Thomas Friedman, the author of "The World is Flat" offers his opinions on what he thinks is a wasteful bailout of the American auto industry.
The reason is that there is a lot of innovation going on in the car industry in other parts of the world, starting with Denmark. Basically it relies on electric cars and a national electric car charging network, generated from clean energy such as wind and solar. Consumers can then buy their milage on their car batteries from the firm Better Place like you would buy minutes for your cell phone.
This model has the effect of being cheaper (6 cents a mile for electric cars, compared to 12 cents a mile for gasoline transportation), and cleaner for the environment. The set up also makes it more convenient for consumers.
Thomas Friedman argued that the US is missing its chance to join in the new trend by its bailout of the old technology. "If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there will be no one to blame more than Detroit’s new shareholders: we the taxpayers. "
However, I don't think the picture is all that rosy. To popularize this model on a larger scale takes innovation in the harnessing of clean energy as well. The disadvantage of clean energy is that it is difficult to generate a lot of electricity compared to using fossil fuels. In addition, wind and solar energy are subject to weather changes, therefore their supplies are sometimes unpredictable and inconsistent. That leads me to question the costs of building the national charging network for electric cars. It's likely to be more costly.
What do you think?
2 comments:
I think it's ok to be a little more costly if it means preservation of the planet. Also the sooner we are hooked off of foreign (and really our own too) oil, the better. I think the American people are ready to make sacrifices again. Something we haven't done in a while.
I think that the government should let the automakers fail. However, these automakers are way to big to fail. Thus allowing the companies to fail would cost more than helping out the automakers. However, i am skeptical, because the automakers don't have a phenomenal plan to re-structure their companies which is obviously what needs to be done.
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