thing about ALL electric vehicles is that the same battery pack dimensions have to be standardized. Imagine the incredible economies of scale and production efficiencies that can be achieved if this were the case! Something like, "This is the battery, now build the car around it! You can do anything you want in terms of car design, but this is the size and shape of the power cell."
Or how about this; have you seen the adapters that allow a AA cell to be put in place of a C cell? It's basically a C cell size casing that houses an AA cell such that the AA properly fits in the space where a C cell would normally be. Since both the AA and C are 1.5V, they both work (of course, the AA probably won't last as long). So, maybe it’s simply the battery compartments on every EV that needs to be standardized, in terms of size, location and access, in order to make automated swapping a reality.
Here's something else to consider; maybe battery exchanges shouldn’t be automated. Oregon and NJ fuel stations don't allow self-service, and are actually required by law to have full-service attendants pumping the fuel. I don't know the reason for NJ's law, but in Oregon, the law was enacted to create jobs in order to counteract the decline in jobs caused by the implosion of the timber industry as it literally grew too large to be sustainable.
Maybe the "law" might have to be that EV battery swaps are performed by service station technicians. These EV technicians would do the work necessary to keep the charging/swap station operating and functioning properly. This could be one of the very specialized, high-tech/green-tech jobs created by the industry! NEW BUSINESS OPPORTUNITIES AND CAREER PATHS FOR AMERICA’S CLEAN ENERGY FUTURE!
Market forces will eventually prevail. People won't buy EVs if they aren't compatible with the charging system. Do you think the auto industry would have grown like it had if "gasoline" hadn't been standardized? So it's in the car makers best interest to "universalize" their designs as much as possible for maximum manufacturing efficiencies, maximum sales potential and maximum profit. This is called "Optimization"- finding the right mix of inputs that allow for maximum benefit to everyone in the loop.
I’m guessing a big part of the bp initiative is to standardize both the "vehicle side" and "dock side" connections. Similar to USB, connections will be cross-platform regardless of vehicle make/model. In other words, regardless of battery design, the important thing is for the connectors to be universal. I'm sure bp probably has a business unit specifically set up for producing, selling and distributing these components to car makers such that, regardless of the battery design, the vehicle can utilize the charging system.
As for the battery exchange program, yes, this poses specific design concerns in terms of "fit". But regardless, not everyone will want to subscribe to battery exchange (just like some people still don't subscribe to text messaging). In other words, if I don't have a car with the type of battery used in the system, I won't want to pay for that service. But you better believe I want my vehicle to have the right plug-in.
However, there is always a solution. Just like each vehicle became standardized on gasoline, maybe the one thing about ALL electric vehicles is that the same battery pack dimensions have to be standardized. Imagine the incredible economies of scale and production efficiencies that can be achieved if this were the case! Something like, "This is the battery, now build the car around it! You can do anything you want in terms of car design, but this is the size and shape of the power cell."
Or how about this; have you seen the adapters that allow a AA cell to be put in place of a C cell? It's basically a C cell size casing that houses an AA cell such that the AA properly fits in the space where a C cell would normally be. Since both the AA and C are 1.5V, they both work (of course, the AA probably won't last as long). So, maybe it’s simply the battery compartments on every EV that needs to be standardized, in terms of size, location and access, in order to make automated swapping a reality.
Here's something else to consider; maybe battery exchanges shouldn’t be automated. Oregon and NJ fuel stations don't allow self-service, and are actually required by law to have full-service attendants pumping the fuel. I don't know the reason for NJ's law, but in Oregon, the law was enacted to create jobs in order to counteract the decline in jobs caused by the implosion of the timber industry as it literally grew too large to be sustainable.
Maybe the "law" might have to be that EV battery swaps are performed by service station technicians. These EV technicians would do the work necessary to keep the charging/swap station operating and functioning properly. This could be one of the very specialized, high-tech/green-tech jobs created by the industry! NEW BUSINESS OPPORTUNITIES AND CAREER PATHS FOR AMERICA’S CLEAN ENERGY FUTURE!
the price of "cheap"
The concept of an item or product being "cheaper" to buy than another is something that has bothered me for quite a while. Is "cheaper" better?
It really depends on how "cheaper" is defined, and in what context; near-term or long-run.
Ask yourself... would you rather buy a "cheap" $10 toaster every year for 10 years, or 1 $100 toaster that lasts 10 years?
I'll go out on a limb here and say that most American's prefer to buy the $10 toaster because it's a "bargain". It allows us to spend less on this item NOW, and allocate more financial resources to purchase other "stuff". But not only are we convinced that we need a toaster, but we need a toaster-oven, microwave, food processor, chopper, rotisserie oven, counter-top grill and any other gadget marketed to make our lives easier.
What is the real cost of all this?
We buy a $10 toaster and other "stuff" from a popular, well known, ginormous big-box retailer. In order for these items to be "cheap", they have to be built "cheaply"- using low cost labor, materials, etc. Low cost labor involves finding an opportunistic sweatshop overseas to take on the manufacturing project. This sweatshop not only needs cheap labor, but they need to use the cheapest materials and have the cheapest "process" costs (energy, etc.) because the big-box will only pay a certain amount for the toaster since it knows it must sell X quantity in order to make a profit.
The first concern here is that the cheapest materials directly lead to the failure of the product. This leads to the disposal and re-consumption of the item! The "disposal" does nothing but necessitate more and more landfills. As our landfills pile up, we lose valuable natural resources to toxic (because the materials were as cheap as possible!) and harmful exposure.
The second thing to consider is that the cheapest process costs lead to expensive long-term costs. Like what? Consider that "cheap" power, such as coal, oil or other fossil fuel resources emit massive levels of pollution. And these outsourced "cheap" production facilities in overseas countries DO NOT have the environmental safety protocols (or laws) in place to keep levels of pollution low. Further, because their only interest is being able to give the big-box what they order at the price the big-bix is willing to pay, they don't have the money to reinvest in ways to reduce pollution.
The third aspect of this supply-consumption chain is TRANSPORTATION. Forget for a moment that the raw materials have to come from somewhere and ask, "How does the finished product get from its manufacturing plant to my house?"
On a giant, fuel-oil guzzling ocean cargo ship of course! What's fuel-oil? Quick lesson... there are two types of engines that run on liquid petroleum: (1) internal combustion- aka gasoline engine, and (2) compression ignition- aka Diesel engine, or fuel oil.
Compression ignition engines are capable of delivering great levels of power. And they are rather efficient in terms of their consumption to power ratio. This is the reason they are used in construction and farm equipment, electric generators, hauling vehicles (OTR trucks and railroad locomotives), cargo ships and even some automobiles. But they still emit exhaust. What kind of exhaust? The worst kind!
Fuel oil comes in many different grades: 1 through 5. #1 is know as light oil such as kerosene. #2 is diesel fuel used in most standard diesel engine applications, #3 is light industrial oil, #4 is heavy industrial oil, and #5 is known as bunker fuel.
Bunker fuel is the heaviest, nastiest, thickest, dirtiest and "cheapest" of all fuel oil because it requires the least refining. As such, it pollutes the most!
Regardless of power to consumption ratio, bunker fuel, burned in cargo ships, is the worst polluting of all fuel oil. Not just because the oil itself emits the worst pollution when burned, but because the cargo ship HAS VERY LITTLE EMISSION CONTROLS to capture/clean the exhaust before it gets dumped into the atmosphere, and subsequently back to earth (and ocean) in the form of rain.
Now take into consideration the retail price of the toaster, $9.99. Typical retail margin is 40%, that means that the big-box, freight included, paid somewhere around $6 for the toaster.
So we're saying that it cost $6 to decide to sell toasters, decide on which toaster to sell, find a manufacturer that has the design for a toaster, have the manufacturer acquire the raw materials to make the toaster, actually have the worker convert the raw materials into a "toaster", pay the worker to do the conversion, dispose of any waste or by-product, pack and ship the toaster over seas. $6!
Now, for $3.99 more, we need to unpack and transport the toaster to a warehouse, transport the toaster to a big-box store, put the toaster on the shelf, turn on the lights so people can see the toaster, and conduct the transaction of the sale of the toaster. $3.99!
The only way for any of this to be profitable is on VOLUME. What kind of volume? The kind of volume created by selling "replacement" toasters when the original one lasts only a year because it was made on the "cheap"!
That assumes the toaster lasts a year. What about the ones that don't even make it that far? The ones consumers bring back when they break within a month or two. Not only does the big-box "give" them a new one, but REFUSES TO PAY THE MANUFACTURER FOR THE BROKEN ONE. With less revenue, the manufacturer is forced to cut costs by, (1) reducing wages, (2) finding "cheaper" materials, or (3) cutting shipping costs.
Any or all of these simply lead to lower standard of living for workers, less reliable products, more product failure, increased consumption, increased landfill and higher levels of pollution.
Further, do you think the manufacturer is going to take the toaster back, fix it, and send it out again? Hell No! The transportation costs alone would drive the company out of business.
AND IN NONE OF THIS DID WE EVEN CONSIDER THE ENVIRONMENTAL IMPACT (CARBON FOOTPRINT) OF THE HOUSE AND KITCHEN YOU PUT THE TOASTER IN, OR THE VEHICLE YOU USED TO GET TO THE BIG-BOX TO BUY THE TOASTER.
I ask again, "What is the price?"
And what's the window dressing as to why we buy into this? Maybe it’s the image of a higher standard of living! The concept that we're better off if we "have the stuff" because it shows we have the ABILITY to "have the stuff."
I submit that the highest standard of living, the real exercise of power and the ultimate in consumer evolution is when we HAVE THE ABILITY TO CONSUME, YET CHOOSE NOT TO!
I'm reminded of the movie Schlindler's List, when Liam Neesan attempts to prevent the camp commandant from killing a prisoner by saying the real power isn't in having the ability to take a life, but in the ability to spare it.
Lest you think I’m oblivious to the way the world works right now, I know this is only but half the story. What, actually, does the repeated sale of a $10 toaster represent in terms of the world financial picture?
I would surmise that we tend to pay for the toaster with plastic instead of paper- credit card rather than cash.
This ads a whole new level of complexity to the scenario, that is nearly IMPOSSIBLE to comprehend.
Simply however, when plastic is used, we say to the store, "If you give me the toaster now, my bank promises to pay you because I've promised to pay them. And if I don't pay them exactly as promised, I will pay them more (interest) for the extra time."
The bank, in turn, may not have the ability to pay for the toaster either, so it goes to another bank and asks to use their money. Just like before, if the money isn't paid back as promised, interest is owed for the extra time.
Each time these "loans" are made, money is created. Money that never existed before. But it has to come from somewhere! It comes from the next sale, and the cycle repeats. This is the growth of the economy- creation of money.
The money goes back around the horn in the form of wages, other loans and consumption based spending. Of course, in order to keep prices low, wages (and other costs) have to stay low. AND WITH WAGES LOW, WE CAN’T FINANCIALLY AFFORD ANYTHING BUT THE CHEAP PRODUCTS!
We've seen what the real price of "cheap" money is- just look at the real causes and effects of the mortgage implosion. We've seen what the real price of "cheap" products is- pollution, landfill, low wages, etc.
Now we see what the real impact of “cheap” is…
Short term- WOW, a $10 toaster! Long-term- not so good.
It really depends on how "cheaper" is defined, and in what context; near-term or long-run.
Ask yourself... would you rather buy a "cheap" $10 toaster every year for 10 years, or 1 $100 toaster that lasts 10 years?
I'll go out on a limb here and say that most American's prefer to buy the $10 toaster because it's a "bargain". It allows us to spend less on this item NOW, and allocate more financial resources to purchase other "stuff". But not only are we convinced that we need a toaster, but we need a toaster-oven, microwave, food processor, chopper, rotisserie oven, counter-top grill and any other gadget marketed to make our lives easier.
What is the real cost of all this?
We buy a $10 toaster and other "stuff" from a popular, well known, ginormous big-box retailer. In order for these items to be "cheap", they have to be built "cheaply"- using low cost labor, materials, etc. Low cost labor involves finding an opportunistic sweatshop overseas to take on the manufacturing project. This sweatshop not only needs cheap labor, but they need to use the cheapest materials and have the cheapest "process" costs (energy, etc.) because the big-box will only pay a certain amount for the toaster since it knows it must sell X quantity in order to make a profit.
The first concern here is that the cheapest materials directly lead to the failure of the product. This leads to the disposal and re-consumption of the item! The "disposal" does nothing but necessitate more and more landfills. As our landfills pile up, we lose valuable natural resources to toxic (because the materials were as cheap as possible!) and harmful exposure.
The second thing to consider is that the cheapest process costs lead to expensive long-term costs. Like what? Consider that "cheap" power, such as coal, oil or other fossil fuel resources emit massive levels of pollution. And these outsourced "cheap" production facilities in overseas countries DO NOT have the environmental safety protocols (or laws) in place to keep levels of pollution low. Further, because their only interest is being able to give the big-box what they order at the price the big-bix is willing to pay, they don't have the money to reinvest in ways to reduce pollution.
The third aspect of this supply-consumption chain is TRANSPORTATION. Forget for a moment that the raw materials have to come from somewhere and ask, "How does the finished product get from its manufacturing plant to my house?"
On a giant, fuel-oil guzzling ocean cargo ship of course! What's fuel-oil? Quick lesson... there are two types of engines that run on liquid petroleum: (1) internal combustion- aka gasoline engine, and (2) compression ignition- aka Diesel engine, or fuel oil.
Compression ignition engines are capable of delivering great levels of power. And they are rather efficient in terms of their consumption to power ratio. This is the reason they are used in construction and farm equipment, electric generators, hauling vehicles (OTR trucks and railroad locomotives), cargo ships and even some automobiles. But they still emit exhaust. What kind of exhaust? The worst kind!
Fuel oil comes in many different grades: 1 through 5. #1 is know as light oil such as kerosene. #2 is diesel fuel used in most standard diesel engine applications, #3 is light industrial oil, #4 is heavy industrial oil, and #5 is known as bunker fuel.
Bunker fuel is the heaviest, nastiest, thickest, dirtiest and "cheapest" of all fuel oil because it requires the least refining. As such, it pollutes the most!
Regardless of power to consumption ratio, bunker fuel, burned in cargo ships, is the worst polluting of all fuel oil. Not just because the oil itself emits the worst pollution when burned, but because the cargo ship HAS VERY LITTLE EMISSION CONTROLS to capture/clean the exhaust before it gets dumped into the atmosphere, and subsequently back to earth (and ocean) in the form of rain.
Now take into consideration the retail price of the toaster, $9.99. Typical retail margin is 40%, that means that the big-box, freight included, paid somewhere around $6 for the toaster.
So we're saying that it cost $6 to decide to sell toasters, decide on which toaster to sell, find a manufacturer that has the design for a toaster, have the manufacturer acquire the raw materials to make the toaster, actually have the worker convert the raw materials into a "toaster", pay the worker to do the conversion, dispose of any waste or by-product, pack and ship the toaster over seas. $6!
Now, for $3.99 more, we need to unpack and transport the toaster to a warehouse, transport the toaster to a big-box store, put the toaster on the shelf, turn on the lights so people can see the toaster, and conduct the transaction of the sale of the toaster. $3.99!
The only way for any of this to be profitable is on VOLUME. What kind of volume? The kind of volume created by selling "replacement" toasters when the original one lasts only a year because it was made on the "cheap"!
That assumes the toaster lasts a year. What about the ones that don't even make it that far? The ones consumers bring back when they break within a month or two. Not only does the big-box "give" them a new one, but REFUSES TO PAY THE MANUFACTURER FOR THE BROKEN ONE. With less revenue, the manufacturer is forced to cut costs by, (1) reducing wages, (2) finding "cheaper" materials, or (3) cutting shipping costs.
Any or all of these simply lead to lower standard of living for workers, less reliable products, more product failure, increased consumption, increased landfill and higher levels of pollution.
Further, do you think the manufacturer is going to take the toaster back, fix it, and send it out again? Hell No! The transportation costs alone would drive the company out of business.
AND IN NONE OF THIS DID WE EVEN CONSIDER THE ENVIRONMENTAL IMPACT (CARBON FOOTPRINT) OF THE HOUSE AND KITCHEN YOU PUT THE TOASTER IN, OR THE VEHICLE YOU USED TO GET TO THE BIG-BOX TO BUY THE TOASTER.
I ask again, "What is the price?"
And what's the window dressing as to why we buy into this? Maybe it’s the image of a higher standard of living! The concept that we're better off if we "have the stuff" because it shows we have the ABILITY to "have the stuff."
I submit that the highest standard of living, the real exercise of power and the ultimate in consumer evolution is when we HAVE THE ABILITY TO CONSUME, YET CHOOSE NOT TO!
I'm reminded of the movie Schlindler's List, when Liam Neesan attempts to prevent the camp commandant from killing a prisoner by saying the real power isn't in having the ability to take a life, but in the ability to spare it.
Lest you think I’m oblivious to the way the world works right now, I know this is only but half the story. What, actually, does the repeated sale of a $10 toaster represent in terms of the world financial picture?
I would surmise that we tend to pay for the toaster with plastic instead of paper- credit card rather than cash.
This ads a whole new level of complexity to the scenario, that is nearly IMPOSSIBLE to comprehend.
Simply however, when plastic is used, we say to the store, "If you give me the toaster now, my bank promises to pay you because I've promised to pay them. And if I don't pay them exactly as promised, I will pay them more (interest) for the extra time."
The bank, in turn, may not have the ability to pay for the toaster either, so it goes to another bank and asks to use their money. Just like before, if the money isn't paid back as promised, interest is owed for the extra time.
Each time these "loans" are made, money is created. Money that never existed before. But it has to come from somewhere! It comes from the next sale, and the cycle repeats. This is the growth of the economy- creation of money.
The money goes back around the horn in the form of wages, other loans and consumption based spending. Of course, in order to keep prices low, wages (and other costs) have to stay low. AND WITH WAGES LOW, WE CAN’T FINANCIALLY AFFORD ANYTHING BUT THE CHEAP PRODUCTS!
We've seen what the real price of "cheap" money is- just look at the real causes and effects of the mortgage implosion. We've seen what the real price of "cheap" products is- pollution, landfill, low wages, etc.
Now we see what the real impact of “cheap” is…
Short term- WOW, a $10 toaster! Long-term- not so good.
story of stuff
This is something everyone needs to take time to watch (20 minutes is all it takes!) It could change your life.
http://storyofstuff.com/
cheers. sg
http://storyofstuff.com/
cheers. sg
Friday, December 5, 2008
to bail or not to bail?
Should Detroit, or any of the new, small "alternative" car makers get ANY congressional handout from the tax payer?
A billion here, a billion there... all the sudden, we're talking real money! "Getting" some of the money isn't necessarily what is needed by either Detroit or the small start-up car companies. What's needed is a restructuring of our ability to use the economic resources we already have (specifically tax law!) and allowing free-markets to operate. Of course, we've learned that "free-markets" still tend to need some kind of oversight and regulation (worker and environmental safety, etc.), to help keep the rampant, self-serving nature of human greed in check).
In reality, the "money' would be better directed if it were allocated for things like:
(1) Clean energy transportation and renewable energy infrastructure redesign/rebuild- remember, if the original power grid and road/highway system was never built to begin with (which put A LOT of people to work!), there wouldn't have been such a need/desire/demand for automobiles OR the overall growth/increase in standard of living we've experienced in the first place.
(2) Human capital- affordable education with REAL standards, greentech job training programs, etc.
(3) RAISE FUEL/CARBON TAXES!- no one likes higher taxes, but face it, higher cigarette taxes have helped more and more people see that the adverse financial effects of smoking are as hard to swallow as the adverse health effects. The general public needs to be shown that the adverse financial effects of driving petrol vehicles will be as painful as the adverse environmental effects of burning the fuel. This will eventually lead to a decrease in fuel usage, thus a decrease in fuel tax revenues, and the need to replace the funds some other way... like...
(4) Implement a national ROAD USE or TOLL system- Fuel taxes are a type of use tax, because you only pay them as you buy/consume more fuel. The problem with this is that tax revenues are directly dependent on the use of carbon emission spewing vehicles. The more we wreck the environment, the more money there is to better the road systems so we can continue to wreck the environment! VERY BAD IDEA!
But again, as people consume less fuel, even if the tax rate is higher, tax revenues (money used to pay for roads, etc.) will eventually fall. Thus, people that USE the ROADS need to pay for them, regardless of fuel usage. Just like betterplace wants us to adopt a subscription based driving experience, those who drive could subscribe to local, regional or national Road Use Program- paying only for what we use, when we use it.
(5) Consumer incentives- Remember when the government "created" demand for the biggest, heaviest, least fuel efficient, yet most profitable SUVs by allowing up to $100K tax incentives for buyers! Funny how the proposed incentive for the lowly EV is a mere $7500. I PROMISE YOU THIS, IF THE GOVERNMENT WOULD ALLOW UP TO $100K TAX INCENTIVE FOR EV'S (NEW OR USED!):
(A) PEOPLE WILL DEMAND CHARGING STATIONS (BUSINESS/JOB OPPORTUNITIES!)
(B) MORE FLEETS WOULD GO ELECTRIC (LESS CARBON EMISSIONS)
(C) MORE TESLA'S (AND OTHER EV'S) WOULD BE BUILT EVENTUALLY DRIVING DOWN THE COST, AND ALLOWING COMPANIES TO SPEND ON R&D, BRING BETTER AND BETTER PRODUCTS TO MARKET
(D) EVENTUALLY THE "PRE-OWNED" EV MARKETPLACE WILL BE CREATED, BRINGING DOWN THE INITIAL PURCHASE PRICE FOR MANY PEOPLE AND NECESSITATING MORE SPECIALIZED, HIGH-TECH/GREEN COLLAR JOBS TO SUPPORT THE PARTS, SALES AND SERVICE NEEDS OF THE EV SECTOR.
(E) DID I MENTION THE ENVIRONMENTAL BENEFITS OF LOWER EMISSIONS?
YADA, YADA, YADA.
Further, given that the US lost 533K jobs LAST MONTH ALONE, and part of GM's "grand plan" is to eliminate up to 30K more jobs, I don't see that the bankruptcy or reorganization of ANY of the big three would be any more degrading/destructive to society than throwing away billions on an attempted bailout- which many believe isn't even nearly enough money to make any real difference anyway!
So, who gets what? In the end, I'm afraid it's really up to YOU AND ME, AS A GOVERNMENT OF THE PEOPLE, BY THE PEOPLE AND FOR THE PEOPLE, to break away from our blinders-on, apathetic, non-in-my-backyard, Joe Six-Pack, Joe-Plumber CRAP, and demand accountability from business leaders, elected officials and each other.
Cheers! sg
A billion here, a billion there... all the sudden, we're talking real money! "Getting" some of the money isn't necessarily what is needed by either Detroit or the small start-up car companies. What's needed is a restructuring of our ability to use the economic resources we already have (specifically tax law!) and allowing free-markets to operate. Of course, we've learned that "free-markets" still tend to need some kind of oversight and regulation (worker and environmental safety, etc.), to help keep the rampant, self-serving nature of human greed in check).
In reality, the "money' would be better directed if it were allocated for things like:
(1) Clean energy transportation and renewable energy infrastructure redesign/rebuild- remember, if the original power grid and road/highway system was never built to begin with (which put A LOT of people to work!), there wouldn't have been such a need/desire/demand for automobiles OR the overall growth/increase in standard of living we've experienced in the first place.
(2) Human capital- affordable education with REAL standards, greentech job training programs, etc.
(3) RAISE FUEL/CARBON TAXES!- no one likes higher taxes, but face it, higher cigarette taxes have helped more and more people see that the adverse financial effects of smoking are as hard to swallow as the adverse health effects. The general public needs to be shown that the adverse financial effects of driving petrol vehicles will be as painful as the adverse environmental effects of burning the fuel. This will eventually lead to a decrease in fuel usage, thus a decrease in fuel tax revenues, and the need to replace the funds some other way... like...
(4) Implement a national ROAD USE or TOLL system- Fuel taxes are a type of use tax, because you only pay them as you buy/consume more fuel. The problem with this is that tax revenues are directly dependent on the use of carbon emission spewing vehicles. The more we wreck the environment, the more money there is to better the road systems so we can continue to wreck the environment! VERY BAD IDEA!
But again, as people consume less fuel, even if the tax rate is higher, tax revenues (money used to pay for roads, etc.) will eventually fall. Thus, people that USE the ROADS need to pay for them, regardless of fuel usage. Just like betterplace wants us to adopt a subscription based driving experience, those who drive could subscribe to local, regional or national Road Use Program- paying only for what we use, when we use it.
(5) Consumer incentives- Remember when the government "created" demand for the biggest, heaviest, least fuel efficient, yet most profitable SUVs by allowing up to $100K tax incentives for buyers! Funny how the proposed incentive for the lowly EV is a mere $7500. I PROMISE YOU THIS, IF THE GOVERNMENT WOULD ALLOW UP TO $100K TAX INCENTIVE FOR EV'S (NEW OR USED!):
(A) PEOPLE WILL DEMAND CHARGING STATIONS (BUSINESS/JOB OPPORTUNITIES!)
(B) MORE FLEETS WOULD GO ELECTRIC (LESS CARBON EMISSIONS)
(C) MORE TESLA'S (AND OTHER EV'S) WOULD BE BUILT EVENTUALLY DRIVING DOWN THE COST, AND ALLOWING COMPANIES TO SPEND ON R&D, BRING BETTER AND BETTER PRODUCTS TO MARKET
(D) EVENTUALLY THE "PRE-OWNED" EV MARKETPLACE WILL BE CREATED, BRINGING DOWN THE INITIAL PURCHASE PRICE FOR MANY PEOPLE AND NECESSITATING MORE SPECIALIZED, HIGH-TECH/GREEN COLLAR JOBS TO SUPPORT THE PARTS, SALES AND SERVICE NEEDS OF THE EV SECTOR.
(E) DID I MENTION THE ENVIRONMENTAL BENEFITS OF LOWER EMISSIONS?
YADA, YADA, YADA.
Further, given that the US lost 533K jobs LAST MONTH ALONE, and part of GM's "grand plan" is to eliminate up to 30K more jobs, I don't see that the bankruptcy or reorganization of ANY of the big three would be any more degrading/destructive to society than throwing away billions on an attempted bailout- which many believe isn't even nearly enough money to make any real difference anyway!
So, who gets what? In the end, I'm afraid it's really up to YOU AND ME, AS A GOVERNMENT OF THE PEOPLE, BY THE PEOPLE AND FOR THE PEOPLE, to break away from our blinders-on, apathetic, non-in-my-backyard, Joe Six-Pack, Joe-Plumber CRAP, and demand accountability from business leaders, elected officials and each other.
Cheers! sg
betterplace- a great place to begin
Better Place company has initiated the mass development and implementation of the infrastructure necessary to support an all-electric vehicle transportation system- starting with the personal car- and powered through clean, renewable energy sources.
They also have an on-line community that has grown exponentially over the past week since the announcement of their efforts in Hawaii.
This is really worth checking out, and supporting!
betterplace.com
They also have an on-line community that has grown exponentially over the past week since the announcement of their efforts in Hawaii.
This is really worth checking out, and supporting!
betterplace.com
Thursday, November 27, 2008
green carjacking- continued
I took the liberty of emailing Mr. Ken Green with my comments, and was fortunate enough to receive a reply. It was short, without much substance, intended simply to pacify my interest:
Ken, thank you so much for taking time to reply, and for the link to the article. I truly appreciate the effort. And yes, we will agree to disagree. No doubt analysts and experts will continue to make the same/similar points as you, just as many will see it from my side as well.
But rather than just disagreeing, do you think there is anything here worth discussing? I sure would like to know what exactly it is about your point of view that you are so attached to. And I don't see you proposing any solutions.
For instance, I make the statement that finding the point of "optimization", rather than extreme efficiency or extreme profitability, might be a more prudent approach. See attached .pdf
Honestly, I don't believe hybrids, as they are today, are anywhere near the answer. Heck, the carbon footprint of one Prius alone cannot be offset by it expected useful life. But it is a bridge to new technology and new consumer behavior.
Other AFVs have promise, but widespread adoption is far down the road. Additionally, the biofuel industry is still in its infancy and there is little understanding/consensus/policy yet of the best way to incorporate them.
For instance, with biodiesel, B2, B5 and B20 (the number represents the percent of biodiesel blended with petroleum) all represent a step in the right direction for a number of reasons- lower emissions, higher lubricity, displacing petroleum consumption, etc. But the infrastructure isn't there to support it yet (both producer, distributor and seller).
Same with ethanol. 10% ethanol is in just about all gasoline sold and can run in any gasoline engine with modification, but provides no real benefit in terms of lower emissions or reducing petroleum consumption. E85, on the other hand, is pretty hard to come by- and there are relatively few vehicles that can actually run on the stuff due to materials compatibilities issues. It also has such a dramatically lower energy content that it takes MORE to do the same job. So while it lowers emissions and reduces petroleum consumption, it is wasteful because more fuel is used to accomplish the same work. In my mind, these are extremes that make little sense in terms of optimal solutions.
However, studies reported by ethanol.org (http://www.ethanol.org/pdf/contentmgmt/Press_Release_12507-1.pdf) show that 20 to 30% ethanol is a better blend for maximum performance, lower consumption, emission reduction and cost, and it can in most of today's cars without adverse mechanical effects.
Same with biodiesel. B20 to B30 is optimal in terms of infrastructure/equipment compatibility, maximum performance, lower consumption, emission reduction and cost.
These are the real short term fixes that will give us enough time to make the next leap in AFVs.
Rather than embrace these solutions, what are we to do... nothing? Status quo? Just because "the economy" is in the toilet?
One reason the economy is in the toilet is because current thinking and practices just aren't working. It isn't sustainable. And the system broke!
Are you familiar with the idea of predators growing so big, so dominant, that they eventually drive themselves to extinction by consuming everything around it and having nothing left to feed on? It's not a stretch to see that's where Detroit is headed.
Detroit needs to embrace this opportunity to optimize. To educate consumers with truths, not truthiness. To become socially responsible and sustainable. To tell the labor unions that enough is enough, and to stop the bleeding caused by unsustainable contracts (http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm) and pension plans. To invest in retraining workers. To cross-train workers, maybe with other businesses/industries, to be useful/productive across multiple disciplines. The answers are out there!
Oh, and don't forget to implement a "pay for performance" initiative ACROSS THE BOARD- from the CEO to the janitor. Remove all unreasonably insane base pay and bonus structures, remove all golden parachutes, and let everyone know that if you suck at your job, you don't get paid at all.
You know, I'm thinking that all the money saved just by these corrective practices alone would be more than enough to pay for retraining/education, as well as universal health care for all workers- especially if the people were educated in eating healthier, getting more exercise and practiced a philosophy of proactive wellness rather than reactive illness management.
Great to have you as a sounding board, and I welcome any elaboration you might offer to discuss my comments.
Regards,
sg
Literally, less than 30 minutes later, he had gotten back to me with this:
To which I replied:
Ken, YOU ROCK! Great conversation. I had a blast reading your world-view. See my comments accordingly, and we'll call it good. Have a wonderful Thanksgiving.
Kenneth Green wrote:
Maslow- physiological, safety love/belonging, esteem, self-actualization.
Just above the basic physiological needs ("air" and "water"), you'll find safety- which includes safety of resources and health. In this sense, I'd argue that environmental protection- "clean air" and "clean water"- actually ranks very high, as it falls within the second level of basic needs.
Additionally, getting "rich" fast is usually done "at any cost". And just like "efficiency" at any cost, these courses of action are simply not sustainable in the long run. In fact, far too many of the "rich" in our society have gotten rich by running businesses that, while they may have followed the letter of the law, they haven't truly protected the environment as much as they could/should have. And many have skirted environmental laws all together and done more harm than good. Some get caught, but some don't. Illegal dumping, water contamination, exposure to workers, etc. are all ways to cut cost, and get rich.
I agree, the market can help weed out these bad seeds, but not before the damage is done. That's the highest cost of all.
Further, these "rich people", when they become rich, tend to live to excess, which in it's very essence, is the antithesis of environmental stewardship. Real environmentalists don't want the world to get rich, they want the world to do the most good what they have, with what's available and more importantly, with what they can do without. A Consumption Conscience, if you will.
And worse yet, when people are "on their way" to becoming rich, they tend to live way outside their means just to give the impression that they have already achieved a level of status. This type of reckless behavior only perpetuates the lack of environmental concern.
We all want a certain standard of living. But everyone's definition of "standard of living" differs. Wealth generation is not the problem. The problem, or "unpleasant side effect", is the disproportionate wealth generation, led by the elite who tend to protect themselves by either buying protective legislation (tax law and otherwise) or buying lawyers to defend, without conscience or concern for anything other than protecting their own wealth.
People will be people, and human behavior is what it is. But at some point, a proactive effort must be made, led by both the top (our leaders- business AND government), as well as grass-roots efforts (local community organizers, NFPs, NGOs, etc), to promote and foster a real shift in our priorities. We've been programmed to consume (http://www.storyofstuff.com/)... why not reprogram with other areas of focus- such as conservation and optimization.
You use the word "efficient", which is really a misnomer, as it doesn't tell the whole story. Efficiency, in it's essence, sacrifices something. In your example, we are sacrificing cleaner, renewable energy for "quick and dirty" energy just because it's cheaper. But in the end, something always suffers, and thus costs more.
Lets take human health, for instance. It may be "super efficient" in terms of the time it takes for a person to "have a meal" (eat a quick burger, fries and coke- 3 minutes in the drive thru, 5 to 10 minutes down the hatch), but at what human cost? Nutritional value is nearly zero, and counterproductive properties including high levels of fat, LDL cholesterol, bovine growth hormone and high-fructose corn syrup are off the scale. The "intangible" costs are that we suffer from obesity, diabetes, heart disease, and are generally unhealthy just because we've found a way to eat fast.
So, is it really "efficient" to eat like this? Of course not. Not unless we counterbalance the unhealthy effects with acts of healthiness- such as incorporating more nutritional elements into our diets, getting some exercise and eating in moderation. The problem is that not everyone takes the time to counterbalance the effects. It takes too much effort, and we are lazy.
In terms of cheap energy (coal, oil, etc), the "efficiencies" of low cost are more than out paced by the negative toll on the plant and human health. Not only are we not doing enough to counterbalance the effects, because "they cost too much", we aren't even doing the things that inherently cost less, such as simply reducing consumption.
How about this equation... how much acid rain, smog, asthma, autism and death, does it take to add up to, "we just can't do this any more"?
And you say, "use it up" before going to more expensive energy? WOW! Use it up? Since when has being "all-consumptive" ever led to anything good? Hunting/fishing to depletion/extinction, over eating, addictive use of drugs/alcohol, etc?
We, as a people, are to a point in our evolution that we can no longer simply rely on financial profitability to drive our development. We must start doing things because they just need to be done. That doesn't lower anyone's standards, it raises everyone's.
Have you considered the amount of money spent on the cost of waging war, let alone the loss in human capital?
If the amount of $$$ spent on Iraq and Afghanistan (including wasted, lost, and over-billed by war profiteers such as Haliburton) would have been used as reinvestment on infrastructure at home, or even constructive foreign aid (rather than destructive), we would be able to help raise the bar across the board. I'm not talking about spreading-the-wealth, I'm talking about reinvesting in infrastructure and people in terms of education and standard of living.
Even though we have the right to drive whatever we want (as long as the vehicle is "legal" and road worthy), it is now generally accepted that 7mpg is a bad idea. Thing is, 7mpg was ALWAYS a bad idea. As individuals, we've told Detroit to give us better MPG vehicles. But they have refused to do it because they know we are so dependent on our cars and trucks, that we will buy whatever they make.
We may not drive them as much with high fuel prices, but we will still buy them. They know it. The bank on it.
So at some point, we need to have our elected officials speak for us, and demand accountability from industry. Anti-trust laws, labor laws, whatever. If tacking on environmental criteria to a financial bail-out is part of that, then good! Tax dollars being used responsibly for once. By mandating environmental guidelines, we as people are simply now telling Detroit, through our representative government, that we want them to stay on task and not buckle under the pressure of maximizing profit. Be innovative. Find a way to do it better. Representation by the people, for the people!
Just curious, were SUVs always so profitable, or is there a cost curve showing that they were in the red once upon a time. Or maybe the Big Three relied on "creative financing" to perpetuate the gorging, http://blogs.ft.com/gapperblog/2008/07/were-suvs-such-profitable-products-after-all/
And did we ever really need SUVs? Just because gas was cheap, did we need to guzzle as much as possible? The current condition/state of the auto industry is the best argument proving that this course of action, though profitable in the short run, was in fact a REALLY BAD IDEA over all.
And again, "more efficient" or "less efficient"is relative to what is given up in the process. Do you really believe we're much better off as a society guzzling fuel, spewing emissions, and consuming everything in sight just for the financial profitability of it?
APATHY AND INDIFFERENCE IS THE REAL ENEMY. I THINK YOU AND I CAN AGREE THAT IT IS OUR RESPONSIBILITY, AS CITIZENS AND PEOPLES OF THIS LAND, TO SIMPLY HOLD ACCOUNTABLE ALL OF OUR LEADERS- BUSINESS, GOVERNMENT, SPIRITUAL AND OTHERWISE.
THAT'S THE REAL MARKET!
PEACE.
SG
And there you have it. I'm guess we didn't solve any of the worlds problems... yet, but at least a conversation like this is "out there" now, and hopefully causing other to pause for a moment, take stock in the BIG PICTURE, and decide for themselves just what kind of world they want to live in. sg
Steve -Grateful to have an open conversation, I continued:
Thank for your note, this is clearly something you're passionate about, and something on which we'll have to agree to disagree. You might read this article in the Washington Post though, and observe that others are making precisely the same points I did in the article you referenced. http://www.washingtonpost.com/wp-dyn/content/article/2008/11/24/AR2008112403211.html?hpid=topnews
Best,
Ken
Ken, thank you so much for taking time to reply, and for the link to the article. I truly appreciate the effort. And yes, we will agree to disagree. No doubt analysts and experts will continue to make the same/similar points as you, just as many will see it from my side as well.
But rather than just disagreeing, do you think there is anything here worth discussing? I sure would like to know what exactly it is about your point of view that you are so attached to. And I don't see you proposing any solutions.
For instance, I make the statement that finding the point of "optimization", rather than extreme efficiency or extreme profitability, might be a more prudent approach. See attached .pdf
Honestly, I don't believe hybrids, as they are today, are anywhere near the answer. Heck, the carbon footprint of one Prius alone cannot be offset by it expected useful life. But it is a bridge to new technology and new consumer behavior.
Other AFVs have promise, but widespread adoption is far down the road. Additionally, the biofuel industry is still in its infancy and there is little understanding/consensus/policy yet of the best way to incorporate them.
For instance, with biodiesel, B2, B5 and B20 (the number represents the percent of biodiesel blended with petroleum) all represent a step in the right direction for a number of reasons- lower emissions, higher lubricity, displacing petroleum consumption, etc. But the infrastructure isn't there to support it yet (both producer, distributor and seller).
Same with ethanol. 10% ethanol is in just about all gasoline sold and can run in any gasoline engine with modification, but provides no real benefit in terms of lower emissions or reducing petroleum consumption. E85, on the other hand, is pretty hard to come by- and there are relatively few vehicles that can actually run on the stuff due to materials compatibilities issues. It also has such a dramatically lower energy content that it takes MORE to do the same job. So while it lowers emissions and reduces petroleum consumption, it is wasteful because more fuel is used to accomplish the same work. In my mind, these are extremes that make little sense in terms of optimal solutions.
However, studies reported by ethanol.org (http://www.ethanol.org/pdf/contentmgmt/Press_Release_12507-1.pdf) show that 20 to 30% ethanol is a better blend for maximum performance, lower consumption, emission reduction and cost, and it can in most of today's cars without adverse mechanical effects.
Same with biodiesel. B20 to B30 is optimal in terms of infrastructure/equipment compatibility, maximum performance, lower consumption, emission reduction and cost.
These are the real short term fixes that will give us enough time to make the next leap in AFVs.
Rather than embrace these solutions, what are we to do... nothing? Status quo? Just because "the economy" is in the toilet?
One reason the economy is in the toilet is because current thinking and practices just aren't working. It isn't sustainable. And the system broke!
Are you familiar with the idea of predators growing so big, so dominant, that they eventually drive themselves to extinction by consuming everything around it and having nothing left to feed on? It's not a stretch to see that's where Detroit is headed.
Detroit needs to embrace this opportunity to optimize. To educate consumers with truths, not truthiness. To become socially responsible and sustainable. To tell the labor unions that enough is enough, and to stop the bleeding caused by unsustainable contracts (http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm) and pension plans. To invest in retraining workers. To cross-train workers, maybe with other businesses/industries, to be useful/productive across multiple disciplines. The answers are out there!
Oh, and don't forget to implement a "pay for performance" initiative ACROSS THE BOARD- from the CEO to the janitor. Remove all unreasonably insane base pay and bonus structures, remove all golden parachutes, and let everyone know that if you suck at your job, you don't get paid at all.
You know, I'm thinking that all the money saved just by these corrective practices alone would be more than enough to pay for retraining/education, as well as universal health care for all workers- especially if the people were educated in eating healthier, getting more exercise and practiced a philosophy of proactive wellness rather than reactive illness management.
Great to have you as a sounding board, and I welcome any elaboration you might offer to discuss my comments.
Regards,
sg
Literally, less than 30 minutes later, he had gotten back to me with this:
Steve -
You raise many interesting areas of discussion, but I suspect that we come from such a diverse way of seeing the world, we could discuss these things for days, or weeks, without gaining any significant agreement. Still, in the interests of civil discourse, my world-view in a nutshell:
1) People seek to satisfy their basic needs, ala Maslow. They want housing, food, potable water, breathable air, education, healthcare, gainful employment, and so on. (Note that I did not say "pure air or pure water," such purity ranks far below other needs for most people in the world). Environmental protection generally ranks low on this list, and is really only affordable by people who are significantly wealthy, which is why real environmentalists want the world to get rich as quickly as possible, and not slow it down.
2) The best system yet developed to provide more people with more of those needs than any other according to the expressed will of the people is democratic capitalism. Yes, it has some unpleasant side effects, such as disparities of wealth, capacity for abuse, and so on, but to paraphrase Winston Churchill, Democratic Capitalism is the worst system except for all the other systems. Democratic Capitalism has generally swept the world, and the countries that generate the most wealth are invariably capitalist democracies. A few countries that generate wealth comparable to capitalist democracies are usually natural resource exporters, whose societies have far worse inequities.
3) For Americans to compete in environment of democratic capitalism, where many billions of people are willing to work for far less, we must be more efficient in other ways, which includes getting the cheapest energy available to us and using it up before going to any more expensive form of energy. The same is true for transportation (which is how we get goods to market, and how we provide the services people need to let them be more productive than workers in other countries). It's also true of our input goods, the food we eat, and everything else: low-cost makes for greater competitive advantage than high cost.
4) If the US raises its cost of energy, goods, and services compared to other countries we will lose competitive ability, and lose the very economic productivity that has allowed us to control pollution better than the developing world, and to set aside vast areas of parkland and wilderness rather than consume them, harming the many species therein.
So, bringing this home to our starting subject. The only people who know what car is right for them, to let them compete effectively as individuals, and for us as a society, are the individuals themselves, making their choices on a free market. The more the government interferes in that market, the less efficient the decisionmaking will be, and the less well off we will all be as a society. What the government should do in the car market is to get out. Rip out the subsidies to energy, transportation, and everything else, and let markets do what they do best: allocating resources to their most efficient use.
Best,
Ken
To which I replied:
Ken, YOU ROCK! Great conversation. I had a blast reading your world-view. See my comments accordingly, and we'll call it good. Have a wonderful Thanksgiving.
Kenneth Green wrote:
Just as the supreme court evaluates our constitution in terms of it's implications on today's society, we must also look critically at all generally accepted theories/areas of study and interpret/analyze them in terms of today's world.Steve -
You raise many interesting areas of discussion, but I suspect that we come from such a diverse way of seeing the world, we could discuss these things for days, or weeks, without gaining any significant agreement. Still, in the interests of civil discourse, my world-view in a nutshell:
1) People seek to satisfy their basic needs, ala Maslow. They want housing, food, potable water, breathable air, education, healthcare, gainful employment, and so on. (Note that I did not say "pure air or pure water," such purity ranks far below other needs for most people in the world). Environmental protection generally ranks low on this list, and is really only affordable by people who are significantly wealthy, which is why real environmentalists want the world to get rich as quickly as possible, and not slow it down.
Maslow- physiological, safety love/belonging, esteem, self-actualization.
Just above the basic physiological needs ("air" and "water"), you'll find safety- which includes safety of resources and health. In this sense, I'd argue that environmental protection- "clean air" and "clean water"- actually ranks very high, as it falls within the second level of basic needs.
Additionally, getting "rich" fast is usually done "at any cost". And just like "efficiency" at any cost, these courses of action are simply not sustainable in the long run. In fact, far too many of the "rich" in our society have gotten rich by running businesses that, while they may have followed the letter of the law, they haven't truly protected the environment as much as they could/should have. And many have skirted environmental laws all together and done more harm than good. Some get caught, but some don't. Illegal dumping, water contamination, exposure to workers, etc. are all ways to cut cost, and get rich.
I agree, the market can help weed out these bad seeds, but not before the damage is done. That's the highest cost of all.
Further, these "rich people", when they become rich, tend to live to excess, which in it's very essence, is the antithesis of environmental stewardship. Real environmentalists don't want the world to get rich, they want the world to do the most good what they have, with what's available and more importantly, with what they can do without. A Consumption Conscience, if you will.
And worse yet, when people are "on their way" to becoming rich, they tend to live way outside their means just to give the impression that they have already achieved a level of status. This type of reckless behavior only perpetuates the lack of environmental concern.
You have very little argument from me on these points. But free-market capitalism, democratic or not, will always benefit the individual over the society. Heck, just look at all the worthless junk consumers are programmed to consume! Bad for landfills, bad for pollution, bad for health, bad for the economy in the long run and thus bad for society as a whole. But someone is making a buck selling it!2) The best system yet developed to provide more people with more of those needs than any other according to the expressed will of the people is democratic capitalism. Yes, it has some unpleasant side effects, such as disparities of wealth, capacity for abuse, and so on, but to paraphrase Winston Churchill, Democratic Capitalism is the worst system except for all the other systems. Democratic Capitalism has generally swept the world, and the countries that generate the most wealth are invariably capitalist democracies. A few countries that generate wealth comparable to capitalist democracies are usually natural resource exporters, whose societies have far worse inequities.
We all want a certain standard of living. But everyone's definition of "standard of living" differs. Wealth generation is not the problem. The problem, or "unpleasant side effect", is the disproportionate wealth generation, led by the elite who tend to protect themselves by either buying protective legislation (tax law and otherwise) or buying lawyers to defend, without conscience or concern for anything other than protecting their own wealth.
People will be people, and human behavior is what it is. But at some point, a proactive effort must be made, led by both the top (our leaders- business AND government), as well as grass-roots efforts (local community organizers, NFPs, NGOs, etc), to promote and foster a real shift in our priorities. We've been programmed to consume (http://www.storyofstuff.com/)... why not reprogram with other areas of focus- such as conservation and optimization.
3) For Americans to compete in environment of democratic capitalism, where many billions of people are willing to work for far less, we must be more efficient in other ways, which includes getting the cheapest energy available to us and using it up before going to any more expensive form of energy. The same is true for transportation (which is how we get goods to market, and how we provide the services people need to let them be more productive than workers in other countries). It's also true of our input goods, the food we eat, and everything else: low-cost makes for greater competitive advantage than high cost.
You use the word "efficient", which is really a misnomer, as it doesn't tell the whole story. Efficiency, in it's essence, sacrifices something. In your example, we are sacrificing cleaner, renewable energy for "quick and dirty" energy just because it's cheaper. But in the end, something always suffers, and thus costs more.
Lets take human health, for instance. It may be "super efficient" in terms of the time it takes for a person to "have a meal" (eat a quick burger, fries and coke- 3 minutes in the drive thru, 5 to 10 minutes down the hatch), but at what human cost? Nutritional value is nearly zero, and counterproductive properties including high levels of fat, LDL cholesterol, bovine growth hormone and high-fructose corn syrup are off the scale. The "intangible" costs are that we suffer from obesity, diabetes, heart disease, and are generally unhealthy just because we've found a way to eat fast.
So, is it really "efficient" to eat like this? Of course not. Not unless we counterbalance the unhealthy effects with acts of healthiness- such as incorporating more nutritional elements into our diets, getting some exercise and eating in moderation. The problem is that not everyone takes the time to counterbalance the effects. It takes too much effort, and we are lazy.
In terms of cheap energy (coal, oil, etc), the "efficiencies" of low cost are more than out paced by the negative toll on the plant and human health. Not only are we not doing enough to counterbalance the effects, because "they cost too much", we aren't even doing the things that inherently cost less, such as simply reducing consumption.
How about this equation... how much acid rain, smog, asthma, autism and death, does it take to add up to, "we just can't do this any more"?
And you say, "use it up" before going to more expensive energy? WOW! Use it up? Since when has being "all-consumptive" ever led to anything good? Hunting/fishing to depletion/extinction, over eating, addictive use of drugs/alcohol, etc?
Very interesting argument. However, I say we will lose competitive ability AND our standard of living (parkland and wilderness), regardless of costs compared to other countries abroad, if we don't reinvest in infrastructure, reduce our consumption, become more "frugal" in terms of energy usage, and demand cleaner, renewable energy. Basically, we need to accept responsibility for our presence on this planet.4) If the US raises its cost of energy, goods, and services compared to other countries we will lose competitive ability, and lose the very economic productivity that has allowed us to control pollution better than the developing world, and to set aside vast areas of parkland and wilderness rather than consume them, harming the many species therein.
We, as a people, are to a point in our evolution that we can no longer simply rely on financial profitability to drive our development. We must start doing things because they just need to be done. That doesn't lower anyone's standards, it raises everyone's.
Have you considered the amount of money spent on the cost of waging war, let alone the loss in human capital?
If the amount of $$$ spent on Iraq and Afghanistan (including wasted, lost, and over-billed by war profiteers such as Haliburton) would have been used as reinvestment on infrastructure at home, or even constructive foreign aid (rather than destructive), we would be able to help raise the bar across the board. I'm not talking about spreading-the-wealth, I'm talking about reinvesting in infrastructure and people in terms of education and standard of living.
But... when things are a bad idea, we as a society have generally accepted principles, guidelines and standards of conduct, as well as laws, intended to keep individuals from harming themselves as well as others. Example: Even though we have an individual constitutional right to free speech, we can't/shouldn't yell "fire" in a crowded theater if there's really no fire, right?So, bringing this home to our starting subject. The only people who know what car is right for them, to let them compete effectively as individuals, and for us as a society, are the individuals themselves, making their choices on a free market.
Even though we have the right to drive whatever we want (as long as the vehicle is "legal" and road worthy), it is now generally accepted that 7mpg is a bad idea. Thing is, 7mpg was ALWAYS a bad idea. As individuals, we've told Detroit to give us better MPG vehicles. But they have refused to do it because they know we are so dependent on our cars and trucks, that we will buy whatever they make.
We may not drive them as much with high fuel prices, but we will still buy them. They know it. The bank on it.
So at some point, we need to have our elected officials speak for us, and demand accountability from industry. Anti-trust laws, labor laws, whatever. If tacking on environmental criteria to a financial bail-out is part of that, then good! Tax dollars being used responsibly for once. By mandating environmental guidelines, we as people are simply now telling Detroit, through our representative government, that we want them to stay on task and not buckle under the pressure of maximizing profit. Be innovative. Find a way to do it better. Representation by the people, for the people!
Just curious, were SUVs always so profitable, or is there a cost curve showing that they were in the red once upon a time. Or maybe the Big Three relied on "creative financing" to perpetuate the gorging, http://blogs.ft.com/gapperblog/2008/07/were-suvs-such-profitable-products-after-all/
And did we ever really need SUVs? Just because gas was cheap, did we need to guzzle as much as possible? The current condition/state of the auto industry is the best argument proving that this course of action, though profitable in the short run, was in fact a REALLY BAD IDEA over all.
Finally, something we completely agree on! Government interference in any market can be counterproductive, especially if bureaucratic red-tape and unnecessary complications get in the way. But since we know government won't get out, we as individuals within this representative capitalistic democracy, need to demand accountability and push our leaders to mandate our interests in terms of policy and enforcement.The more the government interferes in that market, the less efficient the decisionmaking will be, and the less well off we will all be as a society. What the government should do in the car market is to get out. Rip out the subsidies to energy, transportation, and everything else, and let markets do what they do best: allocating resources to their most efficient use.
And again, "more efficient" or "less efficient"is relative to what is given up in the process. Do you really believe we're much better off as a society guzzling fuel, spewing emissions, and consuming everything in sight just for the financial profitability of it?
APATHY AND INDIFFERENCE IS THE REAL ENEMY. I THINK YOU AND I CAN AGREE THAT IT IS OUR RESPONSIBILITY, AS CITIZENS AND PEOPLES OF THIS LAND, TO SIMPLY HOLD ACCOUNTABLE ALL OF OUR LEADERS- BUSINESS, GOVERNMENT, SPIRITUAL AND OTHERWISE.
THAT'S THE REAL MARKET!
PEACE.
SG
And there you have it. I'm guess we didn't solve any of the worlds problems... yet, but at least a conversation like this is "out there" now, and hopefully causing other to pause for a moment, take stock in the BIG PICTURE, and decide for themselves just what kind of world they want to live in. sg
Saturday, November 22, 2008
Detroit going Green
I recently read a short paper by Ken Green in the American regarding the "green movement" forcing it's way into Detroit. Below is my letter to Ken, including complete text of his paper, and my own comments in green:
Kenneth, you're a smart guy. Your resume and credentials are impressive. By all accounts, you are are an accomplished individual and it should stand to reason that you would be an insightful and reasonable person.
No doubt, I would be crazy to challenge you.
But after reading your commentary regarding the "green movement" shoving their agenda on Detroit... all I can say is that YOU HAVE GOT TO BE KIDDING ME! It's points of view like yours that will perpetuate ignorance and bad decisions.
Please see my comments in green below following each section of your article from the American:
Kenneth, you're a smart guy. Your resume and credentials are impressive. By all accounts, you are are an accomplished individual and it should stand to reason that you would be an insightful and reasonable person.
No doubt, I would be crazy to challenge you.
But after reading your commentary regarding the "green movement" shoving their agenda on Detroit... all I can say is that YOU HAVE GOT TO BE KIDDING ME! It's points of view like yours that will perpetuate ignorance and bad decisions.
Please see my comments in green below following each section of your article from the American:
Always eager to shove their agenda into a seemingly unrelated policy discussion, the green movement has joined the debate over bailing out the Big Three automakers.
House Speaker Nancy Pelosi wants to tie federal assistance to a requirement that Detroit make more fuel-efficient, eco-friendly cars. “Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol,” demands New York Times columnist Thomas Friedman. Writing in The Washington Post, Columbia University economist Jeffrey Sachs calls for a “major industry restructuring to position the United States to lead the world in producing cars that get 100 miles or more per gallon.” (Sachs is pinning his hopes on plug-in hybrid vehicles, “fuel-cell cars,” and the much-ballyhooed—but not yet seen or priced—Chevy Volt.)
In other words, at a time when the top Detroit automakers are desperate for financial aid, the federal government should force them to sell more expensive cars that are less profitable. Make sense to you? Me neither.
The auto industry has proven that left on it's own, it will make decisions ONLY in the best interest of the bottom line, with no regard for long term sustainable, good or even smart strategies. This has been, and will continue to be, at the expense of the auto worker, the environment, the consumer and the new global economy.
Now, you can argue that a corporation's only purpose is to post a profit for it's shareholders, and you would be right... in the old economy. In today's world, more than ever, business, government and society are increasingly interwoven and all are more demanding of accountability.
Specifically, the green movement- which I would argue is more of a revolution (as in, revolving, coming around again), is a new force in truly measuring the economy on a global scale. No longer is the simple (or complex depending on what type of bookkeeping and accounting loopholes are employed!) profitability of a corporation of primary concern.
Example: How can producing a $55,000 SUV that financially profits 30% in terms of cash, but macro economically (environmental, social and other such "costs") drives a stake into the heart of our being, be a good practice? Pollution, toxins, waste, landfill, fuel consumption and emissions- not just in the manufacturing level, but in terms of the entire useful life of the vehicle- are all costs that affect the economy. The true cost of that vehicle is nearly immeasurable. In looking at the big picture, it's easy to see that long-term sustainability is not present in this example.
It’s hard to see how greening Detroit will help car companies, car drivers, or American taxpayers. Greener vehicles are more expensive to make and bring in less profit than other cars. They cost more to finance, more to repair, and more to insure. Their sales depend heavily on tax incentives—which means that selling more of them will require more taxpayer dollars. The National Renewable Energy Laboratory (NREL) estimates that plug-in hybrid vehicles cost $3,000 to $7,000 more than regular hybrids, even though the performance differences between the two models are slight, and the really fuel-efficient hybrids cost $12,000 to $18,000 more than the conventional brand.
As my grandfather, a life-long railroad engineer, father of 8, and die-hard republican- yet master of common sense, would say, "The horse shit is knee deep in there." Come on. Development of ANYTHING new (vehicle or otherwise) is ALWAYS more expensive until economies of scale can come into play. Common sense dictates that as technologies improve, costs drop and profitability increases. THAT'S WHAT DRIVES COMPANIES TO INNOVATE AND DO BETTER!
Additionally, I must remind you that the petroleum industry is- always has been- heavily subsidized with TAX breaks! Who pays for that??? The American tax payer!
So, just off the bat, greening Detroit will help the American tax payer by reducing our dependency on petroleum, and eventually driving the oil companies the way of the dinosaurs. Ironic, isn't it!
And if it takes tax incentives to cause a huge shift in our consumer behavior, then so be it. I seem to remember there was a HUGE tax incentive for buying SUVs over 6000lbs, which led to Detroit making BIGGER and BIGGER vehicles, and buyers buying MORE and MORE of them. The government made it easy for the consumer to buy gas guzzling, emission spewing, expensive to insure, monsters of the road. Why not for greener vehicles as well!
BTW, history has proven (not estimated) that big-ass SUV's cost $10K to $30K MORE than regular station wagons or trucks. So don't tell me price is an issue! American's will always pony up for whatever the want.
What about general maintenance? Service on a hybrid is understandably different than traditional combustion engine vehicles, so it's not an apples-to-apples comparison for sure. But lets take tires for instance- a set of rubber for an SUV can cost as much as $1600 or more. A Prius can be put back on the road for more than $1000 less! That's $1000 of disposable consumer income that is able to be REDIRECTED to another focus such savings, or other costs of living.
Consider the Chevy Volt. When it was first announced, the price estimate from General Motors (GM) was $30,000. That soon jumped to $35,000. Now GM’s president says that the actual price could be closer to $40,000, and that GM will still lose money on the sale. As for fuel cells, GM’s prototype fuel-cell car runs on hydrogen and emits nothing but water vapor. It’s hard to get greener than that—but it’s also hard to find a more expensive car: the prototypes cost $1.5 million to produce.
Consider the source... GM is the creator AND killer of the EV-1 electric vehicle. It is also the suppressor of battery technology development. GM once owned the patent rights to NiMH batteries, which showed great success and promise in terms of rechargeable technology, and then sold that to Texaco. Hummmm?
Additionally, I think your financial/monetary arguments are lame, especially in terms of R&D. R&D dollars are there for a reason- for innovation. PROTOTYPES ALWAYS COST MORE. And, you obviously haven't considered the R&D tax credits so heavily relied upon by corporations- especially the auto industry, yes?
But for the sake of arguments, have you bothered to compare green R&D spending with pharma, aerospace or IT R&D? I'm guessing it's all about the same, proportionally, in terms of the cost of prototype development and bringing safe, reliable products to market. (Oh, and I'm taking serious liberty in assuming that corporations are intent upon bringing safe, reliable products to market! Truly, history has shown that profit driven corporations will find ways to cut costs/corners- usually in terms of consumer safety- all the while paying lawyers obscene amounts of money to defend their decisions, and lobbyists even more to get congress to ease consumer protection laws.)
Hybrids are also more expensive to insure. Online insurance broker Insure.com shows that it costs $1,374 to insure a Honda Civic but $1,427 to insure a Honda Civic Hybrid. Similarly, it costs $1,304 to insure a Toyota Camry but $1,628 to insure a Toyota Camry Hybrid.
Oh, LAME again! Lets see, a $53 annual difference for the Civic? Are you serious? Less than one cup of coffee per week! And $324 per year additional for the Camry? Less than a dollar per day! The savings in fuel alone will make up the difference. I know people who spend more on dry cleaning and nail salon visits!
What explains the higher rates? According to State Farm, hybrids cost more to insure because their parts are more expensive and repairing them requires specialized labor, thus boosting the after-accident payout.
OK, let's forget for a minute that economies of scale will eventually come into play, and parts will become less expensive over time. You want us to assume that having smart, well trained, specialized labor is a bad thing? Green-tech jobs are the future! These will be the in-demand jobs that propel our labor force into a higher paid, higher standard of living.
Even conventional small cars are more expensive to insure than larger vehicles, because the former are involved in more accidents that produce extensive injuries. According to a recent article in The Wall Street Journal, the same driver would pay $412 more to insure a Honda Civic compact that gets 36 mpg on the highway than he would to insure a Honda CR-V (Honda’s mini-SUV) that gets 27 mpg.
You're right, after-accident payouts don't just include the costs of parts, materials and labor... they are really about bodily damage to the human being. But more people are smashed up by, and in, SUVs because of the perceived sense of invulnerability leading to higher risk taking and unsafe driving practices. Talk about high risk!
FYI, both Travelers and Allstate offer discounts for Hybrids. Shop around! According to Allstate's website, http://www.allstate.com/insurance-made-simple/hybrid-cars-cheaper-to-insure.aspx, "Hybrid cars aren't just cheaper to drive. Research shows that hybrid car owners tend to fall into the lower-risk category, which gives insurance companies the chance to offer them a lower insurance premium. This depends on the insurer, though, so be sure to ask when you get your quote."
I guess it all really depends on your point of view, and your spin. But at some point, we all need to make a decision of what we want, and what we are willing to live with. What are you willing to "sacrifice" to ensure a more balanced planet?
President-elect Barack Obama wants to give a $7,000 tax credit to Americans who buy a plug-in hybrid vehicle. He says that such a tax credit will help carmakers sell a million plug-in hybrids over the next seven years. If Obama is right, that means the government will spend around $7 billion in taxpayer money to promote the sale of plug-in hybrids. Replacing all American cars with plug-in hybrids would require tax incentives worth roughly $1.8 trillion dollars (assuming each car would cost the government $7,000).
I defer to my argument on the SUV tax break. THAT "INCENTIVE" WAS UP TO $75,000! How much did that cost the American tax payer!
If the green movement succeeds in carjacking the Detroit bailout, automakers will be forced to sell costlier and less profitable vehicles. Before allowing that to happen, policymakers should consider the consequences of higher car prices, namely, reduced sales, slower fleet turnover, and longer operation of aging vehicles that emit more pollution and break down more frequently than newer automobiles.
You really want people to believe that we should continue to produce status-quo, gas guzzling vehicles because the alternative will lead to reduced sales, slower fleet turnover, and longer operation of aging vehicles, etc? GET REAL! People still drive old cars today, and always will- both out of desire and necessity.
Other's buy new cars every year or two. Shouldn't they have reasonably priced, readily available alternative fuel vehicles to choose from? Then after a few years, they trade in, and thus starts a NEW supply of USED cars, AFV's this time, now available for buyers in the pre-owned market. WHAT A CONCEPT. It all has to start somewhere.
In fact, I'd argue that selling less and having slower fleet turn over (reduction in consumption?) is not necessarily a bad thing, especially if it means we have a chance to replenish resources, restore damage to the environment and renew/replace the infrastructure necessary to foster a more sustainable planet AND global economy.
Additionally, it will also FORCE Detroit to "get real" in terms of reorganizing into organizations that will survive and thrive in the coming decades.
They should also consider how higher car prices will affect Americans in the midst of a nasty—and possible long—recession. Finally, they should ask themselves: Is this really the way to make U.S. automakers more financially secure and globally competitive?
Arguing that we shouldn't enable a green agenda in Detroit because of your perceived short-term "pain", is absurd. The recession pain we are all feeling now, due to fast-and-loose financial business practices/greed, is just one example of why big corporations will never act in the best interest of society without a little encouragement.
If you are so worried about how higher car prices might affect Americans during this nasty, possibly lengthy recession, I say NOW is the best time ever to feel the pain- in the midst of ALL THE OTHER PAIN!
Ask yourself this... if you had to have a broken arm, leg, concussion, cuts and a coma, would you prefer being inflicted with multiple events (get beat up, fall down stairs, trip, wreck your car, etc) or just get it all over with in one big, bad trauma? The pain will be there no matter when each thing happens. But if it all happens at once, then the sting of one will help the sting of another not feel as intense. It will also give the WHOLE SYSTEM a chance to reset, regroup, make a full recovery and become stronger/better than before.
Don't you know, love shared is doubled, while pain shared is halved?
Now, I'm not arguing that the "green way" is the only way, or that radical tree-huggers have all the answers. But I will argue until I'm blue in the face that the status-quo cannot be the answer either.
And though I'm an idealist, I also realize that until we, as peoples of the earth, are evolved to the point where we ALWAYS act in the best interest of existence rather than self-interest, we will have to cope with greed vs. good. As a bridge to that more evolved, enlightened level of humanity, a more reasonable approach is to find ways to "optimize" our efforts in order to balance efficiency vs profit.
Attached is my "optimization curve" theory that shows the relationship of maximum benefit to the population in relation to extreme efficiency and extreme profitability. Basically, somewhere between each extreme is an optimized level of "enough" of each.
So, before ANYONE makes ANY decisions, we need to consider ALL of the consequences of continuing down the path we've been traveling. In my opinion, the "negatives" you present are nothing more than circumstances of transition.
I know you probably mean well, but I think you are truly misguided in your analysis. So, please, rethink your archaic, backwards, and generally "bad" ideas such that your readers might actually get through tomorrow with a better understanding of the things we really need to be doing in order to build a stronger future.
Sincerely yours,
sg
Steve Greene is a renewable energy activist, and biodiesel industry refugee
Kenneth P. Green is a resident scholar at the American Enterprise Institute.
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