Volt Jolt

During the recent Democratic National Convention, we heard a lot about how General Motors is back, thanks to its government bailout.  Now Reuters has a report that reveals, again, that things aren’t all that great at GM.

The report addresses the economics of the Chevy Volt.  Using information from industry analysts and manufacturing experts, Reuters estimates that GM could be losing as much as $49,000 on each Volt it sells.  The Reuters piece concludes that the Volt uses complex technology and expensive components and notes that analysts say it is “over-engineered and over-priced.”  GM says the Reuters report is “grossly wrong” because it doesn’t allocate product development costs over the lifetime of the Volt program — but even GM concedes that it is losing money on the car.

Volt sales are poor.  GM forecast that it would sell 40,000 Volts this year; through the first eight months of the year it had sold only 13,500 — and that’s even with an incentive program that allows a Volt buyer to get a two-year lease for as low as $199 a month.  GM has had to halt Volt production lines twice this year due to low sales, and some people question whether American consumers will ever want a plug-in car that takes hours to recharge its battery.

Politicians can argue about whether the bailout and government-sponsored bankruptcy were the best way to handle GM’s struggles and saved hundreds of thousands of jobs or instead simply locked in excessive labor costs and inept management.  Those debates shouldn’t affect a clear-eyed appraisal of GM now, four years later, with American taxpayers having invested billions of dollars in the company.  Let’s not kid ourselves:  successful companies don’t market products that are sold at less than cost.  The Reuters analysis of the bad economics of the Volt helps explain why GM’s stock price is in the doldrums, and why we should all be concerned about the company’s future rather than engaging in empty cheerleading.

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President Obama Gets The Last Word — For Now

President Obama brought the Democratic National Convention to a close last night with a much-anticipated speech accepting his party’s nomination for re-election.  As always, the President gave a well-delivered address that addressed concepts that have become familiar from the 2008 campaign and his four years in office, and that sought to stir some of the same emotions that made his 2008 a crusade for so many people.  The burden for the President, I think, is that every speech he makes is compared to some of his prior addresses to rapturous audiences; for many it will be hard for him to approach, much less equal or exceed, his efforts four years ago.  He has set a high bar for himself.

The President’s speech reminded me of President Clinton’s speech the night before in that it was heavy on brief references to a host of issues and policy concerns.  The President mentioned a number of matters — job training, renewable energy, investment in education, climate change, women’s health, oil and gas exploration, and countless others — and then moved on quickly.  The speech included lots of round-number goals (“100,000 math and science teachers” or “a million new manufacturing jobs”) and future dates (“over the next decade”).  It was as if the President wanted to touch every conceivable base.  It certainly seemed that he did so, but talking, however briefly, about disparate issues makes it more difficult to knit together and present broad, unifying themes.

The President acknowledged the difficulties in achieving his promises from the 2008 campaign, without getting into specifics of discouraging data on  unemployment, foreclosures, and the federal deficit.  He spoke of “hope tested by political gridlock,” said he never said it would be easy, called our recent economic issues the “Great Recession,” and added that it is clear that it will take more than a few years to solve the problems.  He referred to his failings, and said he was moved by the hope that ordinary Americans gave to him, not the other way around.

The speech was more pointed in its criticism of his opponent than you typically hear in addresses by incumbents, who often attempt to appear above the fray and largely ignore their adversaries.  He said Republicans don’t want Americans to know their plans, which consist only of lower taxes and reduced regulations as the remedy for every malady.  He noted the lack of foreign policy experience of Mitt Romney and Paul Ryan, accused them of being in a “Cold War time warp,” and chided Romney for purportedly “insulting” Great Britain, “our closest ally,” during a recent visit to that country.  From such remarks, I think we are safe to say that we are in for a hard-fought, and probably personal, campaign.

The President sought to address the charge that he views more government as the solution to every problem.  Not all of our problems can be solved by government programs, he said — but our problems can be solved.  Thereafter, however, every proposal and solution he offered seemed to involve some form of government program, benefit, or subsidy.  He talked about “nation-building here at home” through construction of roads and bridges, which sounded like a pitch for another “stimulus” effort.  It’s tough for President Obama to argue that he isn’t for bigger government, because he obviously believes that, as he says,”government has a role.”  That belief makes it difficult to convince him that some government programs don’t work and that government spending often is wasteful.  Last night, at least, there was no talk of eliminating any specific programs or spending as part of a plan to balance our budget.

The overarching challenge for the President is that, as he observed at one point during his speech, “I am the President.”  Unlike 2008, he has a performance record to explain and defend, and it is hard to sound lofty themes when your opponents are constantly bringing the debate back down to earth with statistics about unemployment, home foreclosures, or declining median family incomes.

This year the Democrats had the luxury of following the Republicans, which gives President Obama the last word — for now — but Republicans will have their say soon enough.  For all of their apparent differences, President Obama and Mitt Romney do seem to agree on one thing:  to use President Obama’s formulation from last night, this election offers the “clearest choice in a generation” between candidates with “fundamentally different visions of the future.”  With the conventions done, we now move into the final phase of this ridiculously long campaign — a time of more rallies, more attack ads, and eventually debates that will let the competing candidates go toe-to-toe.

Speech Saturation

After watching three days of Republican Convention, and now three days of the Democratic Convention, Kish and I are reaching the point of speech saturation.  I think I can make it through President Obama’s speech without suffering peroration poisoning — but it’s going to be close.

The sad fact is, there just aren’t many good speakers or speechwriters in either party.  Most of the speeches are hopelessly generic.  Everyone seems to talk about their families coming from nothing and their parents sacrificing.  Everyone relates some interaction with a generic American citizen — “in east Bejeebus, I met an ex-autoworker named Mel . . . .” — to illustrate some tired point.  Everyone tries to get the audience repeat some limp catch phrase, time and time again, until the viewer is ready to hurl a Coke can through the TV screen.  Except for Clint Eastwood, there’s not much originality out there.

The deliveries usually aren’t much better.  For every high-energy speaker like former Michigan Governor Jennifer Granholm, there are dozens of deadpan, monotone snore-inducers.  Most have no sense of timing and can’t deliver a punch line; they don’t know how to use facial expressions or gestures to accentuate the words.  They stand stiffly, turning their heads from side to side like a robot, reading off the teleprompters.  Even worse, however, are those people who think they are just about the most clever, entertaining personalities imaginable; their mugging and winking is intolerable.

Tonight, we’re seeing more of the same.  Sigh.  President Obama’s speech can’t get here soon enough.

A House Divided On President Clinton’s Speech

The Webner House was a house divided last night after President Clinton’s speech to the Democratic National Convention.  It’s been a while since we’ve seen President Clinton giving a speech on the national stage, but he hasn’t changed much.  He still has that crinkly voice, the habit of starting every second sentence with “Now” or “Look” or “This is important,” and the finger-wagging and finger-pointing.  He still exudes a kind of roguish folksiness.

Kish thought President Clinton knocked it out of the park with his vigorous defense of President Obama’s performance and critique of the Republicans.  I thought the speech was too long and too unfocused, flitting from topic to topic on hummingbird’s wings without establishing any kind of theme, and not very convincing besides.

Consider President Clinton’s point on gas costs.  He said we should be grateful that the Obama Administration has issued regulations that will require cars to be twice as fuel-efficient in the future, saying that means we’ll be paying half as much for gas because we’ll be driving cars that need only half as much gas.  The problem with that argument is that the federal government has been issuing fuel-efficiency regulations for years, yet our costs increase because the rising price of gasoline outstrips any fuel-efficiency savings.  Is any American paying less for gas these days than they did, say, in 1994?  And, of course, President Clinton only focused on the cost of gas, and not the cost of the car.  How much will it cost to buy a car that meets the new standards? How many people will be able to afford them, and how many of the cars — like the Chevy Volt — will need to be sold with a government subsidy to even approach the range of affordability?

I also was struck by President Clinton’s point that the big difference between his tenure and now could be summarized in one word:  arithmetic.  He argued that Republican proposals don’t add up.  The use of “arithmetic” is interesting because a popular t-shirt in Republican circles these days is a play on the famous 2008 Obama “hope” poster; it features a silk screen of Paul Ryan with the word “Math.”  Republicans argue that it is President Obama’s budget proposals that violate basic principles of mathematics and are based on phony “savings” and overly optimistic assumptions about economic growth.  Is President Obama well-suited to attack Republican arithmetic when he has presided over a series of years that have produced trillion-dollar deficits, and his own budgets forecast enormous deficits for the foreseeable future?

Finally, President Clinton argued that no President, including Clinton himself, could have fixed the problems President Obama inherited in only four years.  The fundamental premise in that argument, of course, is that President Obama hasn’t repaired the damage in four years.  Even if you accept that conditions when President Obama took office were historically unprecedented, the problem is that President Obama, Vice President Biden, and other members of the Administration confidently predicted that the problems would be fixed and that the economy would be roaring ahead at this point.  Obviously, that hasn’t happened.  Some Americans may pause to wonder why we should reelect someone who hasn’t delivered on his assurances and now is saying that the job was tougher than he led us to believe.

“The System Is Rigged”?

Does Elizabeth Warren really believe what she said tonight?  Does she really believe that the American system is “rigged”?  Seriously?

Perhaps Professor Warren just wants to get into the headlines with her provocative comment — but does she realize what it says that, after four years of President Obama, one of the key speakers at the convention that is renominating him takes the position that the system is rigged?  Even if you believed that the system is “rigged” — and I don’t — why would people who hold that belief want to re-elect someone who was so ineffective they didn’t successfully address that claimed fundamental unfairness in our society after four years in office?

I tire of sanctimonious people like Elizabeth Warren, who has lived for years in the ivory towers of academia.   What in the world does Elizabeth Warren know about creating jobs?  When has Elizabeth Warren ever created a job?

Maybe I’m missing something, but a Harvard professor bashing a country that President Obama has run for four years — and with a Senate under Democratic control to boot — doesn’t seem like a very compelling re-election message to me.

What’s With The Podium At The Democratic National Convention?

After two days of speechifying, I confess that my attention is starting to wander.  As the last few speakers have come striding up to the podium — always waving or pointing at someone, incidentally — I’ve found myself thinking about the podium itself.

What’s with the podium, anyway?  For one thing, it looks like the generic podium you might find at some bland ballroom at the conference facility on the outskirts of Anytown, U.S.A.  You feel like Democratic National Convention organizers had to pry off a cheap plastic “Knightsbridge Conference Facility” sign that used to be bolted to the front of the podium.  Who’s responsible for returning the podium so that the next motivational speaker coming to the local airport “convention facility” has a place to put his notecards?

And then there’s the design.  I’m no architect or interior decorator, but the podium looks like an awkward combination of the prow of a clipper ship, an art deco facade, and one of the decorations in the Emerald City.  You kind of expect to find  one of the Wizard of Oz’s guards to be lounging behind there, checking IDs.

Finally, the podium is massive.  What’s behind that ponderous edifice, anyway?  One of the recent speakers apparently found a bottled water back there.  The podium looks big enough to accommodate a Frigidaire — or maybe even a Sub-Zero.

Or perhaps the podium was designed to serve as a kind of ready-made shield, in case delegates rioted and started hurling placards or silly hats after hearing one speech too many.  On second thought, that podium might make sense after all.

The Double-Edged Student Loans Sword

Student loans have been a focus of many of the speeches at the Democratic National Convention.  The speakers obviously feel that talking about “making college more affordable” through more student loans is a winning issue — but is it?

To be sure, at one time going to college, and especially being the first person in your family to do so, was viewed as a sure way to get ahead and realize the American Dream.  Is that still the case?  As the scope of student loans has expanded — and as such loans have been used to finance educations in traditional colleges, and trade schools, and for-profit schools, and as all such schools seem to increase their tuition requirements on an annual basis — many have come to see student loans as less a gateway to opportunity, and more as a gateway to lifelong debt.

The statistics about the debt load related to student loans are striking.  Believe it or not, the Treasury Department is garnishing the Social Security payments of more than 115,000 senior citizens — to pay off their student loans.  More than 2 million people 60 and older have student loan debt; I know people who are hoping to pay off the loans they took out to attend college and law school at some point in their 50s.  As the article linked above indicates, younger Americans are carrying enormous amounts of student loan debt, debts that have affected the choices they are making about their careers and their lives, debts that have affected their parents who agreed to guarantee the repayment of those loans, and debts that may even make it impossible for the students to later get a mortgage for their purchase of a home.

How much has the easy availability of student loans encouraged universities, trade schools, and for-profit colleges to constantly increase their tuitions, rather than looking for ways to reduce costs?  How are students who borrowed heavily to go to college, or graduate school, or both, to manage in an economy that isn’t producing enough jobs that will allow them to comfortably repay those debts?  How many individuals who took on such loans now regret that decision?

Going to college and receiving a higher education is great, but you need income to repay debts — and that means getting a good-paying job.  If a struggling economy isn’t creating such jobs, student loans can quickly go from a blessing to an albatross.