Special Interests and the General Interest

Via Market Urbanism, I learn that the Obama administration’s latest push for jobs is to subsidize manufacturing batteries for electric cars. The New York Times article about it lets us know that manufacturing in America is bleeding and needs this support:

We may marvel at the hardware and software of mobile phones and laptops, but batteries don’t get the credit they deserve. Without a lithium-ion battery, your iPad would be a kludge. The new Chevrolet Volt and Nissan Leaf rely on big racks of lithium-ion battery cells to hold their electric charges, and a number of new models — including those from Ford and Toyota, which use similar battery technology — are on their way to showrooms within the next 18 months.

This flurry of activity comes against a dismal backdrop. In the last decade, the United States lost some five million manufacturing jobs, a contraction of about one-third. Added to the equally brutal decades that preceded it, this decline left large swaths of the country, the Great Lakes region in particular, without a clear economic future. As I drove through the hollowed-out cities and towns of Michigan earlier this year, it was hard to tell how some of these places could survive. Inside the handful of battery companies that I visited, though, the mood was starkly different.

While it’s true that the decline of the US auto industry has hollowed out Michigan, it’s not true that it’s a general feature of manufacturing. The recession barely hit Upstate New York and Pittsburgh, two regions with heavy, non-auto manufacturing; even prior to the recession, those regions had much faster per capita income growth than both the US as a whole and their respective states’ primate coastal cities. Even Providence, with unemployment that was at one point in the recession higher than Michigan’s, managed to eke out good income growth numbers. Not every Rust Belt region is Detroit.

But industrial policy in the US is decidedly auto-focused, and if it’s not, it’s based on hi-tech. Car batteries, offering both, can unite two different special interests, ensuring those industries will retain their government support.

Fundamentally, the US attitude to transportation is unchanged from the 1950s, when a former GM CEO tapped to serve as Secretary of Defense could tell the Senate that “For years I thought that what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the nation is considerable.” Sprawl is good, not for the average American who’s forced to spend thousands per year on cars, but for favored industries; thus, the federal government has no interest in stopping it, and local governments merely use the zoning tools handed down by the federal government.

Although the original good roads movement was about transportation, and was fueled in part by populist anger at railroads and concentration of wealth in the cities, from about the 1920s on it featured collusion between government and industry: for example, Bureau of Public Roads chief Thomas MacDonald created a pseudo-scholarly Highway Education Board, funded primarily by the auto and tire industries, featuring such essay contests as “How Good Roads Help the Religious Life of My Community.” By the postwar period, the US had no coherent transportation policy, just an industrial policy. The Interstate network was partly the culmination of the 1920s and 30s’ efforts and partly fiscal stimulus in a recession; everything since then has been about preserving the status quo for the benefit of the relevant industries, which can buy Congress more cheaply than they can make good cars or diversify their products. Even public transit investment is essentially about preserving the status quo of the early 1960s in the big cities, which goes to explain why APTA’s culture is so wedded to keeping things as they are and avoiding policies that would benefit transit at the expense of cars.

It’s common to attribute the failure of American transportation policy to uniquely American features such as new urban design or low density, but when the same policy was tried elsewhere, it produced the same result. For example, compare Puerto Rico to Antigua and Barbuda, Barbados, and Trinidad and Tobago, which have comparable density and income: Puerto Rico has Interstates, the rest have no freeways; Puerto Rico’s car ownership is higher than in most European countries, and twice that of the other middle-income Caribbean nations.

Much like its richer, better-known tiger neighbors, Malaysia has had fast economic growth in the last few decades, involving heavy industrial policy. But unlike in South Korea, Japan, Singapore, and Taiwan, in Malaysia one of the industries chosen to be winners in the crucial period of early motorization was the car industry; to encourage the spread of this industry, the Malaysian government built highway infrastructure and let transit wither through benign neglect and overregulation, effectively turning Kuala Lumpur into a guinea pig for industry. Unsurprisingly, Malaysia’s car ownership is high for its income, and Kuala Lumpur’s transit mode share is 16%, compared with figures higher than 50% in richer East Asian cities.

The best source is Paul Barter’s thesis, comparing traffic policies in Tokyo, Hong Kong, Seoul, and Singapore on the one hand, and Kuala Lumpur and Bangkok on the other. The first four cities engaged in traffic restraint early in their motorization: they imposed sin taxes on cars or on gasoline, or in Tokyo’s case required car owners to purchase off-street parking space before being allowed to buy cars. Hong Kong has had no industrial policy, but the other three are in countries with heavy government involvement in industry. But Singapore has no auto industry, and the Japanese and Korean auto industries were late entrants to their respective countries’ export-fueled growth. In contrast, Kuala Lumpur and Bangkok imposed no such controls on traffic, and on the contrary built large urban freeway networks; if you’ve ever visited Bangkok, you’ve seen the double-decked freeways and the traffic cops with face masks.

Similar special interests dominate even in pro-transit policy in the US, since it’s so unused to having transportation policy whose primary purpose is to provide good transportation to users. I’ve already mentioned APTA, which is more interested in funding than in ridership, but the same can be said about development-oriented transit, which is judged based on its use to developers and ribbon-cutting politicians. A cleverer solution, due to Michael Moore, is to develop a domestic rolling stock industry from the carcasses of the auto industry – in other words, convert a special interest that promotes pollution into one that opposes it. But this won’t work, either, not when rolling stock is an order of magnitude cheaper than the cars it replaces; most of the costs of transit are local construction and operations rather than manufactures. An America that chooses transit over cars is an America that doesn’t need Detroit.

In a one-to-one match, special interests always win: they’re invested in their side and often fighting for survival. Detroit needs the rest of the US to keep driving much more than the rest of the US needs to reduce its sprawl. The gas and oil interests are more invested in their own existence than consumers are in rooftop solar panels. Corn farmers need ethanol subsidies more than people who aren’t corn farmers need the money for healthy food.

The reason general public interests can succeed is that while individual special interests are popular, the idea of special interests isn’t. The special interest-ridden politics of the Gilded Age led to the progressive movement – a movement that had its own special interests (including driving and suburbanization as the solution to social ills!) but somewhat cleaned up governance. Today the oil industry is unpopular in the US, even if its lobbyists are everywhere. The ideas of transit and clean energy are popular – in the few polls done on the subject, solar and wind power polls at the minimum in the 70s and often in the 80s, and “subway, rail, and bus systems” poll in the 60s, even higher than fuel-efficient cars.

The correct political strategy is therefore to keep hammering on the distinction between the general interest in good transit and walkability and special pollution and old-time practice interests. The general interest is what transportation policy is, as opposed to industrial policy. Some individual issues are too difficult and NIMBY-ridden, especially on the local level, but on the national level, policies promoting good government and a mode shift do not have those obstacles. Few politicians want to have to face entrenched special interests, but even fewer want to be branded as being for bad government.


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