End of the Line for American Auto Makers? Paul Krugman Thinks So
On Sunday, a few days before collecting his 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics (on international trade patterns), Professor Paul Krugman told reporters he felt the American auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed, it is no longer sustained by the current economy," he said.
Commenting on the possibility of a bail-out for the so-called Big Three car makers, General Motors, Ford and Chrysler, (who are asking taxpayers for $34 billion USD) Paul Krugman suggested this was merely a short term solution, stemming from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."Paul obviously has reservations about the ability of the 'invisible hand' of laissez-faire economics to resolve the major issues facings us today. Previously remarking on big business's reaction to global warming, he observed, "Leave it up to the free market, and in a few generations Florida will be underwater."
Oddly, at roughly the same time Paul was making his announcement, US President-elect, Barack Obama was outlining his forthcoming economic stimulus package, which will include massive expenditure on, of all things, roads. It will be, he said, "the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s".
Could it be that the United States might end up with brand spanking new roads, with no new American made cars to drive on them?
Image: GM's mini timeline of auto history, from their website.