The Cold War’s mutually-assured destruction has given way to a one-sided assured destruction: Russians are dying off.

Not only are birth rates far below the replacement level, but the living are drinking, smoking, poisoning, and murdering themselves to early graves.  While most rich countries have managed to reduce deaths from chronic diseases (heart attacks, cirrhosis, etc.) from already low levels, Russians have managed to increase their deaths from higher levels to yet even higher levels.  The average Russian life expectancy today is lower than that of 1950.

Low birth rates and shorter lives are leading Russia to a population decline much faster than those of Germany, Italy, and Japan, which all enjoy long life-expectancies.  Yet unlike Germany, Italy, and Japan, Russia is rich in land and resources, making it an attractive option for investors of the next century.

How does a country manage its population decline smartly?  As the age distribution places a greater portion of people into retirement, per-capita GDP may decline as there are fewer workers.  Additionally, the elderly will require greater care, thus diverting a greater portion of national wealth to their own care.  To compensate for this strain, a slowly dying nation might consider the equivalent of a reverse mortgage, selling off parts of itself to foreign powers and corporations interested in its resources.

Global warming will make Siberia a much more attractive buy over the next few decades and Russia might consider selling parts of it to pay for its increasingly elderly and debilitated population.  China seems like the natural buyer, desperate as it is for oil resources, but perhaps timber companies will place offers, too.

The more interesting question involves what to do with a nation when its citizens have gone entirely extinct, having died off naturally.  The government will have dissolved already, but what will the international community do with the “estate”?

George Will sarcastically notes that the fuel-efficient-car-of-tomorrow boosterism is moot now that gas is cheap again:

The two best-selling vehicles in America this year are large pickup trucks (Ford F-Series and Chevy Silverado). In February, Toyota sold 13,600 Tundra and Tacoma pickups and 7,232 Priuses. It sells the Prius at a loss, which it can afford to do because it makes pots of money selling pickups. Has the Car Designer in Chief, a.k.a. the president, considered the possibility that what he calls “the cars of tomorrow” will forever be that?

The American car-buyer likes big cars, regardless of fuel-efficiency. If the president wants Americans to move away from gas profligacy—a position that seems to be politically popular—he might suggest raising the Federal gas tax to make fuel efficient cars more financially attractive. Though I think this is a wise idea eventually (raising taxes right now in a recession is unwise), I still hold that a Congress bowing to popular will (as it typically should) will handily defeat any such proposal.

The public may agree with statements that the country is too dependent on oil, but its behavior suggests the complete opposite.  The Obama energy agenda may not be as popular as he might think.

Here are three varying takes on the potential GM bailout.

On the Left, Jeffrey Sachs believes the Detroit automakers are indispensable employers in several rustbelt states whose economic decline would severely damage the rest of the national economy.  He fails to explain why this is or how Michigan, in economic decline for many years, didn’t manage to bring down the entire national economy with it.

Sachs also claims that there is huge global growth in auto purchases, but somehow assumes that foreigners, like Americans, would be reluctant to purchase vehicles from a bankruptcy-protected company.  That remains to be seen.

Sachs also partly absolves Detroit from the blame of the decades of mismanagement:

Some want to see the industry punished for its neglect of energy and environmental realities, but we should acknowledge that the SUV era reflected poor judgment across society. Yes, the industry ignored warnings about energy insecurity and climate, but so did the public and politicians.

Curiously absent from Sachs’s article is any mention of Toyota and Honda, two companies that invested in and started producing low-emissions and hybrid vehicles even when gas was significantly cheaper.  One wonders why GM, Ford, and Chrysler didn’t do the same.  Perhaps a lack of vision even when the increase of oil consumption was clearly outpacing the increase in supply?  One cannot so easily blame Detroit’s decline on “the system” when both Toyota and Honda are a part of the same system and not flirting with bankruptcy.

What is Sachs’s motive?  He seems intent on nationalizing Detroit automakers as a means of promoting various pet projects such a fuel cell cars, a new technology GM is within two years of producing—so they say.  If such a great revolution is within short reach, certainly there are private investors willing loan the company money for fuel cell vehicle production.  However, many doubt GM’s claims on the fuel cell Volt and Sachs wishes the government to act as an investment house for ideas that, if they were good on their own merits, could easily fetch private investment without the help of the Treasury.

Sachs mentions nary a word on the political realities the government money in any bailout.  Such funds would inevitably be directed to over-employ and over-pay people in politically powerful districts to produce cars that simply won’t sell.  State capitalism is not capitalism as any investment will inevitably be held hostage to various vocal political constituencies.

The Washington Post’s center-right economist Robert Samuelson lukewarmly advocates a bailout.  He asserts that a bankruptcy, even under Chapter 11, will damage the economy (again, unexplained).  However he also asserts that any bailout must not suit political goals (as Sachs would prefer).  Samuelson writes,

But neither does it make sense simply to heave taxpayers’ money at automakers. The goal is not to rescue the companies or workers; it’s to shore up the economy and improve the U.S. industry’s competitiveness. A bailout won’t succeed unless other things also happen.

He lists three things that must be done in order to make a bailout worthwhile to the taxpayers:

1. GM must shutter plants it does not need.
2. Workers’ lavish pay, benefits and pensions must be renegotiated to compete with other automakers.
3. The government must mandate lower fuel consumption, either through mandated increases in efficiency or through hikes in gas taxes.

But the devil is in the details, Mr. Samuelson.  How exactly does Samuelson expect the a recipient of public funds to lay-off thousands of taxpayers?  GM will find it hard to make business decisions that hurt separate communities when their public investment itself was premised on saving “the economy.”  If you’re in a town whose GM plant is about to close, surely you’d think that the closure is not saving your economy.

Furthermore, just as the Bush administration retained close ties to its corporate backers, the Democrats now coming into power will remember who funded their ascent: Big Labor.  Samuelson quotes the UAW President as saying that a bailout is necessary “so that auto companies can meet their health-care obligations to more than 780,000 retirees and dependents.”

At least the UAW is honest in its assessment of GM.  General Motors is an HMO that, by the way, just so happens to produce a few automobiles on the side.

Finally, government mandates for higher fuel efficiency have always met strong opposition from both Detroit’s auto executive and the UAW, the latter fearing that such standards will put their members out of work.  It’s unlikely the UAW is suddenly going to drop its opposition in the name of the public interest.

On the Right, NYU Law School professor Michael Levine, a former airline chief (probably familiar with bankruptcy!), makes a compelling case that Chapter 11 is the most thorough way to free the company from various laws and labor agreements that have served to increase the industry’s employment while diminishing the industry’s efficiency.  The obstacles GM faces are intimidating and better overcome through bankruptcy protection than through political goodwill, which, let’s face it, often favors sound-byte populism to sound macroeconomics.

Levine lists several of the challenges:

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota’s.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM’s. But their expenses for benefits are a fraction of GM’s. GM is contractually required to support thousands of workers in the UAW’s “Jobs Bank” program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities.

The political pressure to resist any change to this stifling system is too powerful and will inevitably ruin the solvency of any nationalized (and thus politicized) automaker.  If GM were to receive government money, what’s to stop it from demanding even more cash six months later?  Twelve months later? Two years later?

•••

Lots of people see GM and project onto it different ideals.  Some see a social service provider obligated to provide what the state does not and never did.  Others see it as an environmental and geopolitical silver bullet to reduce environmental strain and reduce the power of oil dictators.  Others see it nostalgically as a symbol of American manufacturing prowess.

A bankruptcy judge is best positioned to see GM in a different view—not GM as cradle-to-grave patriarch, not GM as Jonas Salk of the skies, not GM as Winston Churchill of oil politics, and not GM as Neil Armstrong.  A bankruptcy judge is best suited to view GM in a new light, i.e. as a car company.

My arguments against a Detroit bailout have finally coalesced into a cohesive letter to my Congressional delegation.

A former manager of the International Space Station writes that it may be possible to harvest solar energy from satellites and the beam the power back down to earth.  The main advantage is that there is no interferance from clouds and that a network of satellites can relay solar power at night.

The writer also beleives that such a project might make NASA relevant again.

In fact, in a time of some skepticism about the utility of our space program, NASA should realize that the American public would be inspired by our astronauts working in space to meet critical energy needs here on Earth.

Of course, a former NASA scientist would say that.

In other news, the governor of Texas is asking the EPA to waive the ethanol mandate for gas sold in the state as the demand for corn ethanol has driven up the cost of food and feed.  The corn lobby is understandably upset, but certainly the affordability of food for everyone is more important that the need of midwestern farmers to grow rich.  Furthermore, if ethanol were so important Congress would consider eliminating the import tariff on Brazillian sugar cane ethanol, which is much more environmentally sustainable than its corn cousin and would lower the cost of food.  Thus the trade wall for Brazillian ethanol could be converted into a sea wall protecting the world’s vulnerable from the “silent tsunami“.

Suburban living requires lots of driving.  Driving requires gas.  Lots of driving requires cheap gas and thus many exurbs are suffering especially hard right now, says the New York Times.

In a recent study, Mr. Cortright found that house prices in the urban centers of Chicago, Los Angeles, Pittsburgh, Portland and Tampa have fared significantly better than those in the suburbs. So-called exurbs — communities sprouting on the distant edges of metropolitan areas — have suffered worst of all, Mr. Cortright found.

In some ways this is a bittersweet phenomenon because the exurbanites tend to be a mix of the lower-middle class who cannot afford to live closer and the neauveau almost-riche who demand ridiculously large McMansions.  I feel sorry for the former, but little sympathy for the latter.

Thomas Friedman in the NYT is back to his usual environomics finger wagging:

It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.”

Friedman forgets is that our democratically elected president is simply representing the wishes of the American people, who steadfastly demand cheap oil.  No candidate has offered to raise the gas tax because they know that to do so would be touching a third rail of politics, “elite opinion” be damned.

Friedman further laments the Bush administration:

The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image.

Though I don’t doubt the wisdom of developing such industries, it will only be possible with higher gas prices, as the demand for alternative fuels will necessarily increase.    Unfortunately, high gas prices are politically unpopular.

Friedman may be right about what energy policy shifts are needed, but his opinions are not going to go over well at the polls.  Not everyone can afford a Prius, Tom.