North America and the Auto Sector: The Upside of Down

Anyone else notice how circumscribed the debate over the auto sector has been? Some news outlets have occasionally asked “is the bail out fair?” but the discussion has remained fairly limited. Specifically, pieces on the auto-sector bailouts tends to be restricted to the negative consequences in relation to the costs in jobs: the moral hazard the bailout creates, the (unfair) treatment the bailout affords autoworkers, the concerns over the enormous burden the bailouts imposes on taxpayers, the impact on affected communities. Even within this narrow discourse,few commentators have even been outspoken. Maclean’s has probably been the most interesting. It bluntly outlined the gong show the industry has become  with this set of amazing statistics and its columnist Andrew Coyne published has posted piece after piece where he rightly points out the opportunity cost of bailing out the auto industry.

However, none of the commentary on the North American auto-sector’s dramatic decline has touched on how this change will impact the continent’s political and policy landscape. It interesting because, while it isn’t polite to talk about it, the fact is, there are upsides to the decline of the North American auto sector.

Start wit the fact that we will now only have one or two (smaller) American auto companies and their relative importance to the US economy will be dramatically diminished. It is hard to imagine that the political muscle of this sector will not equally diminish. This is no small matter. Huge swaths of American (and thus, in part, Canadian) public policy is explicitly and/or implicitly focused on ensuring that people either need cars, or that cars are never a burden. (Remember, these are companies that, with political and government acquiescence, bought up public transport companies across the US just so they could tear up the tracks their trams ran on to push people into cars or, if they had to, the buses the car companies built.)

So everything from highways, to urban planning, to emission controls, to business hours… almost everything in our society, is shaped by the fact that cars and the auto-sector were a large and integral part of the North American economy and its social fabric.

And so all these decision, all these debates about how North Americans should structure their society, they are all going to open up again as American auto companies cease to exist or decline in importance. The US congress is much more likely to impose tougher emission restrictions if those restrictions most likely impact foreign companies. If more roads don’t create more American jobs and profits then public transport – not the auto-sector – becomes slightly more appealing to subside.

It is true that Americans (and Canadians) love their cars. But this love didn’t come out of nowhere, it was nursed by decades of social policy and economic planning. Now the incentives that created and sustained that process are potentially irrevocably weakened. The consequences are terrible for those who work in the sector, but they may end up being liberating and renewing for society at large. For cities, citizens and communities the implicit legal, political and policy barriers that have prevented alternatives are already beginning to decay.

At that’s a big upside.

5 thoughts on “North America and the Auto Sector: The Upside of Down

  1. Jeremy Vernon

    In the programming world we'd call this a process of total-refactoring. Where the system is disassembled and the pieces are examined with the new context taken into consideration. Those that no longer serve a purpose, are redundant or actually caused problems are round-filed. A sedimentary accumulation of bureaucracy has built up around the industry – this break-up allows economic forces to gain purchase and accelerate those aspects that have the most positive net effects. I'd be interested to see how environmentalist organizations are thinking about how to capitalize on this turn of fortunes. This reminds me in many ways of Operation Berkshire and the Master Settlement Agreement, where Tobacco Corporations were revealed as the decrepit cancer-spreading, life-destroying engines of avarice we now understand them to be. It marked the beginning of the end for the industry (at least in North America).If only something similar happened to Canadian telecommunications companies…

  2. Stephane Dubord

    I think you have to be careful in your attribution to the car manufactuing industry. I think you're lacking the last step, which is to go past the car maker, to get to the car fueler… the big Oil industry. I have to believe the major political clout still resides with them, and has a great deal to do with the politics behind the bailout of gas guzzling car makers, in essence getting government to ensure the oil makers have a consistent market driving their demand. Obviously, it would be better if the reason for their comparative decline in importance was due to the rest of the industries catching up, as opposed to the collapse of that industry, but barring that, yes I do see some benefits to this shift.

  3. RichDice

    Your argument seems to be “smaller car companies will be less able to push their agendas on the rest of us.” I wish I could believe that, but it seems like all kinds of small industries manage to push public policy generation in poor directions.

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