But isn't the Delorean the "Car of the Future"?

The Chevy Volt - which, despite its name, runs on less than 1.21 gigawatts - is the car being asked to "save" General Motors. This electric model will produce zero emissions for most Americans (those that drive less than 40 miles per day) and goes from zero to 60 in nine seconds. (No word on how soon it gets to 88 miles per hour.)

The full model isn't due until next year, and it's going through some growing pains. In the meantime, as Wired reports, the Obama administration is trying to kill it. The task force appointed by the President to oversee handouts to the auto industry doesn't think the zero-carbon electric car will be profitable anytime soon. According to this blue-ribbon panel - which, incidentally, gets paid whether or not GM goes belly-up - GM should focus on more immediately marketable vehicles, rather than vehicles which will be marketable long-term.

Somehow, the Obama Administration has succeeded in being more nearsighted than Detroit auto manufacturers.

If GM was flush with profit, it would be a good time to experiment with new technology. Unfortunately, they are currently being propped up with someone else's money. The Obama Administration wants a return on their investment, and they won't let things like the long-term viability of GM get in the way.

That's the downside of asking for money from a controlling interest that doesn't understand your business.

No brakes! Rolling down the slippery slope in a GM car

The President of the United States is now firing CEOs. And why not? If the American Government is bankrolling a business, shouldn't the CEO of the American Government have the power to hire and fire the leader of its subsidiaries?

Maybe this is the journalism degree talking, but when I heard that Rick Wagoner was being let go by General/Obama Motors, my first thought went back to a story that broke last week: Senator Benjamin Cardin proposing that newspapers be able to exist as tax-exempt entities. Essentially, this would grant the struggling local newspaper industry a bailout of sorts.

Ask anyone who has worked at a tax-exempt, 501(c)(3) organization and they will tell you that there are certain things you can and can't do - for instance, you can't endorse or oppose candidates for office. Thus tax-exempt status is a tradeoff - you don't have to pay taxes, but in return your speech is limited by the government.

In other words, the newspaper bailout would create a plan where government would limit newspapers' speech - a plan which would carry financial incentives over alternatives, such as finding new and innovative ways to deliver content. And though current tax exempt law still offers a great deal of freedom, how long will that last when a 501(c)(3) paper starts printing something unpopular?

Perhaps I'm stretching a bit to envision a world where government would use a newspaper's tax exempt status as a way to regulate content. But if you told me five years ago that the President of the United States would dismiss the head of the world's second-largest automaker, I would have said you were stretching a bit, as well.

Sunday Funnies: Your monetary policy at work

While perusing Right Wing Video, I found this insightful clip that displays the inner workings of our government's monetary policy:

Ex-AIG employee names his own name.

In case you missed it, one of the recipients of the AIG bonuses, Jake DeSantis, turned in his resignation. DeSantis had been working for almost no pay ($1) with the promise that he would be compensated for 12 months of work all at once - compensation which may now be taxed at nearly 100%. His resignation letter, printed in the New York Times, chides AIG's corporate leadership for lacking backbone and accuses the attorneys general of New York and Connecticut of abandoning their oaths to uphold the law.

Contractual bonuses? F*** you, pay me.

"Now he's got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, go to Paulie. Trouble with cops, deliveries, Tommy, he calls Paulie. But now he has to pay Paulie."

-Goodfellas

I'm not thrilled that AIG is using $165 million in taxpayer dollars to fund bonuses. I'm even more mad that the government is bailing out businesses without checking where the money is going. But taking government bailout money is a little like taking money from the mob to keep your business afloat.

The AIG saga began in September, when the insurer asked for $85 billion, and continued in November, when the government gave them even more. AIG turned heads soon after with an executive retreat, and cancelled a second only after intense criticism. And now, it turns out, AIG has awarded lush bonuses to the folks who ran them into the ground - bonuses that were part of contracts signed a while back and which AIG is legally forced to honor. Clearly, they weren't worth a bailout to begin with.

"Business bad? F*** you, pay me. Had a fire? F*** you, pay me."

But President Obama and Congress are asking AIG to retract the bonuses - which would, of course, open them up for lawsuits that could be potentially more expensive. In essence, they're changing the terms of the bailout after handing out the money - and there's not much AIG can do about it now.

"Also, Paulie could do anything - like run up bills on the joint's credit. And why not? Nobody's going to pay for it anyway."

The currency of politics isn't money, but votes, and every politician only cares about re-election and legacy. The grandstanding by Congressional leaders, the President, and New York Attorney General/Gubernatorial candidate Andrew Cuomo is meant to win votes rather than stabilize a business.

Given those divergent goals of business people and politicians, the bailouts could wind up being more trouble for AIG than they were in before.

"Then, finally, when there's nothing left, when you can't borrow another buck from the bank, you bust the joint out. You light a match."

Innovation Nation

A research firm released an "innovation heat map" last week - using a variety of factors to identify where new and exciting advances were taking place across several industries. Not surprisingly, Silicon Valley was the most innovative area of the United States. But somewhat troubling is they way innovation is tanking in some of our major cities: Philadelphia, Pittsburgh, Chicago, and other industrial cities are simply not keeping up with the times.

Washington, D.C., with its culture of federal government and bureaucracy, isn't even on the radar for this - which is no surprise, and which is probably a big reason why the tech team that funtioned so freely and successfully on the Obama campaign is meeting so many challenges during the Obama Presidency.

Washington's premium on the status quo and aversion to innovation will taint any aid failing industrial cities receive - and worse, will prolong those cities' economic woes.

Since it's March, imagine a young basketball player with bad shooting habits. The only way that player will get better is if he changes his or her shooting motion to adapt to the game. The federal government solution might be to replace basketball rims with hula hoops or lower backboards, but none of these will actually make the shooter better - and eventually, he or she will get to a level where the rules can't be changed.

(By the way, this is not some sort of clever metaphor for why the Washington Wizards and Georgetown Hoyas suck this year.)

Sunday Funnies: Prize Patrol!

The folks at Right.org are giving away stimulus/bailout checks! And they're also giving out stimulus/bailout invoices...

Incidentally, if you think you can make a better video panning the stimulus, you should enter Right.org's contest to do just that. Grand prize is $27,599 - your share of the stimulus.

Girl Scouts 2.0

The Girl Scouts understand two concepts which have escaped the people at the controls of the economy: supply and demand.

The Girl Scouts of America have announced sweeping changes in order to boost membership. Recognizing that this isn't 1955 anymore, the concepts of campfire sing-a-longs, sewing and cooking, and even merit badges are being replaced by video conferences, financial responsibility training, and a leadership development curriculum. With more girls socializing online, blogs and online networks are emphasized (which gives the Girl Scouts a chance to teach about online safety, too).

Breathe easy, those peanut-butter-and-chocolate cookies aren't going anywhere.

Of course it's sad when traditions are phased out, but the Girl Scouts are reacting to the reality of dwindling membership - the organization was forced to change to meet the needs and demands of today. By clinging to those traditions, the Girl Scouts could serve nostalgia-seekers, but not the young girls who need them - and they would slowly die out.

Any industry seeking a bailout should heed the example of the Girl Scouts. And if the parallels aren't readily clear, maybe they could go door to door selling thin mints for a week or so - apparently, you can pick up pretty sound economic lessons that way.

Lessons from the Calvin Coolidge Snack Bar: Diet Sprite, the Stimulus, and Creating Demand

I took two economics classes at the University of Massachusetts. One was ECON 103, a course in basic macro economics that taught freshman how to draw basic supply and demand curves. It was taught by a professor in a big lecture hall with smaller sections on Friday mornings (which were mercifully taught in classrooms that were just a few hundred yard from my dorm). I slept through most of it, and if it had been the only economics class I took, I might be shrugging my shoulders right now and saying "Stimulus? Sure, why not."

The second class I took was in a building named, appropriately, after Calvin "Silent Cal" Coolidge (a staunch supporter of free market economics) when our dorm's House Council decided to found a snack bar in the 19th floor lounge. I was one of the nerds involved in House Council - a quasi-governmental body which, up to that point, had focused on putting on educational and social programming that no one cared about and no one went to. We decided to put the tax money we had collected to a better, more productive use by launching a social hub for Coolidge residents. It also taught me a great deal about how business works.

We launched simply in Spring 1998, and sent one of our volunteers out to buy the first run of supplies. She came back with one twelve pack of every type of soda she could find - assuming that we needed variety. We learned that demand didn't call for a wide variety - people were just happy to have a place in the building where they could get soda cheaper than the vending machines. We also learned that no one likes Diet Sprite. To get rid of the supply, I gamely purchased about eleven of the ten cans our supply director bought (so I can personally attest to how horrible it was - seriously, don't ever buy Diet Sprite).

Essentially, I subsidized the purchase of a product no one wanted. If we had only looked at raw data about which sodas sold quickest for our next supply run, we might have thought Diet Sprite was selling like hot cakes and bought more. Luckily, we were a tight knit group, so I could express my distaste for Diet Sprite. (Have I mentioned it's sickeningly sweet? Stay away from Diet Sprite.) What I had done is artificially create demand.

Eleven years later, our economy is lagging and President Barack Obama - in a phrase uttered last week that has been retooled for this week's speeches and press conferences - is blaming lost demand. People are simply not spending money, so the government will start spending for them.

When I created demand, it was 50 cents per can and I spent my own money. But now, with this stimulus plan, we're all chipping in.

And this is the problem with any government action under the umbrella of a so-called "stimulus package." Government doesn't seem to understand the world of business - which is why President Obama can say, with a straight face, that an entity with a trillion dollar operating deficit "is the only entity left with the resources to jolt our economy back to life." (Seriously - he actually said that.)

Since government doesn't understand business, and doesn't operate by the same rules, how can we expect government activity to turn the business world around? Maybe Obama is wrong to say doing nothing is not an option. Maybe doing nothing - for a change - would be the best option.

In the meantime, I hope you like Diet Sprite; since no one is buying it, we're going to buy a whole lot more of it.

NOTE: After some cursory research, it appears "Diet Sprite" is the same product as Sprite Zero. You're warned.

Sunday Funnies: Economic Dysfunction

Thanks, Washington!

Recent comments on the economy have shown just how much confidence we can place in our representatives. There are lots of companies out there that are failing or in debt because of irresponsible spending. Now that those companies are being supported by the taxpayers, President Obama and his pals are setting strict regulations - for instance, the people who caused this mess aren't allowed to give themselves raises. And they've come out strongly against those fancy "retreats" that are really just subsidized vacations.

It's good to see that folks with business sense are making decisions on the economic recovery.

Garth, do you smell bacon?

In order to beg for a piece of the stimulus pie, the U.S. Conference of Mayors released their list of "shovel ready projects" that they feel are good candidates for pork spending with funds from the stimulus package.

StimulusWatch.org is a great way to look at what America's mayors think is a good idea to spend other people's tax dollars on. More than a simple listing of projects in the Conference of Mayors report, Stimulus Watch is a wiki that allows citizen involvement - you can vote whether a project is necessary or not, list points for and against it, and make comments.

It seems to be working. Users are leaving comments and actually discussing the reasons for and against many of the projects. And while there are a few proposals which are drawing positive support, most are getting voted down. Citizens are also giving a bit of valuable: in response to a $3.5 million plan to refurbish the sidewalks in Old Town Alexandria, Va., one resident reveals that the city already makes regular repairs.

As Ars Technica notes, by opening the process up with a wiki-style interface, Stimulus Watch is light years ahead of the Obama Administration's definition of "transparency."

For transparency, this is a little fuzzy...

President Obama's stimulus package was the story of the week. The bill passed, but the bigger story may be what didn't happen - or at least, didn't happen yet.

TechPresident's Nancy Scola was incredulous that President Obama did not mobilize his grassroots standing army to support the stimulus, even as Republicans began crying "pork." Scola wondered if this showed the President felt he could take care of navigating the bill through Congress on his own. But some Obama critics - like Craig Colgan of TechRepublican - point out that the White House has not exactly on the cutting edge of new media, with a website that delivers little of the transparency, connection, and access that was promised on the campaign trail.

The answer may be that Team Obama cares more about the image of transparency than the actual substance. Consider Recovery.gov - a site which promises to track the stimulus package after its passage, so citizens can see where their tax dollars are going. A nice concept, but somewhat useless - after the bill passes, taxpayers can do little if nothing to change where their dollars go.

It may be that the Obama Administration realizes that, with less-than-ironclad public support, it may be wise to keep the people at an arms length while the stimulus is debated and ultimately passed by Congressional Democrats. But they will give you a great view once your money starts getting flushed.

Bipartisan Opposition

Some corners of the mainstream media continue to chide Republicans for opposing President Obama's stimulus/bailout/recovery/handout/train wreck bill. But on the day where the new face of the GOP will be chosen, consider this:

Opposition to the bill was bi-partisan, with 11 Democrats joining the Republicans in voting "Nay." The same can't be said for the support.

The choice of a new generation?

Sure, Congressional Democrats continues to work on a giant spending bill even with the economy in the doldrums. But luckily, President Obama seems to have instituted his own stimulus plan to help our struggling businesses create more jobs - companies like Pepsi are capitalizing on the themes of the Obama campaign to move more of their own project.

As this Metro billboard suggests, Pepsi has adopted the mantra of hope and change. It's more appropriate than they know - Pepsi has been claiming to be the "choice of a new generation" for decades - probably long enough to be the choice of the next generation that came along after the original new generation. It's a message based more on positioning a brand than on any kind of substance.

Betting the farm

With stimulus/bailout talk dominating the headlines, President Obama's Department of Agriculture is doing something smart - reviewing the disbursement of farm subsidies to stop some payments. Currently, the flawed handout program sends cash to some people who have never planted a seed in their lives - and probably couldn't tell a hole in the ground from... well, you can figure that part out.

It's over a year old, but this blog post from Merry Olde England has a clever take on the ridiculousness of farm subsidies.

Yes We Cantor

A running theme of the early Obama Administration has been "process."

When will the President make good on his promise to pull troops out of Iraq? How will the President handle the suspected terrorists at Guantanamo? When will the government pass an economic policy to make everything better? White House Press Secretary Robert Gibbs has frequently referred to each situation as a process - giving the Administration a chance to delay and diffuse questions.

And as Mama Eltringham pointed out to me today, one Republican is turning that back on the Administration. Faced with a harmful economic stimulus bill, Republicans are looking to delay and diffuse too - delay (or destroy) a harmful bill and diffuse criticism that they are suffering from sour grape syndrome since November. So Rep. Eric Cantor of Virginia used the same language:

"The House is set to vote on the legislation as soon as tomorrow... Cantor said the House vote on the legislation 'is only the first step in the process.'"

Gibbs later credited Cantor with successfully pushing to publish the stimulus package online for public scrutiny - a tactic which not only delays the bill's passage, but forces the Obama Administration to explain spending $800+ billion in tax dollars during a time when working folks are pinching every penny to get by.

But don't accuse the Republicans of trying to sink the stimulus. They're just letting the process play out.

Power vacuum

The Washington Post painted a great picture of the evolution of Your Nation's Capital in a piece that ran yesterday.

The Post's Joel Kotkin points out that DC is unique among national capitals in that it was not a significant city before it was chosen to house the federal government - and even afterward, its growth was slow because American federalism concentrated power elsewhere. But as power became more centralized in the 20th century - especially in the last 30-40 years - Washington has grown in size and cultural significance.

At the same time, Kotkin reminds us, other American cities have suffered crises of identity; Detroit's auto makers, New York's financial barons, and others have been "forced to kiss Washington's ring." Businesses are moving their corporate headquarters here to be closer to the machinations of government.

Like most federal initiatives, Washington is synthetic. Cities like New York, Philadelphia, and Boston sprang up on their own because of their access to ports and commerce; Washington was placed strategically; it has planned by a relatively small committee of officials; and its growth has been fueled by money taken from other parts of the country.

Socialism is bad right?

AOL Political Machine Blogger Matt Lewis was on Fox News today squaring off with former Mondale campaign manager Bob Beckel. The quote that stuck with Lewis coming away from the segment was Beckel's defense of socialism: "What is wrong with some form of socialism in certain areas?" Here's the video:

Beckel poses a valid question. And with the Obama administration less than a week from taking the controls, it's a question that needs to be answered by opponents of a government controlled economy. If people are struggling to make ends meet, a scheme to nationalize industries will sound more appealing - and without a viable answer, could become a reality.

Oh yeah, baby, bail me out...

Yesterday's fun news of the afternoon was the $5 billion adult entertainment industry bailout proposed by Joe Francis of Girls Gone Wild and Larry Flynt of Hustler.

With Congress was going wilder than any of the barely legal spring breakers has Francis caught on film, the Porn bailout is well timed. The case they lay out similar to the Detroit automakers': Flynt and Francis (the F&F boys?) argue that thanks to the internet, people just aren't buying smut in the form of magazines and DVDs anymore. Rather than adapt to the new technology, they argue that the government should fund an old business model - a model which, if not fatally flawed, will certainly never be as profitable as it once was.

Some actually took it seriously: as the story unfolded, the Huffington Post used the occasion to point out how the recession has affected porn. Which goes to show just how ridiculous the concept of corporate welfare is: eventually, the government has to pick and choose which industries to subsidize and which to turn away. As Francis and Flynt show, any industry can claim to "need it so bad," but Congress has to draw a line somewhere.