"Green" funding for Ford: Why Government Shouldn't Pick Winners

Wed, 2008-09-03 07:17Richard Littlemore
Richard Littlemore's picture

"Green" funding for Ford: Why Government Shouldn't Pick Winners

The Canadian government of Prime Minister Stephen Harper is reported to be on the verge of giving $200 million from a "green initiatives fund" to Ford and General Motors - to help those failing companies continue to build really big (and increasingly unpopular) cars and trucks.

Ford, which lost $8.7 billion in the second-quarter of this year as its truck-dominated fleet crashed into oily reality, is advertising its latest Ontario production facility as "green" because it features a "more fuel-efficient V8 engine." And Stephen Harper, in a pre-election vote-buying frenzy, is using taxpayers money to prop up this stupidity.

I would hope for some support from the libertarian community in criticizing this decision. As every Milton Friedman fan can attest, governments have a wretched record of picking industrial winners. And if you were trying to pick a winner in the current car wars, the names GM and Ford would not jump quickly to mind. The most an intelligent government investor might consider is a small subsidy for truly Canadian industry (Magna?) or for companies that are building small, energy-efficient and incredibly popular vehicles (Toyota, Honda).

But it defies belief that the Canadian Conservatives would divert "green" taxpayer cash to the construction of the largest regular-production engines on the continent - even if they are "more fuel-efficient." That's great, we can have "more fuel-efficient" F-150 trucks, the CAFE dodging behemoths that were once Ford's best-selling vehicle.

It's clear that the Tories would like to help (or be seen to be helping) the working folks of southern Ontario, who have been hit hard by Ford and GM's institutional incompetence. But subsidizing those companies at this juncture is analogous to buy an alcoholic cheap wine so he doesn't have to drink vanilla extract.

This isn't help; it's enabling. And it couldn't be more cynical, more wasteful or more pointedly destructive to the environment.


These big F150s are an inefficient blight more often than not. They generally ride around empty. Very few people really need one. Get a small pick up instead and save a bunch of gas.

The F-150 is efficient, it is the people who buy them for show that are wasteful.

Many items, like trucks or houses, are positional goods. People buy larger then necessary to outdo their neighbours and friends.

Ah yes, no responsibility at all should fall at the feet of Ford, which has been spending more than $2.4 billion a year just since 2005 on advertising telling Americans that waste is cool - that you should be able to drive your car over the curb and into "the wilderness," where you can startle wildlife without getting your shoes dirty.

Ford's current fiscal crisis demonstrates that this was a short-sighted strategy - a stupid strategy given what we have known for more than a decade about peak oil and climate change. While smart car companies have been building the kinds of vehicles that people need, Ford has been putting all its energy into convincing people to buy huge, and hugely pointless pick-up trucks, polished to perfection and kept permanently empty lest the boxes get scratched.

The stories today say that the Harper government gave Ford $80 million (theoretically to be paid back over 20 years). That's $80 million too much for a company so determinedly out of step with reality.

The money could be used to lure Peugeot Citroen (or Fiat or Renault) to North America, as they are the European leaders in fuel economy. In fact, these companies are expected to meet strict European 2012 emission standards early perhaps even by 2010 (which means that they'll manage between 50 - 65 mpg). Peugeot-Citroen, for example, will enable start-stop technology on all European cars by 2011, which improves fuel efficiency by up to 20 percent in city driving.

Or we could start talking to Th!nk Global, now producing 10,000 EVs per year, because they want to be producing 150,000 EVs by 2011 for the North American market from a North American factory. Ironically, Ford sold the company to Norwegian investors several years back, and the company is taking the clean transportation world by storm. They have a City Car now, and plan to release a five-seater (called the Ox) that can travel 124 miles on a single charge, with a top speed of 84 mph.

Or we could see if we can convince Project Better Place to create an electric infrastructure to recharge EVs in Vancouver, Montreal, and Toronto, with Nissan to supply the electric cars... just as they're doing in Israel, Denmark, and Portugal.

Or we could build an Or we could build an Air Car Factory. See: http://smartlikestreetcar.com/?p=458

We cannot allow this government to remain in power as long as they remain mired in the past, with their heads stuck in the oil stands.

I'd love to have a think ev. The nev's like zenn don't get the job done, what we need is a car that can do city speeds.

ZENN has a highway ready EV that should be on the market by late 2009 and it will be able to do better than 75 mph, travel more 200 miles on a charge, recharge in 15 minutes, and cost less than a Chevy Volt. Basically, ZENN put their faith in a secretive battery company that has been developing a new ultracapacitor, and the company announced last month that it had hit a home run, and would be gearing yp for production next year.

Thanks very much for this Richard. As I constantly awake to politics, it is becoming increasingly clear to me that the so-called Conservative Party of Canada is not really all that conservative -- at least not economically conservative. While they might or might not be social conservatives, they really are not living by the dogma of small, non-intervening, free-market loving government. It is possibly a tribute to the thickness of the smog that people do not see through it. Many say to me, "yeah, well I know he is not living by his stated principles, but that is just political reality... politicians have to compromise their principles, especially in minority situations". But when you stop, look at and think about the record -- and not the words and rhetoric -- it is hard, if not impossible to believe that he is just a bad conservative. What is he then? I don`t know for sure and I`m sure my thinking will evolve with time, but right now my thinking is that everything is far more in line with him being what I`m calling corporatist. Someone who is best understood if you assume that he`s working first and foremost on behalf of large corporations. Conservatives as I understand them work from principles that don`t put corporations before people and country. They know that companies come and go and that markets and companies serve people and countries, not the other way around. But the "conservative" bit is a nice smoke screen. It helps draw in a bigger crowd so he can show us his oh-so-great (mis-)leadership.

Climate and energy are the main way I`ve come to this conclusion. First off, it really struck me as unconservative to deny science. I figured `true` conservatives want to know physical truths as much as anyone, right? Rational, skeptical debate of course…but denial no. Yet here they were full-force against science … and scientists. Then when they were finally forced to do something about it because the polls changed, they chose regulations (previously derided as "command and control!") as their policy tools of choice. How odd….Weren`t `true` conservatives supposed to espouse market-based mechanisms (taxes, fees, feebates, emission allowance trading, etc.) and not regulations which can often err on the side of being inflexible, crude and bureaucratic? Wouldn`t these other policy tools better keep government out of the Market`s role? Nope, they wanted regs. They also started talking about nuclear power. Again … so weird. Weren`t true conservatives supposed to let free-markets decide which technologies rise and fall in the marketplace? True conservatives also want government to be small, but nuclear costs tens and tens of billions and only those dreaded “central planners” are paying for it these days around the globe, never the free-markets. And when those `spineless` Liberals stood up and said, “You know what? We think market-based mechanisms are the way to go. Let`s lower taxes on what we earn and raise them on what we burn”. Well, those supposed conservatives flipped. This would hurt the economy now…stutter, stammer… this would tax everything! Yet again, their response is totally at odds with all the economic training Harper is claimed to have had. An externality had been clearly identified which the market was failing to address appropriately and it was government`s role to internalize it. And yes, true conservatives believe in market failures. They even recognize that accounting for them and intervening because of them is a way to *improve* the economy. It is just that they choose mechanisms which help the market account for this and adapt as efficiently and seamlessly as possible.

So why betray every one of the most cherished conservative principles in the most obvious of ways for everyone to see? Mostly likely because they are actually not your principles. Your main principle, if this can be described as one, is about using public institutions and funds to support private enterprise. Deny physical truths because they are inconvenient to the profits of the biggest of companies. Choose regulations because you can control and minimize the progress of competitors to these companies and so that you can create loopholes or wane on enforcement when nobody is looking. Promote nuclear because the few benefit at the expense of the many and because of its linkages to the biggest profit business of all – war. And fail to account for pollution in the tax scheme because, well, that would be a highly effective way for a not-so-all-knowing government to let the market do its magic and the market has a magic that does not care about the profits of the biggest of corporations the way you do.

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