Examiner Editorial: Politicians have no business in auto industry 

Set aside for the moment the constitutional argument. There’s a practical reason why Washington, D.C., politicians and bureaucrats have no business managing General Motors and Chrysler: They’re no good at it.

Exhibit A is what has happened in Detroit in a little more than a year since the bailouts of 2009. An audit by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, found that President Barack Obama’s auto task force arbitrarily closed many profitable dealerships, destroying thousands of jobs “based on a theory and without sufficient consideration of the decision’s broader economic impact.”

Barofsky observed that GM and Chrysler were subsequently forced to reinstate more than 700 of the approximately 3,000 disenfranchised dealers, “suggesting, at the very least, that the number and speed of the terminations was not necessarily critical to the manufacturers’ viability.”

Obama is wreaking further havoc on the auto industry based on another unproven theory, that of global warming being caused primarily by the burning of fossil fuels in cars and trucks. Obama’s solution is more electric cars, but his problem is that consumers have decisively rejected them. Undaunted, Obama has invested $2.4 billion in electric car technology development, including most recently $151 million in economic stimulus funds for a new lithium-ion battery plant in Holland, Mich., owned by a South Korean conglomerate.

Don’t be surprised if in the near future the 300 workers in the Holland plant join the 104,000 Michigan residents who have already exhausted their unemployment benefits. This is because industry analysts predict a worldwide glut of electric car batteries due to still-unresolved technical problems.

Obama boasts that electric car battery prices will drop from $33,000 to “only $16,000” by the end of 2013. But, the $33,000 figure cited by Obama already includes a $7,500 federal tax subsidy, so the $16,000 claim is about as credible as the used-car salesman’s pitch for the cream puff only driven to church on Sundays by the little old lady from Pasadena.

Obama promises that there will be 1 million plug-in electric cars on the road by 2015. Don’t count on it because, as former Bell Labs director and lithium-ion battery expert Don Murphy said, range limits (the Chevy Volt, for example, will only go 40 miles on a single charge), long recharge times (five hours) and limited utility will keep many mainstream buyers away. One more thing: China has a virtual monopoly on neodymium, a rare earth metal required for critical components in vehicles like the hybrid-electric Prius.

Only a Washington politician or bureaucrat would consider it smart business to increase U.S. dependence on China by mandating more electric vehicles on American roads at the same time the Chinese own a growing chunk of our $13 trillion national debt.

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Staff Report

Staff Report

A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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