Driving a Hard Bargain

American carmakers have had a rough time, mostly out of arrogance and losing touch with a market that was sending the clearest message imaginable in a world of rising gas prices. It was too easy for management to say yes to union benefit packages that simply made American cars uncompetitive with foreign imports. Tariffs to penalize cheap overseas manufacturers were no longer viable in a universe of World Trade Organization rules and bitterly-fought retaliatory tariffs on American goods any time America threatened to impose these economic barriers against imports. The collapse of the economy only accelerated the inevitable.

As a massive oil slick decimates our Gulf coastal states, killing wildlife, destroying fishing grounds and threatening recreational coastline with long-term if not permanent damage, the ugliest side of our reliance on petroleum-powered energy comes home with an explosive bang… and maybe a desperate firestorm. The hard fact is that cars and energy demands have defined the American lifestyle for decades now. We complain of crumbling infrastructure, but almost all of that “stuff” relates to energy-generating dams and power plants, fixing or building mass transportation and car/truck-carrying roads, highways and bridges. Our work world, for those with work, for the most part involves a century-plus of separation of workplace from residence; with the exception of a few stay-at-home freelancers, getting to work usually involves “travel” (even looking for work requires transportation).

Think of the cost of transportation: direct costs like fuel, insurance, maintenance, taxes, ticket costs or buying a vehicle, and indirect costs like air and water pollution, accident victims, and the like. The old paradigm of the three necessities – food, clothing and shelter – adds transportation into a modern world. What would be willing to give up first… transportation or Internet access? Or there a link? Internet access providing work access? Where is the balance?

And exactly whom is the government trying to help? Car companies? Consumers? Workers in the automotive industry? Car dealers? Lenders who make car loans? Indeed, government clearly does interfere at every level. Look at the simplest fact of all… Try and buy a new car today online, skipping the dealer and saving a precious extra $1,500-$2,000 average mark-up. Go ahead, try going online to order a new car directly from the manufacturer… I’ll wait while you search… la, la, la, la…. Give up yet? No? Okay, take some more time… la, la, la, la… No luck? Guess I should have saved you the effort; you can’t.

Autos.Aol.com (April 30^th) tells you why: “Auto manufacturers did try their hand at selling cars via the Internet [and a number of start-ups joined the fray offering direct-to-consumer pricing], but before they got very far, they ran head-on into the massive legal barricades that state legislatures had erected over the last 50 years to protect dealers from automakers. These were ‘iron-clad franchising laws,’ said Jack Gillis, director of public affairs at the Consumer Federation of America in Washington, D.C. ‘For the most part the laws have been interpreted to not allow manufacturers to directly sell vehicles.’” Only authorized franchisees have that right.

See the pattern? Technology is introduced into our lives. When it becomes pervasive and changes our lives, money accumulates to the purveyors of the technology to allow them to “buy” protective legislation to secure their advantage not only through the technology, but through artificial barriers to keep others from changing… until uncompetitive barriers, whatever they may be, lose their economic edge in a sea of change.

There’s a metaphor here; we live very complex lives – linked to millions of variables that we do not control – but in the end, we live those lives in accordance with the patterns and requirements of the special interests which prefer to spend money more on protective legislation than in innovating and accelerating change. Since that protective legislation favors rich incumbents at the expense of consumers, two inevitables seem to be the result: (i) when special interests fall after being artificially supported by legal machinations (like the automotive industry or Wall Street), the damage they cause is akin to flooding after a massive dam break and (ii) the little guy bears the brunt. Legal machinations like supporting an unlevel playing field to favor big financial institutions or laws that simply stop competition. Think of that the n ext time you put your key in the ignition to go somewhere or buy a token to get onto public transportation. Simple acts – multiplied by millions every day – define our very existence.

I’m Peter Dekom, and what would you give up first – transportation or Internet?