Holman W. Jenkins Jr. is not a happy camper. The Wall Street Journal columnist begins his broadside by taking on the Hail Mary-shaped plug-in hybrid gas – electric Chevrolet Volt. Jenkins reckons it’s what the Brits call a “non-starter.” “Even as GM teeters toward bankruptcy and wheedles for billions in public aid, its forthcoming plug-in hybrid continues to absorb a big chunk of the company’s product development budget. This is a car that, by GM’s own admission, won’t make money. It’s a car that can’t possibly provide a buyer with value commensurate with the resources and labor needed to build it. It’s a car that will be unsalable without multiple handouts from government.” While Jenkins’ anti-Volt tirade isn’t especially accurate (you could even call it inaccurate), at least his rhetoric is a moving target, as he changes targets.
Next in the firing line: the feds, for enabling Motown’s labor “accommodations.”
“The Carter administration rushed in with loan guarantees to keep Chrysler out of bankruptcy. The Reagan administration imposed quotas on Japanese imports to prop up GM. Both parties colluded in the fuel-economy loophole that allowed the passenger ‘truck’ boom that kept Detroit’s head above water during the ’90s. Barack Obama and Nancy Pelosi now want to bail out Detroit once more, while mandating that the Big Three build “green” cars. If consumers really wanted green cars, no mandate would be necessary. Washington here is just marching Detroit deeper into an unsustainable business model, requiring ever more interventions in the future.”
Amen. So what IS the answer? Swimming against the raging torrent flowing towards Washington. Jenkins calls for less government.
“The simplest step forward would be to get rid of the “two fleet rule,” devised by Congress’s fuel-mileage managers to keep Detroit making small econoboxes in high-cost UAW factories. Dumping the rule would force the UAW to compete directly inside each company for jobs against cheaper workers abroad. Even better would be to dump CAFE altogether. If Congress really thinks consumers must be encouraged to use less gas, replace it with an intellectually honest gas tax. Mr. Obama promised to transcend the old stalemates — let him begin with the 30-year-old fraud that our fuel-economy rules represent.”
Fortunately for rants fans everywhere, Jenkins is not in the habit of holding his breath for recommendation realization. And just in case you’re an Obama supporter who doesn’t support bailout billions for Detroit, Jenkins takes his final parting shot at The One.
“He ran a brilliant campaign, but his programmatic prescriptions amounted to handwaving designed to capture the presidency rather than tell voters what really to expect. This may have been a virtue in campaigning but it becomes a handicap in governing. The public now has no idea what to expect — except miracles, reconciling all opposites, turning all hard choices into gauzy win-wins. Thanks to Detroit, his honeymoon is about to end before it begins.”
People still don’t quite understand what the Volt is all about. They still think that GM is aiming at the consumer market with this car. But they’re not. It’s firmly aimed at the government market of tax credits and (green)bailout money. It’s something to show of to politicians craving for oil independence and saving the planet. It’s something to convince them that great things are on the horizon if they just gave them the G*ddamn money already.
Of course they know that nobody will actually buy it. It would take about $250/barrel oil for this car to start making economic sense and even than it would be blasted away by china’s BYD which is already about to launch it’s F3DM PHEV with a longer all-electric range at about half the price.
The WSJ fell the hell off since NewsCorp got their hands on it.
I had a new bailout plan pop into my head when I woke up this morning.
1) GM goes C11; govt. provides debtor in possession financing.
2) Govt. provides emergency loans to stabilize the suppliers in the aftermath of the bankruptcy.
3) Bridge loans to Ford when/if they need them.
This is about what I’d expect from the Wall Street Journal’s editorial page, which is one of the most conservative in the country. Over the last eight years it has generally been a knee-jerk supporter of the Bush administration’s economic agenda.
So Jenkins wants a gas tax to replace CAFE. Sure, lots of folks across the political spectrum do. But that’s DOA — and has been for years — because of the rabidly anti-tax political right. If Obama proposed a major gas tax the Dems would be utterly destroyed in Congressional elections two years from now. So for Jenkins to push that meme is akin to Lucy offering to hold the football.
It seems pretty silly for Jenkins to imply that the Chrysler loan guarantees were bad public policy. The simple fact of the matter is that they worked, both for taxpayers and for Chrysler. This is the problem with ideologues — they get so fixated on upholding an abstract idea that they can’t see reality until it slaps them in the face.
I haven’t followed Jenkins so I’m curious if he is intellectually honest in his critique of what he sees as Obama’s “handwaving designed to capture the presidency rather than tell voters what really to expect.” In other words, did Jenkins complain in 2000 and 2004 that the Bush policy agendas bore very little resemblance to the empty platitudes that he ran on?
If not, why take Jenkins seriously?
I think he’s got a solid point about CAFE and the gas tax. Of course, pointing out economically insane and stupid laws from Washington is shooting fish in a barrel. Sheesh, look how long we’ve had retarded farm subsidies.
His point about the ‘two fleet rule’ needs expanding.
His point about The One may pan out. A cynic (which Jenkins may be) would suggest The One resigned from the Senate to avoid making a bailout vote. Or point out The One’s lack of proposals/leadership regarding a bailout.
Dr Lemming:
In other words, did Jenkins complain in 2000 and 2004 that the Bush policy agendas bore very little resemblance to the empty platitudes that he ran on?
Jenkins is consistent. He beat up the GOP for it’s spending and corruption ways. Of course, when it comes to mocking derisiveness, he tends to pick Democrats.
If not, why take Jenkins seriously?
His epic take on the Pruis wadded eco-panties nationwide:
http://blog.vehiclevoice.com/2005/11/dear_valued_hybrid_customer.html
Yes exactly, why take Jenkins seriously? When was the last time he wrote anything at all interesting, or for that matter, even to the point?
So, based on your inability to read what Jenkins has written in the past, you decide to disregard what he has written now? I might ask what is on your list of publications and abstracts?
I sense you feel slighted by his treatment of soon-to-be President Obama…
This is the problem with ideologues — they get so fixated on upholding an abstract idea that they can’t see reality until it slaps them in the face.
Preach it brother, but be prepared to be called everthing save a flag burning commie for your trouble.
Interesting that Jenkins and others can take Obama on regarding leadership on the bailout issue, given that a part of the reason these companies need a bailout is the total vacuum of leadership on the issue. The tax incentive which allowed companies to expense the entire cost of a >6000lb vehicle is part of the reason GM, Ford and Chrysler got to this place.
Nonetheless, that was then and this is now. As much as I still like the idea that we should have American companies manufacturing automobiles (and lots of other things), we have shown that as investors, we’re interested solely in short term value. We the people have allowed a tax and accounting structure to arise which has created the likes of GM, and for that matter Lehman Bros and Bear Stearns. We still want to believe the siren song that we can get something for nothing.
Corporate “leadership” has simply evolved to most take advantage of this lie.
Thw WSJ has not supported Bush’s economic policies during the past eight years. The editorial board supported his tax cuts, but not his spending policies. They have been advocates of lower taxes, lower spending, and smaller government for a long time. Bush only got that half right.
Furthermore, Jenkins was not advocating a gas tax; he is simply pointing out that it is disingenuous to dictate to auto makers what they should make, if it is contrary to what the public wants to buy. The only way to make the public want higher mileage cars is to raise the price of gas. I am sure Jenkins thinks that there should be neither CAFE standards nor a gas tax. I agree with him that there would be nothing more foolish than loaning money to GM, doing nothing about the union/too many dealers/too many divisions problems, and mandating that GM make “green” cars. That would be a terrible waste of money and, ultimately, jobs.
This is the problem with ideologues — they get so fixated on upholding an abstract idea that they can’t see reality until it slaps them in the face.
——
Preach it brother, but be prepared to be called everthing save a flag burning commie for your trouble.
Actually–and I say this as a flag-burning commie myself–ideological myopia strikes both the left and right extremes. Mind you, extreme right-wingers usually get more soapbox time in North America, so you’d be forgiven thinking it was the right alone.
I agree with scrapping CAFE in favour of a gas tax, but I also agree with posters who’ve stated that this will never happen. Americans just do not support broad, proportional taxes; they prefer either nickel-and-time usage fees and/or supply-side constraints.
I agree 100% with what he says. Gas tax will work better than the CAFE or the “green” corporate welfare handouts. Bring the price of gas to $5 per gallon (in 2008 dollars, so probably more than $5 in 2010 dollars) over a course of say five years. This will have a much stronger effect on the fuel efficiency and the emissions of the vehicles than any CAFE or tax handouts will. Yes, this will be politically difficult to do, but then, after this nation elected a black president with relatively little experience and known connections to shady people and who run against a Vietnam war hero, I think everything should be possible..
People don’t stay stupid forever. I think the time has come for a carbon tax (and maybe a gas tax on top of that, to compensate for the cost of military adventures and uncertainty of supply), and I think Obama just might be the guy to get it passed. And despite the fact that I come from the opposite side of the political spectrum from Holman Jenkins, I think he makes some good points.
The biggest problem we face is political. Jenkins and the WSJ don’t really care about fixing Detroit they only care about killing the UAW.
Nobody actually wants to fix this country’s problems, they just want to win. Until that changes, everything is only going to keep getting worse.
Yes, as Jacob writes, we need such a tax to bring gas up to $5 gallon. I see many permanently capped pickups or seven seater SUVs with a lone driver – perhaps higher gas prices will get the message across. It also does nothing for road safety out on the highway to have a plenitude of these large empty vehicles effectively blocking the views of those following behind.
As for the Volt. Auto engineers design what they’re told. Like the Camaro this is the flight of fancy of a senior exec and has nothing to do with providing for the mass market which should be the core business for GM wouldn’t you say ?
The Volt with its 16KWHr battery continues to take heat based on its marketability. OTOH a less expensive battery-free VOLT is possible and would still deliver most of the advantages of hybridisation. Full decoupling of the engine in the Volt, as opposed to the partial decoupling of the Prius engine, should allow an even smaller engine perhaps under 1.0 Liter to be fitted.
You have to understand that the efficacy of the Toyota HSD system though obviously superior to a conventional mechanical multistage transmission still manages to place a limit on engine revs and hence power whereas the Volt system does not. My vision is that this simpler type of powertrain could achieve a reduced price point and present a significant challenge to the coming release of future Honda and Toyota hybrid products.
T2
Jenkins: Gasoline goes bad after a few months…
Never heard of it never seen it. On the contrary, seen and personally experienced numerous cases where a car ran fine after being parked in the driveway for months even a year.
That’s all I need to know about Mr. Jenkin’s brilliance as an automotive writer.
Actually–and I say this as a flag-burning commie myself–ideological myopia strikes both the left and right extremes.
I agree 100%. And I admire your courage in eloquently defending your convictions as a member of the minority around here. I don’t see myself as an ideologue so much as a realistic student of history and honest interpreter of current events. I see that quality in Bernanke. He’s a realist.
I get a kick out of those, clinging to their market purity, who speak as though they have a crystal ball before them while completely ignoring any lessons of the past. Unfortunately, there is a tendency (here, there, and everywhere, I guess) to categorize those with whom we disagree as representatives of extremes when often they’re not.
Jenkins: Gasoline goes bad after a few months…
I recently ran stored 3+ year old non-stabilized jerrycanned RUG through my 2002 Ranger (w/ancient Vulcan pushrod) without a hiccup. The computer didn’t care and compensated for any octane deviance that might have been present.
Fuel stability isn’t a problem for the Volt… take it on a trip out of town every quarter and use up the gas. Or add Sta-bil.
What is a problem for the Volt is GM’s inability or unwillingness to build it in volumes that make a difference in the near future, its excessive price, its compromised capability and the fact that, at all times, the car will be dragging an anchor. Sometimes the anchor is the engine and sometimes the anchor is the battery but, any way you slice it, it’s dragging an anchor along.
Jenkins got the gas issue wrong but he’s still right about the Volt.