A few months back, I wrote my editorial about the importance of relativity (and context), and among many of the things I mentioned was the Tesla S, which recently received Motor Trend’s Car of the Year award. While I try not to insert too much of my political opinion into this column, the purpose and goal of GM High-Tech is to educate and inform you after all, not to propagandize you with my political beliefs. That said, I find often that people like to insert politics into a discussion where it doesn’t belong. Case in point, electric cars. Many people see them as somehow threatening to their way of life, immediately reject the idea, and even find it offensive. Along those lines, one reader wrote back in an attempt to refute the idea that the existence of electric cars in the market place is not dependent upon demand (see “Off the Wire” on p.6) because automakers accept subsidies and tax breaks from the government for making them in order for them to be cheaper for the consumer.
My problem with this statement is, ironically enough, context. All large corporations accept subsidies and tax breaks from the government, which is often referred to as “corporate welfare” and fiercely debated in political circles. For example, the IMF (International Monetary Fund) says the U.S. spends $502 billion per year to subsidize oil consumption (the largest of any country, China is next at $279) in order to make gasoline cheap for U.S. citizens. In the agricultural industry, the USDA provides $17 billion a year for corn syrup, high fructose corn syrup, corn starch, and soy oils to make junk food cheaper for the American public. Meanwhile, just $261 million was spent on apples (according to Apples to Twinkies, a U.S. public interest research group). The government does in fact have its hands in the economy in an effort to (hopefully) steer it in the direction of long-term health, which is also socially and environmentally responsible. With large corporations lobbying and providing campaign funds for elected officials, this is certainly not a perfect system.
Unfortunately, the alternative to having a meddling government is one that takes no action, makes no rules, and allows chaos. As one political commentator recently stated, “When you see a stop light, your reaction should be, ‘Great, an easy way to ensure we don’t crash into each other.’ Not, ‘How dare the government tell me when I can and cannot go!’” We are living in an era when a lack of government interaction nearly caused an economic collapse, and quite honestly we are definitely not out of the woods. Some corporations were allowed to become so large that they were deemed too big to fail. And the only solution was to bail them out. But did they fix the root of the problem? The United States government was founded upon a system of checks and balances, but sometimes I wonder how effective this system is anymore. President Roosevelt broke up Standard Oil, which was at least partially to blame for prohibition as Henry Ford’s ethanol-burning Model T threatened John D. Rockefeller’s potential profits from the mechanization of America’s transportation industry. Fast-forward 80-90 years—this sort of long-term thinking is gone. And the government’s biggest fear is that if certain large corporations fail, it will drive up the already high unemployment rate and do further damage to the economy.
At this point the rest of the world is doing whatever it can to survive the sorry state of the global economy. I recently visited Spain, which currently has an unemployment rate of 26 percent and is expected to be at 27 percent by the end of the year. The gross domestic product has shrank by 1.4 percent, meanwhile a banking bust has all but wiped out most private savings banks as the result of a huge mortgage crisis. Spain’s massive debt has required bailouts from the European Union to stay afloat. And of course everyone knows about Greece’s massive debt... Combine unrestrained spending, cheap lending, and zero financial reform in an already unstable environment and you have the perfect recipe for collapse amidst a global economic downturn. Italy’s inflexible labor market, poor tax collection, and low fertility have it along the same course. As you can imagine, these three countries, along with Slovenia, have become a giant anchor around the necks of the EU.
When you take a global perspective, the United States is like many large countries, burdened by an enormous amount of government spending that offsets its equally large GDP. It is the natural result of substantial growth, that you become less efficient. This happens in the business world constantly, which is why consultants like “The Bobs” are periodically called in to trim the fat. With the current budget crisis, it will be the government’s task to cut spending, but believe it or not, subsidies and tax breaks for corporations are not on the hot list. What is? Healthcare, Medicaid, and “entitlement programs.” I guess it’s a good thing the Chevy Volt and gas are so cheap, I’ll need to save up every penny I can for healthy food, the privilege of getting sick, and having kids.
Whether I agree or disagree with how the government spends money, I do feel that it is their place to do so. But that certainly doesn’t mean that they don’t put their hands where they don’t belong—particularly when it comes to individual rights and “law enforcement.” Google reported that it complied in full or part with only 88 percent of total requests from American authorities from July to December 2012, requiring law enforcement to obtain a warrant in other instances. Meanwhile 22 percent of those 8,400-plus requests were made via the rather outdated Electronic Communications Privacy Act (ECPA). A few months after this story broke, police were raiding the Kansas City-suburban home of a family of four, including two former CIA employees, at 7 am because they had purchased some as-yet-unused hydroponic farming equipment. Apparently that passes for probable cause in a drug case in Kansas. And just in case you thought you were safe somewhere outside of your home, now you have to worry about government—or privately—owned drones flying above you. Now I know why people move to wooden shacks in Montana.