Friday, November 14, 2008

U.S.Auto bailout tip of iceberg

For decades the U.S. taxpayer has directly subsidized the carbon-fuel, automobile, and sprawl industries. Now "emergency" direct subsidies are being considered for automakers.

But these direct subsidies are just the tip of the iceberg. The autosprawl system generates large "profits" for the above industries, but these are not real economic profits. The profits come from ignoring the costs [externalities] and wastefulness [opportunity costs] of this system.

The biggest hidden cost is greenhouse gas emissions and the consequent floods and drought. The second is oil and pipeline wars. There are many more problems absorbed by society for the unnecessary autosprawl system. How many can you name?

The solution is to stop the subsidies and invest in public tranportation.