Let the marketplace determine what survives, they say

So Congress has nixed the bailout of the US auto industry, based on the simpleminded economic principle of "let the marketplace determine what survives." The principle of "let the marketplace determine what survives" seems like something that ought to work, and makes life a lot easier to think about. But, like in other grandiose simpleminded economic systems, the big picture of the real world comes crashing through, insisting it not be ignored in dreamland.

Not that the US auto industry has been a lively player, light on its feet, moving in a complex wide picture real world. In fact, it seems to have grown so big and powerful it thought it ran the show and made all the rules: bigger-faster-cheaper inspired at times; and substituting buyer dazzling with style, for the much harder preparation for the needs in the rapidly growing (and shrinking world) system. The massive inertia of the transportation system, of which the auto industry is a major player and generator of much of that inertia, would seem to dictate all possible next moves. Follow the market that it in part shaped, but not in all ways; the gas-guzzling behemoth SUVs became soccer-mom daily commute transportation even though its purpose was to be able to quickly load survivalist stuff in quickly when the quake or riots or whatever hits the fan, take the deer rifles and head for the mountains to survive on deer and rabbits, while the non-escapees perish in the cities. Some 50% of new personal vehicles purchased in California were SUV's, showing the extent of the problem; the automakers geared up to meet that demand for huge vehicles to man the home garages; nevermind that the world petroleum reserves are limited and huge one-way money flow was leaving America to go to the mid-eastern countries for oil we just burn to oscillate back in forth in our SUV's, big numbers. Nevermind the CO2 contamination of the atmosphere, aren't the trees going to gobble it all up? Not the automaker's problem; they are there just to make and sell the product, go home and watch TV.

Is the marketplace, the world-sized bazaar, sufficiently wise to fully guide civilization, including our individual little parts of it? It is too easy to focus down on something small and easily manageable, and assume all the world is going to work together with everybody doing the same thing, nobody minding the store. Isn't that quite a lot like the ancient hunter-gatherer mentality that worked well when Mother Nature had abundance aplenty for mankind to plunder endlessly; all man had to do was figure out how to plunder enough. When the resources of Mother Nature faded, mankind went for agriculture, being responsible nurturer to some staked out territory; yet the world is round and of limited size, and even in the vast oceans and deserts we bump into each other's territory and Nature's nature and limits. A Nature that has a new major player on the loose in it, which is us.

The chunk of it that is America produces 3% of the world's energy supply, and yet consumes 25% of the world's supply. What are we trading for that energy we import? Especially are we trading our resources that are as vanishing as is the oil we import to just burn and have nothing to show for it remaining? This shows an inkling that there is something wrong and unsustainable about our guiding principles. There have been big "danger ahead" signs all over the place, all long ignored; after all, the marketplace determines what thrives and what perishes, right? Ever consider that we are subject to that same maybe-perish principle, if we are not getting it all right? The neighbors are not worried, so why should we be worried ourselves? Life is good.

Our transportation infrastructure consumes a significant amount of that unsustainable energy level. The automobile grew to survive in a world populated by horse and buggy, had to travel the same dirt roads across town and wilderness terrain. It had to carry its own energy supply, enough to get to the next filling station easily all the time. The energy density of gasoline burned in the freely available omnipresent air, enabled the adequate range. Yet the dirt roads have morphed into paved streets and freeways; and they are shared by semi trucks and buses ... and an occasional bicycle. The needs of the average person to travel the daily commute and shopping activities, is still largely being done in vehicles stemming from that long-ago competing with horse and buggy travel. The wilderness terrain may lurk at the perimeter, but most of our travel is in highly controlled and determined environs. Surely there are lots of more convenient time & energy efficient ways to provide the needed normal average person's transportation needs. Evaluate, just what do we need re movement; get from home to the job site in a safe, rapid, efficient means, and back home again after work; to get to shopping and bring back purchases, or at least get needed items somehow into our homes for our uses. Occasionally take longer journeys, such as for non-typical purchases or visits elsewhere; but do they need to be by the same means as daily routine commute?

(I won't dwell at this point on the transportation needs of those millions of survivalists, to spring on cue with the mob riots or earthquakes or nuke button-pushers or whatever, toward the hills with their SUV and deer rifle, to raid the few thousands of deer and rabbits in the mountains for a quick extinction. Wouldn't their skills be more useful in building a better thriving world instead?)

However, things need to morph to a new system; can't just drop the old ways and go for an entirely new and more appropriate mode of getting around. That is no excuse for not doing the morphing all along, and the automakers could have been helping that all along all these decades. But no, they are just the businessmen, going for the fastest easiest buck, no responsibility for the overall transportation system, no more than the hunter-gatherer hunting mastodons had responsibility for the sustenance of the mastodons. And somehow our whole "free enterprise" economic system is supposed to work, composed solely of such hunter-gathers, automakers included, and on the block now. If we get "regulators" in to rule the automakers, they will be drawn from the same mutual-predator mentality, could they be trusted with the responsibility for the big-picture America full of Americans, with all their needs?

Perhaps it is time to step back and look at the big picture of the transportation needs of America, at least temporarily fending off the easy solutions offered by ready builders of light rail and buses, but really looking for what can really work in the scenario of daily life in America, an America that needs to do the same and more, but with only use of its own energy resources. There are alternative commute system conceptual designs that have been strangled by the existing big suppliers, that is fair play in a free-enterprise system, right; the customer cannot buy anything that the businessman does not offer; and the customer does not care if the businessman ruthlessly killed off that fledgling competition which would have far better filled the customer's needs. Perhaps now it is time for the customer to declare what is needed; instead of the businessmen limiting the options.

History shows that in the desperation of changing times out of control, people grab at that which looks familiar, unfortunately. And then they are stuck with building their future upon that, a crumbled foundation that eventually, like now ongoing, fails to carry the load. We are patiently awaiting a new administration's installation that declares change to be acceptable; this may be America's chance to pull our head out of the sand of business-as-usual, and use our wits and strengths to survive, and survive well, once again. Is the pompous CEO truly a wiser observer than the grunt down on the job dealing with a dynamic real world? How much does the CEO really, really know what it is all about? There is guiding wisdom to be found at all levels.

And yet, change is stressful, even helpful change. We will thus also need to adopt the ways of incorporating only the stress needed at the moment for the immediate task, and not store yesterday's stress to add to our load; we can thus be freer to more clearly see the present moment as it morphs into our future, much more efficiently and cleanly.

Are there ways that our country's automakers can become more compliant to the evolving needs of changing world? The automakers create and build truly marvelous machines that do amazing things, and reliably so for the average driver. Absolutely amazing contrivances, those autos. Much of its interwoven machinery has been forged by finding what works out there in the real world. And yet, they have been stuck on doing their assumed franchise, that of making cars. Is there some way, or several possible ways, of adding to the automaker's roles, such that they are conscious players in the overall transportation system that is arm in arm with the rest of the world? They have survived in part by controlling the market, clever trick. That's not good enough, as has been found recently. (Or is it thought they are mere casualties in the fall of the housing pricing expanding bubble bursting's repercussions, not their responsibility in the big picture?)

The automakers are really players in the transportation system of America, unconscious as it has been up to now, other than rival game playing stuff. Can the automakers become conscious, responsible activators in the overall transportation scenario in a constantly morphing, interacting big picture of a nation in a bigger picture world? Become significant providers of far more efficient, comfortable, safe, and convenient transportation options for Americans?

If one brings a "game changer" to the playing field

If one brings a "game changer" to a playing field already occupied by power players, expect their game to include taking the game-changer away from you, so they can continue winning by beating you.

Parable-communication technique & business investment dividends

The Bible uses some time-proven communication techniques that can be fun to use in one's current living awareness. One is the Psalm-communication technique, where each sentence is immediately followed by a redundant sentence, which says the significant thing of the first sentence through saying it a different way or contrasting with opposite, for example.

Another communication technique that works well down through time is the parable-communication technique. Use of the parable-communication technique has some esteemed users in the past; so in using the technique, one is in good company. Not all parables communicate something that is comfortable to hear. Some scientists might say that it is a subset of "morphological equivalences"; but, no matter. During the past election campaign rivalries, there were quite a few uses of the parable technique floating around, mostly to ridicule the opponent; so, there is much precedent for its use in many ways.

In recent times, I have been struggling to understand our economic system, how it works, explaining it to myself with models that simplify and make a little sense to me. Given that I consider myself so poor a businessman as to not be able to sell a tall glass of cool clear water for a dime to a rich man dying of thirst in the desert; in fact, I probably couldn't give it away for free - witness my success in my KESTS to GEO and Pull-Band Commute System efforts of recent decades - I have a lot to learn. The model is continually evolving whenever I happen upon some news item that seems to fit with a missing piece of the puzzle. The model seems comprehensible to me in the form of a parable; so here is one such, that explains the concepts of profit, dividend, value-added, and usefulness-to-customer.

An enterprising businessperson decides to form a business, a corporation. It will have investors; each investor is to invest in increments of $100, and is guaranteed at least a 10% dividend each month, so that in the first 10 months, the investor will have gotten back the $100 invested, and from there on, it is all extra; and they can always sell back their $100 investment to the company and get the original investment back. Part of the business agreement is to be a customer membership; each week, the corporation will send with free shipping, a priority mailed package to the customer; each package of the product costs $25. The customers are part owners in the corporation via their investments and monthly dividends paid to them, plus they are owners of the product, too, the more product on hand, the higher the feeling of ownership. Now, this corporation has some business expenses, such as management, which consists of the lady of the house; and one employee, which consists of one rabbit. Management performs such duties as providing supplies for the employee and providing health care for the employee. The product is the litter the rabbit makes, converting timothy hay and kibbles into fertilized rabbit pen litter, which is the company product. The fully processed fertilized litter is put into a sealed ziplock bag in one pound (or more) quantities, and is shipped out weekly to the owner-customers of the corporation, per the business agreement. The shipping cost is a business cost, of say $4 per package; and the rabbit hay and kibbles cost maybe another $5 per week per pound produced of product. So each owner customer each week pays $25 per package of product delivered to them; and each month they get a corporate investment dividend of $10, a nice $120 dividend received per year of investment of a mere $100 in the corporation. So the employee is paid in the supplies given, housing provided, and health care given. In return the employee is required to produce corporate product. Management needs also to perform duties such as scooping up the product, packaging it in ziplock bags, weighing the product to verify it is at least 1 pound in weight, placing product in shipping containers, and getting product to the shipper. Management salary is the return of $25 per package-week less the supplies expense of $5 per package-week and providing health care for the employee rabbit. The employee provides value-added to the timothy hay, kibbles, fresh litter, and tap water, by converting it into company product of juicy fertilized litter; the management salary is thus $25 - 5-4 = $16 per package-wek. However, the company must pay the investor-customers a 10% dividend each month, $10 for each investor-customer's $100 invested; since each investor-customer is required to purchase one package of product per week, that is $100 of product they buy each month and they receive $10 in return from their investment each month, plus they have also gotten four packages of company product, a nice increase to their accumulated wealth, increasingly stacked high in a corner, showing how wealthy they are getting to be, owning more and more product that they are even getting paid dividends of $10 per $100 of their investment. So the company manager each month has received income of $25 per package for 4 packages at $16 profit per package, or 4 times $16 = $64 per package-month, from which $10 dividend must be paid to the investor-customer each month, thus the manager earns $54 per package month for performing management work. Everybody is a winner: the manager receives income of $54 per package month for performing shopping and facilities provision and health care management for the employee rabbit; the employee rabbit wins because of the fresh litter and clean cage, plenty of food and water and health care when needed; and the investor-customers win by receiving a good dividend return on their investment, a guaranteed earnings of 100% return every ten months, and also has an impressive collection of product to proudly show as increasing possessions to show their increasing wealth in a substantial fashion.

Now, a few of the investor-customers have found a use for the product, in that they put a package of product in each of the houseplant root containers, enabling the plants to grow better. This is fine until the corporation decides to also get a second employee, this time a cat, in addition to the original employee rabbit. The cat produces a different kind of litter, however, but it is company product and gets shipped out in some of the packages of product each week. This is fine for most investor-customers, except those who have been using the purchased company product in the house plant planters, finds the new product is not suitable for that purpose; but, no matter. There is the great satisfaction of being an investor that is earning a lot of investment dividends, and also has a lot of product stacked in the corner to show how wealthy they are, increasing possessions.

Will the profit dollar continue to be more important than the customer

When a switch happens where business development guidance changes from that of providing products and services of benefit to people, to that of making decisions for future approaches to be controlled by the making of the most profit, could be the Achilles Heel of the Free Enterprise System. At that point, the American customer base changes from being a people benefiting by business products and services, to being a monetary resource base to be exploited by business similar to mining the earth for minerals. The nature of the products and services available to the American customer then also changes to that which extracts the most money from them, instead of that which provides them with the best value for the money. Virtual franchise of technology and business territory cinches down the enforceability of this unfortunate turn of events; sometimes even worsened by government agency support for its perpetuation, which sometimes can be reversed by public outrage via widespread petitions against such rulings. Why is it that "it is so difficult to see the forest, because the trees are in the way?" Possibly the grooves of mental processing have been worn deeper on the analytic side via conventional formal educational techniques, so that once we have gone from the overall full picture, to the detailed focus on some particular aspect, we get stuck there in the area of the limited aspect, the grooves are too deep to be easily climbed out of to again attain the full picture of life's needs and opportunities. Will the profit dollar continue to be more important than the people ... and as the people fade in life, so also fades the dollar, as is happening nowadays. (There was an old saying about throwing the baby out with the bathwater; apparently mostly forgotten nowadays.) Is it still possible to switch back to business development guidance being that of providing products and services of most benefit to people, even if not the most profitable? Are there any CEOs that can keep their jobs while doing that; are the investors aware of what they have invested in for their future?

Attention, our carmakers maybe can finally listen ... no?

A front page item in recent news is calling for loan by the American public to the US automakers, numbers like $25,000,000,000 in loans. Just to re-tool for a tiny increase in fuel efficiency, at that. The foot-dragging of our beloved car industry about much higher fuel efficient vehicles was caused by several factors, not all of which have been mentioned in the news. Some go really deep and are completely missed by management in SOP. This post is not to rehash those things, but instead to propose a modified suggestion I have posted for a couple years, without notice; probably this one will get equal burying, in favor of 25 bn hoopla. Anyway, here goes. First, am going to repeat a post I have made several times, several places, but with a few changes in it:

There are ways to greatly reduce the wastage in use of fossil fuels, that can make a significant difference and pay for itself; but takes some very different ways of looking at things, along with backing off of business egos a bit at times. Transportation is one area that looks quite promising for this approach. If we can look at a 10 year time frame for payback plus profit, some possibilities come to mind. It requires looking at the big picture, to find the solutions; the old narrow picture has lost the game, maybe it is time to include the lateral scenes to make the big picture.

For example, let us imagine that "we America" buy the design rights for the 1990 Honda Civic Hatchback from Honda, along with any tooling and assembly data they have remaining on that now obsolete vehicle, 18 years into history. So it ought to be potentially a cheap design purchase; obtaining working ones around the country ought to still be possible for examples. I owned one of them and it got 42 mpg on the freeway commute in the Los Angeles area, and handled great on the road; had automatic transmission, a/c, cruise control and plenty of room inside; and the engine still did not use oil up at 160,000 miles (although I did use a high quality synthetic oil, only a little more expensive than normal oil per mile) when it was squished in a multi-car wreck from which I walked away. It did have some design flaws in the positioning of the alternator and electrical relays too near the driver, causing long terem EMF risks, which ought to take less than half a million dollars to modify; the only other flaw would be harder and might need living with for now, that is the need to replace the engine timing belt every 70,000 miles. In this scenario the government (state or national) would provide loans and enough guidance for the project to re-create this proven vehicle in the context of the need. If they are produceable in multi-million quantities here in the US, cost probably would be maybe $10,000 each or significantly less if all vehicles were identical. These new vehicles would be offered free in direct exchange for any vehicle which gets less than 18 mpg, regardless of age or condition of the gas hog. Thereafter, for each of these new vehicle's 10,000 miles of commute, at say average of 36 mpg, it has saved the consumption of 555 gallons of refined gasoline; at a cost of $4.00 per gallon, that is $2,220 saved per 10,000 miles driven. If the average vehicle is driven 100,000 miles, that is a savings of $22,200, so the vehicle has long since paid for its $10,000 cost to the nation, and produced a substantial profit of over 120%. Each individual who did the vehicle exchange got a new vehicle free (or remaining payments to yet make on the former old gas hog vehicle) and is saving $2.00 in gas for every 36 miles driven. But more importantly to the world ecosystem's climate, it has saved the use of 5,500 gallons of fuel per vehicle. For each 1,000,000 vehicles thus replaced and utilized, this is a savings of 5,500,000,000 gallons of refined petrochemical fuel to remain in the world's reserves becoming more precious with time for non-fuel uses; along with preventing its enormous amount of CO2 from being dumped into the atmosphere to add to global weather disruption and resultant sea level rise.

OK, that is the repeated post, more or less. Further thoughts include:
1) Lots of egos are involved, paticularly those of the "Big Three" automakers. However, it is an even better indication of quality person if admission of error and redirection to adequately solving the problem happens.
2) It is a design of another automaker; an 18 year old design probably has passed teh 17 year limit of patents, but in respect to the original designers, perhaps it could be a joint venture between Honda (Japan) and one of the big-3 US car makers. And the quantities involved would be far greater than suggested in the above referenced post which shows it is a big win-win for everybody to get the gas hogs off the streets, getting a brand new free high quality vehicle for participating, that pays for itself more than twice over in the first 100,000 miles.
3) There are probably similarly proven vehicles in the high gas milage and performance arena than that multipurpose hatchback vehicle was; unbiased research into that would find the answers; the resulting otehr vehicles could be assigned to each of teh other "Big 3" US car makers to convert over for production, based on existing proven designs, like that of the 1990 Honda Civic hatchback.
4) Part of each of the "big 3" manufacturing plants could be converted to refurbishing some of its former produced vehicles, truly re-manufacturing them, from vehicles traded in; this would be to maintain a working transportation system as exists now, while a consciously engineered national transportation system is put into place.
5) Continuing development of a hybrid vehicle would proceed enthusiastically and clear-headed. Part of this design/development activity would be starting from teh ground up to produce a target vehicular performance, not from a jigsaw puzzle of minor changes from the way we do it now. Think time and energy efficiency plus safety and reliability, with a realizable change in the associated infrastructure.
6) get serious about creating a next generation American transportation system, one that provides the personal convenience of privately garaged vehicles at residence, integrated into an automatically controlled system when on the freeway and most surface streets. Does it take a two ton vehicle to take a 165 pound person to work? Why not a 500 pound vehicle? Figure the more frequent refueling stops, vs the higher energy efficiency and mileage of the lower mass being pushed around. And even more effectively develop a national-potential transportation system for non-cargo-carriers, that utilizes a distributed energy system such as the "Pull-Band-Commute" system I proposed decades ago.
7) Overall, each step needs to be done by looking at the wide view overall picture of America and the world. Where there are existing franchises and business territories including technology ones, buy them out from American-pooled-resource-funds for fair prices, instead of struggling with pretzel-like work-around solutions.

OK, there I have made my soapbox noise again to an empty audience, all of them elsewhere to decide to throw zillions of dollars for no defined goals, to pretend they are doing something to solve the problems. Well, maybe a few continue to remain to throw rotten eggs and crash my email and websites, just to prove they are boss.

James E. D. Cline
jedcline1@kestsgeo.com
jedcline@gmail.com

(Ref http://energyideasjedc.blogspot.com/2007_01_01_archive.html )