Ideas for the Next Economy — Knock the Auto Off Its Pedestal

There are lots of thoughts out there about what to do now that the global economy appears to be going through a reset. Or, as the economists keep calling it, a secular change, meaning one that happens only once in an age (as opposed to the idea that we’ve given up worshipping the economy). One I’ve struggled with is Emma Rothschild’s argument that now is the time to break with what she calls the “Auto-Industrial Society.”

The crisis of the automobile industry presents a seriously difficult set of problems for the new administration. These problems have to do with the connections between short-term and long-term economic policies, policies concerned with the economy, the environment, and energy, and policies that influence the very long-term relationship between the state and markets (as the policies of the New Deal of the 1930s did, for at least two generations).

She writes in Can We Transform the Auto-Industrial Society?

But crisis also creates opportunity. She thinks in this case we have to break the model of focusing just on better fuel efficiency, or vehicles powered by something like electricity. That way lies disaster, she argues. It means

the auto-industrial organization of space, or of transport-intensive growth, is set in concrete for another generation, or longer….A new, hybrid economy for the world, at present US rates of 0.8 cars and trucks per person, would include a universewide fleet of a billion hybrid vehicles in China and a further billion in India; an asphalt Asia of more than four hundred cars per square mile.

Instead, she argues for a bailout tied to improving our public transit infrastructure. This she argues will reduce our carbon footprint and remove some of the nation’s inequalities.

The automobile industry, and its employees and retired employees, could be part of a bailout of this sort; they could be a source of plug-in hybrids, bus engines, new ideas for assisting deprived urban communities (like so many of the cities of Michigan and Ohio), and long-forgotten projects of public transportation. The condition for continuing support would be a lasting commitment to innovation in low-CO2 vehicles, and also in the public transport and urban projects with which the auto companies were once so involved.

Something just doesn’t sit right with me about this essay. I’m not against public transit; the automakers killed off much of its effectiveness decades ago, but we could go back towards it. Even towns like mine once had a trolley, and while giving up most driving would affect things like where I go to church (12 or so miles away), we could walk to buy our essentials if we didn’t feel like waiting for the trolley.

But I’m confused as to how saving the automakers helps us eliminate the auto-industrial society. She needs to spell out her argument more clearly, and instead veers off into biting remarks about how our feckless banks have turned their insolvency into incredible political power (now they’re really too big to fail, so why do they care what regulators say?), and how the auto industry is poised to be even bigger and more powerful. We need less invoking of Adam Smith (“whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters”) and more spelling out of just how bailing out the industry ‘as one component of a program of investment in the transformation of the auto-industrial society.”