As North American taxpayers take a look at the gleaming new models on display at Detroit’s auto show this week, they might well ask themselves just why they poured billions of dollars into saving GM and Chrysler when no one else would.

Politicians, local car dealers, parts suppliers and the auto workers’ unions told them it was to protect strategically vital jobs in their economies. But far from being essential to our economic future, those jobs are rapidly becoming obsolete—at least in this part of the world, where they are being funded by taxpayers’ money.

With GM car sales in China up over 60 per cent this year and North American sales still down from last year, I know what I’d be doing if I were running the company.

I’d take the bailout money given by the taxpayers of countries with shrinking auto markets, like the US and Canada, and use it to build new car plants in China and other countries where car sales are booming. (GM already sells almost as many cars in China as it does in the US.)

But I’m sure the company promised not to do that.

Even so, the bailout is a losing proposition for North American taxpayers, who have become the de facto owners of the company. US car sales are a shadow of what they once were, and in a world of triple-digit oil prices, they will become even fainter.

There were four million fewer cars on American roads last year than there were the year before. As oil prices climb ever higher, some 50 million more vehicles will be heading for the exit lane over the next decade.

Is that the kind of market outlook the taxpayer should be investing in?

But invest they have. American taxpayers ponied up some $40 billion last year. The federal government in Canada, along with the provincial government of Ontario, anted up $14.5 billion in direct taxpayers’ assistance to GM and Chrysler—a bailout equal to half those jurisdictions’ entire annual corporate tax collection.

Just think of the public outrage that would follow if the government gave the money directly to the oil industry instead. Yet the auto and oil industries are two sides of the same coin—over half of all the oil used in North America is burned in our cars.

During World War II, Detroit went from manufacturing cars to making tanks and bombers literally overnight. Today, couldn’t all those unemployed auto workers be re-employed to make what their economy really needs—more public transit vehicles—so that when those fifty million Americans get off the road, there’s a bus or mass rapid transit vehicle for them to get on?

That way, if we’re going to spend billions of dollars of taxpayers’ money, we’ll be investing in our future, not in our past.

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  • Sandra and Robert Barber

    It is encouraging to read the viewpoint of someone with insight and intelligence-and my husband and I thank you for stating exactly what you see. It is time that someone opposed the sheer hypocrisy of our so-called leaders. Their only motivation is greed and has absolutley nothing to do with saving our environment or creating jobs for those unemployed.

  • marcovth

    Don't expect any political change until oil bottoms out at $150 as the new LOW.

  • J. Allen Strople

    You indicate in your article “there were four million fewer cars on American roads last year than there were the year before”. Are you sure these North American built cars were not simply replaced by foreign vehicles. There has been a clear change in perception of quality of N.A. built vehicles and hence a clear shift to foreign vehicles. It's the “in thing” to be driving a Japanese or German vehicle. Who would have ever thought back in the 1940's this discarding of anything made in America, and the clear shift to Japan and Germany. I'm from the older generation and as a youth anything made in China or Japan was clearly inferior. That ended after 1945 and thanks to the US, the Marshall Plan in Europe and Edward Deming and his system of profound knowledge when he set japanese production in motion and as they say, the rest is history!

  • YuriH

    J.A., I am not sure your read the article properly. It was never mentioned that the reduction was in NA made vehicles. Rather, it clearly points to the total number of vehicles on the road. The rest of your comment, thus, is off topic. Otherwise, it is an interesting look at the situation, but does the author really think that China is such a sweet spot to build extra plants? There is a lot of capacity globally as it is. As far as whether the car boom there is sustainable…..I honestly do not think so 2-3 years down the road.

  • http://www.2000Watts.org/ Laurent – Switzerland

    “The auto and oil industries are two sides of the same coin”. Helping the auto industry is helping the oil industry. This is a good point but a scary thought.

    Regarding the public transport (fast train or bus).
    In the 1920s, GM bought all trains and rails and shut them down to remove the competition.
    Since the US have had all of its eggs in the same basket: cars & oil. When the oil jumps high, people do not have a Plan B to move around and go to work. No choice is a bad choice.

    Let’s imagine than 90 years later, GM will have to rebuilt what they destroyed!

  • davidwdent

    Jeff, keep up the great commentary. Your ideas are unique and concisely stated. In time (and not too far from today), you'll have a great and clairvoyant body of work and will be in high demand when it comes time to try to dig out of the mess we're creating. Yours are massively important ideas and though I've been reading about the energy crisis for a few years now, it's your work that has me moving to within walking distance of my office and assuming there will be no resale market for my tragically beautiful BMW.

  • davidwdent

    Jeff, keep up the great commentary. Your ideas are unique and concisely stated. In time (and not too far from today), you'll have a great and clairvoyant body of work and will be in high demand when it comes time to try to dig out of the mess we're creating. Yours are massively important ideas and though I've been reading about the energy crisis for a few years now, it's your work that has me moving to within walking distance of my office and assuming there will be no resale market for my tragically beautiful BMW.

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