The hazards of bailing out Car 1.0
Image source: greenerist.com
There is a brilliant piece by Thomas Friedman in the IHT today on the US auto bail-out and what Joseph Schumpeter once referred to as the process of creative destruction. He writes about the Better Place electric car charging system and how this is set to replace the petroleum-based model. The best paragraph is reproduced below:
America’s bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.
The bail-out has to proceed for the sake of the people who would otherwise lose there jobs, and the knock-on effect this would have on the rest of the economy. However, it would be a lot smarter if financial assistance were tied to the development of Car 2.0. This way, people would not only keep their jobs now, but they would be safe in the future as well.
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