An off-the-cuff analysis by Maynard
The new Volt has been in the news.
The Chevy Dolt (I’m going to stop calling it a “Volt”, for reasons that will come clear) will cost $41,000. A Federal tax credit of $7,500 cuts the out-of-pocket expense to $33,500.
The Dolt, a 4-door sedan, runs on battery power for up to 40 miles but has a small gasoline engine to generate electricity once the battery runs down. The gas engine can generate power to run the car another 300 miles.
I (Maynard) went to Starfleet Academy, and I think this kind of stuff is neat. I’d be happy to have one. But why in the world should the government subsidize it? It’s not like Washington has extra money to throw away.
They (the ubiquitous “they”) tell us it’s green. Look no tailpipe! No gasoline! Is good, right?
No, Brainiac, is not good. Is bad! I’ll explain why.
First of all, the natural base price of a product is a fair guide as to how many resources went into manufacturing that product. So to make a $41,000 car consumed about 3 times the resources of making a $14,000 car. If you want true green, you should first and foremost consume less. Right out of the gate, this monster consumes more. A lot more. To say the Volt is green, you’d have to argue that, over its lifetime, it used enough less energy to make up for the disparity. Even if it ran for free, I doubt it could close the gap.
The foregoing argument could be invalidated if eventual economies of scale will bring down the price of a Dolt. But that doesn’t seem to be in the cards.
Another argument in favor of the Dolt would be that, as a plug-in device, its fuel is whatever they use at the local power station. In other words, a Dolt might be coal-powered or hydroelectric or nuclear. A conventional car is limited to gasoline. Yes, it would indeed be good to shift away from our inflexible dependence upon gasoline, which is in domestic short supply (and will continue to be, whether we drill in Alaska or not). However, we can’t afford to buy enough $41,000 cars to escape this dependency, with or without subsidies.
Let me repeat that I’m very enthusiastic about true green projects, and I’m also deeply concerned about America’s dangerous dependence upon foreign oil. But what passes for “green” is all too often wasteful and “brown”. This subsidized boondoggle will prove to be just another payoff to cronies and special interests. There will be no benefit for the taxpayers’ dollars other than a photo op for Obama and new toys for cash-laden yuppies, who will then cruise around town proclaiming how virtuous they are.
Oh, I shouldn’t close without noting that the Dolt announcement comes on the heels of Obama’s little victory dance last week with the opening of a battery plant in Michigan.
Searching for an economic success story that can resonate with the public, President Barack Obama put his hopes Thursday in the fledgling electric vehicle battery industry, a sector with a promising but uncertain future.
Obama’s quick trip to Michigan underscored the White House’s efforts to spur job creation with the help of public money. Speaking at a muddy construction site where work will soon begin on a plant producing batteries for Chevrolet and Ford electric cars, Obama said U.S. manufacturing is poised for a comeback.
“When you buy one of these vehicles, the battery could be stamped ‘Made in America’ — just like the car,” he said.
With Democrats facing shaky election prospects and the unemployment rate stuck near 10 percent, Obama is under pressure to show that his $862 billion stimulus is delivering results and spurring private sector investment that can lead to a sustained recovery.
The plant in Holland is expected to employ 300 people during construction, with another 300 hired when the factory is fully operational. “Government can’t generate the jobs or growth we need by itself,” Obama said. “But what government can do is lay the foundation for small businesses to expand and to hire.”
Wow, 300 jobs! If you read down in the article, you see that the plant received $151 million from Obama’s stimulus funds. Lemmeesee, that works out to about half a million dollars per job.
The Washington Post article notes:
The plant in Michigan that Obama visited Thursday is controlled by a subsidiary of LG Chem, whose South Korean executives were on hand for the event. The ceremony had a Korean flair: LG Chem passed out hand fans in the colors of their flag, and scores of South Korean reporters flew in to cover the appearance, interviewing members of the company in Korean.
Oh, that’s just peachy. We’re borrowing $151 million from China to hand it over to the Koreans. We get 300 jobs in Michigan and Obama gets another chance to make a speech and get his picture taken.
You don’t need an economics degree to understand that Obama is burying us rather than helping us. There isn’t enough money in the universe to finance his subsidies, and there aren’t enough foreigners to take that money and hire unemployed Americans. We pay one group of people to make the product, and we pay another group of people to buy the product. This is crazy.
Okay, I’ve got nothing more to say here. We’re in the hands of lunatics with a credit card. Brings to mind the wise words of a man who warned us and has now moved on. “In this present crisis, government is not the solution to our problem; government is the problem.”