GM Declares Bankruptcy

[DarkCloud]

Oerdin... raise gas taxes by 2 dollars and the amount of subsidies to poor drivers will have to increase. gvt. inefficiency will increase. for the 2 dollars you raise the gas price, you will who are good at arguing for pork.

Basically to save the environment by raising gas taxes, the government will perversely harm it by encouraging poor people to drive more through subsidization.

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also, this may get pushed back- but about the time GM is supposed to be fiscally making money... 2012? I believe that Chery, the Chinese automotive mfgr. is planning for a rollout of its products (more competition).

And I think that Tata motors will not be far behind.

Whether anyone will buy their offerings is questionable, but they will be competing for the super-small to small to midsize markets... which is where the US gvt. wants GM to refocus.

[DanS]

Dino: The CFO is living in a fantasy world if he thinks that he won't have to deal with intense scrutiny. As I said, don't worry about it.

[DinoDoc]

Well, a fuel tax increase could increase the speed of this transition

Being unable to buy anything other than cars made of beer cans will do the same thing. Besides, the oil market seems to be doing what you want anyway wrt punishing the poor. So you just have to be patient.

[BlackCat]

Oerdin... raise gas taxes by 2 dollars and the amount of subsidies to poor drivers will have to increase. gvt. inefficiency will increase. for the 2 dollars you raise the gas price, you will who are good at arguing for pork.

Basically to save the environment by raising gas taxes, the government will perversely harm it by encouraging poor people to drive more through subsidization.

[BlackCat]

Being unable to buy anything other than cars made of beer cans will do the same thing. Besides, the oil market seems to be doing what you want anyway wrt punishing the poor. So you just have to be patient.

You do have a point about poor people not being able to buy efficient cars because it takes some time to build up the used cars market, but that is no excuse for not doing anything. 50 cents ayear the next four years should do it - isn't that the life cycle for american cars ?

[DinoDoc]

Is the market not raising the price of gas fast enough for you?

[BlackCat]

Is the market not raising the price of gas fast enough for you?

No

Edit : to be honest, the rise in market price hasn't really done anything that have made a change.

[DinoDoc]

Edit : to be honest, the rise in market price hasn't really done anything that have made a change.

http://www.cnn.com/2008/US/05/26/gas.driving/index.html

[DarkCloud]

I think that Robert Reich put it best on CNBC when he (paraphrased) said. You can have 2 of 3 things- you can 1) save jobs at GM; 2) make a profit on production of cars ; 3) make environmentally efficient cars.

The americans can't do all three things. One has to give. I would argue that #1 should give, but no politician will dare do that- so the most economically responsible thing to do is to back off of mandating enviro-friendly cars and to allow #3 to give.

[notyoueither]

Wonder if GM can spin this.

"Buy GM, you own this company anyway"?

Buy from yourself, you're the majority shareholder!

[notyoueither]

Is the market not raising the price of gas fast enough for you?

No.

The cash is going into the pockets of oil producers and those who own refineries. And it's a hell of a lot of cash.

[BlackCat]

http://www.cnn.com/2008/US/05/26/gas.driving/index.html

Buy a more fuelefficient car and you don't have do cut driving

Gas prices here are something like $7.20 /gal and we still drive.

[Riesstiu IV]

Yeah but you live in a small country and most of your cars have been burned in the cartoon riots.

[DanS]

Gas prices here are something like $7.20 /gal and we still drive.

I would be interested in knowing what the objective rationale is for that particular level of taxes.

In the US, the level of taxes is supposed to be commensurate with the need to support the method of transportation. This seems entirely fair and makes eminently good sense.

[KrazyHorse]

Although DanS at least mentions the concept of externalities it seems as though nobody here has bothered to scan the relevant economic literature to get a sense of the approximate scales involved.

To classify the major externalities:

1) Congestion; when I drive I inconvenience all others on the road by slowing down their drive. Offhand I haven't read any studies which quantify the congestion externalities of driving, but I imagine they are pretty significant for any fairly urban area. See (2) for a surprising answer as to how big the externalities can get.

2) Accidents; the classic example is a two-car collision at an intersection where one car was running a red light. If EITHER car hadn't been on the road then the accident wouldn't have happened, despite the fact that only one driver is legally at fault. By driving, even if I am a very safe driver, I increase the risk of accidents for everybody else on the road. http://works.bepress.com/cgi/viewcon...xt=aaron_edlin estimates the annual externality of vehicle ownership at a couple of thousand dollars in California (this is averaged over all cars; in actuality it will be dependent on how much, at what time, and where people drive). States with less crowded roads see a lower accident externality to driving, as well as a lower congestion externality. If we take 2000$ as a good estimate per car per year and take 15000 miles per year per car at 25 miles per gallon then we would need to assess a pigovian gas in California of 3.33$ per gallon simply to rectify the accident externality of driving in that state! Note that gas taxes might not be the best way to capture this externality (or the congestion externality). Tolls for road use which vary based on time, location, congestion condition etc. would probably do a better job.

3) Global warming; all silliness aside it's pretty obvious that carbon emissions cause global warming. The two questions here are: how much warming and how costly will this warming be. The closest to a median answer I've seen is that carbon dioxide emissions should be priced at 50$ a ton or so (this captures the global externalities of carbon emission; in the absence of an international treaty a purely selfish state should price only the externalities of carbon emission which impact their own population, which will obviously be far lower than the global externalities). Since a gallon of gas emits ~10 kg of carbon dioxide we can use as a first estimate that global warming should add 50 cents or so per gallon.