Deja Vu All Over Again: Detroit Blues

As many know Detroit is in the news. A recent L.A. Times story asks “Are the Big Three worth saving?” Now I hate the Pistons and have never been to Detroit, but that does not mean I think the auto industry should implode. Yet, with $25 billion in loan guarantees in place and new requests for government help, one has to wonder whether the industry did it to itself. And here’s the déjà vu of sorts. An article from 2000, yes that’s correct, 2000, called Detroit Plays Catch-Up In Race for Hybrid Car; With Fewer Subsidies, Japan Is Ahead details how despite $1.4 billion given to the auto industry, universities, and national laboratories, Japan, well, Japan kicked our butts. I hate that; not because the Japanese did well, but because this country can still do great things yet seems to squander opportunities. Could it be that Good To Great was not published in time? No. It was published in 2001, and Built to Last came out in 1994. Maybe it is good old fashioned corruption (perhaps Lessig will show that). Or maybe it is a bureaucratic problem. That many actors easily beget bureaucratic balderdash.

And now there are the calls for an energy plan that mirrors the moon shot. Would it go the same way as the previous investment? Maybe not. We seem to do better when we are up against the wall. Unlike the article’s point that in 2000 there was “little sign that Americans want high-mileage cars in an era of relatively low gasoline prices and rising national prosperity,” we are in a different place. So although we seem to be poor at preventative measures, we can move quickly to attack serious problems. But what is the best way to do that? One possibility is that the government needs to spread the money to small companies that are in fierce competition for a piece of the energy solution. Would that lead to railroad era problems? Possibly. But insofar as the moon shot paid a huge sum of money to a broad range of players, it probably had some waste, yet did not seem to create the large scale problems that the rail industry did.

To be honest I need to read more about the economics of the moon shot. So if anyone has suggestions for good reading please share. Nonetheless, it seems that we are in one of those moments in history when we can leverage possibility to solve one problem and in so doing gain a broad range of beneficial outcomes. It is sort of a perfect moment for Brett Frischmann’s work. We can invest in a serious piece of infrastructure and if we plan it properly (in other words limit the ability for the players to end up as neo-railroad barons), we can have tremendous spillovers (Brett and Mark Lemley wrote this article) for the economy and the country as a whole. That’s the hope at least.