Monday, November 17, 2008

Bailouts, the Economy and Environment

I haven't been paying much attention the last few days but it appears that an auto sector bailout is imminent in North America. We all have a lot invested in it because of the wider economic impact if the Big Three go bankrupt. I understand the reasons people and politicians support this idea but I feel we need to evaluate the situation a little more.

Our economy is designed around the automobile. Interstates, subdivisions and drive-through everything exist because we all have cars. Without them there would be a much smaller consumer economy. As a result, we can't live without them. Now, we are dependent on one industry to keep our economy going. However, our economy and finances are measured by rather short-term goals like profits. We have never accounted for the long-term and indirect costs of our auto-centered lives. Costs such as pollution, urban sprawl, and numerous health issues. We are at a cross-roads in our economic development and have a difficult choice to make. One is to continue using the same economic model we have, continue to socialize losses with bailouts and hope we can ride it out. The second is to change the way we live, produce, and consume. This will also require a fundamental change in how we measure economic activity and success in general.

How the second option will look is anybody's guess but unless we address it we are only going to see the current situation repeat itself.