A Modest Proposal to Save the United States

We've been following the affairs of the United States' automobile manufacturers rather closely. It's an interesting situation, one that we think deserves more analysis that it seems to be getting. The moves to nationalise the companies, as we wrote about in an earlier article, seem to suggest that one of the most probable outcomes will be the foundation of 'AmeriCar'.

The notion of a nationalised automobile manufacturer is not outside of the realm of possibility, in this bailout-happy era of U.S. policy-making. It carries with it a guarantee of employing thousands of people, backstops what James Kunstler calls the "Happy Motoring fiesta," and more-or-less (mostly less) preserves the appearance of the status quo. All these appear to be the avowed goals of the Obama Administration, so the situation really is ripe for this particular flavour of Lemon Socialism. If the AmeriCar future is true, we have some thoughts as to how the Government can help make the continuation of the Happy Motoring fiesta more durable.

All that we suggest is the phasing in of a national speed limit of 35 miles per hour. Municipalities could, of course, have lower speed limits, but the highest legal speed in the United States would be 35 mph. Ignoring the indignant screams of rage from the Citizenry, this vastly lower limit would bring many positive changes:

The loss of life in automobile accidents would fall dramatically to near zero, reducing the cost of cleaning up the wreck, the medical bills, and fixing any damage done to public roadways. The repair cost of automobile collisions would be greatly reduced, since at 35 mph the force involved in any one collision is relatively low. The wear on public roadways and bridges would fall dramatically, allowing for more maintenance money to be diverted from maintenance to building more infrastructure.

Additionally, the reduced speed limit would force citizens to live closer to their places of work. By vastly cutting commutes, this would give citizens more time to spend with their families (or work more, according to preference). Also, the amount of energy burned daily by citizens going to work would be vastly reduced, thereby cutting the United States' dependence on 'foreign oil.' At the same time, this would automatically increase the density of American cities, which would both give a larger tax base to those cities, as well as make public services cheaper (i.e. more people are paying less).

We could go on, but we hope the point is made. A simple and elegant piece of legislation, like a vastly reduced national speed limit, could perform a world of change. Many of the apparent goals of the Obama Administration could be serviced by a lower speed limit. To be honest, we fully believe that this sort of legislation will never see the light of day. Such well-reasoned, functional mandates seem to be beyond the abilities of the Government.

Recovery and Mobility

In order for any kind of recovery to arise out of this Depression, workers must have the mobility to move to where the jobs are. The housing crash in the USA and policy response to it is impeding this necessary step.

In areas where jobs are vanishing, housing prices are falling as well. Many owners, whose houses are worth less than the mortgages, who can still afford their housing payments feel trapped in their houses because to sell would mean bringing cash to the close. They feel unable to move to areas where job prospects are better.

Government efforts to "keep people in their homes" are misguided for this reason as well. It is little benefit to a person to keep him in his house when his long term economic prospects are poor in that locale.

We propose as a better policy and an aid to stuck property owners a system of municipally-owned housing trusts to take title to physically sound, but financially impaired, properties. The former owners would formally lose their equity (the market has already taken the value away) but with out the negative credit event associated with default, and banks would accept conversion of their mortgages into municipal bonds secured by the properties. The former owners would then have the option to continue renting their homes at market rates, or move on to greener pastures.