Thursday, July 02, 2009

General Motors Streetcar "Scandal"


I grew up in Milwaukee at a time when the old electric streetcars were ubiquitous. We had a streetcar stop directly across the street. For 10¢, a person could ride most of the day with transfer slips. Given the inflation rate, that's about $1 or $2... certainly no more than $5.

Recently, there has been a telling of GM's effort to destroy the public transportation system in order to sell cars. Most of the sites telling this story are "pro-environment" and have a definite ax to grind about the automobile.

While it certainly didn't hurt GM to have the old trolley systems go out of business, there really was little need to spend a lot of money in order to eliminate them.

Streetcars were noisy, rickety, uncomfortable, required waiting 10-20 minutes in all sorts of weather for the next one, often had their power pickup arms slip off the power line creating delays and traffic backups, and were hostage to the routes laid out by the tracks. If one broke down, it became a major operation to move it to a repair facility. As a rider, I experienced all of the "glory" of these vehicles. Sure, they used "clean" electric power to propel them, but that power came from some pretty dirty coal-fired power plants.
This seems to be a case of selective nostalgia.
These were replaced by buses that used the same power lines, but were quieter and more comfortable. Subsequently, these were replaced by buses powered by diesel or gasoline engines that offered significantly more flexibility in establishing new routes... at far lower costs than laying new tracks and hoisting new power lines.

The 1950s were a time of expansion in the U.S. and while buses and trolleys were fine for inner cities, they served little practical purpose for a burgeoning population that was enjoying the post WWII industrial and economic boom in the U.S. Many blue collar workers who couldn't afford personal vehicles moved up the economic ladder and getting a car meant more freedom and status. GM didn't need to spend money to destroy a system that was ill-equipped to meet the needs of this expanding, more affluent population. GM only had to provide a variety of vehicles that fulfilled the wants of these customers.

Did GM spend a lot of money to undermine public transportation? Possibly. Was it worth the money? Probably not, since the change was going to happen anyway. Public transportation requires a high population density and a system that restricts alternatives. GM and other automobile manufacturers simply provided a more appealing alternative to the marketplace.

It's pretty much the same thing our government is attempting to do by limiting and sequestering carbon to cool a planet that is managing its climate pretty well by itself. It also requires limiting alternatives... and the free marketplace.

Besides, urban centers have shown that they are capable of using new mass transit effectively... where it makes sense in the marketplace....


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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)