The debate about Detroit's desperate auto industry oscillates between two sterile extremes: bailout or bankruptcy. Both are bad alternatives, though bankruptcy has a better chance of forcing real change for these dinosaur companies. Problem is, the risk to the plummeting economy is too great.
Here's a better idea, and a paradigm for other bailouts and infrastructure spending. It comes from Tom Evslin's blog, Fractals of Change. The idea is to use government spending power to create new markets, in this case hybrid cars, much as the government created the computer and microchip industry by having Defense buy heavily at generous prices before there was a natural consumer market for these products.
Evslin's pitch:
The US government should order a complete replacement for its vehicle fleet to be delivered over the next four years. The new vehicles must be either plugin electric hybrid, pure electric, or possibly natural gas. Obviously retooling both at the manufacturers and suppliers is required to deliver this order so the government should be willing to prepay a significant part of it as it does for new weapons systems. That gets money into the system fast and creates/saves jobs almost immediately. It lets the suppliers retool as well as the final assemblers.
He would also spend infrastructure money on building charging and fueling stations. The result is more than preserving jobs and accelerating the shift to new vehicles. "The manufacturers and their suppliers that win the bids to supply the US government with a green, fuel-efficient fleet will then be well-positioned and retooled so that they can sell these products to the rest of us and the rest of the world once we start buying cars again."
