Columbia's Jeffrey Sachs: Big 3 can become auto sector technology leaders again

Can the U.S. auto sector re-claim technological supremacy in the global auto market?

True, innovation, breakthrough technology, and supremacy are not exactly words that come to mind when one currently hears the corporate names 'General Motors,' 'Ford,' and 'Chrysler.'

The auto sector as an asset, even now?

But Columbia University Prof. Jeffrey Sachs forecasts that the U.S. auto industry can return to greatness, in the nation that's championed innovation and ingenuity during the modern era -- if Congress passes a comprehensive rescue package for the Big Three, C-SPAN reported.

Sachs is doing what academics do best: looking down the field -- to what macroeconomic conditions and global commerce -- and auto demand -- will look like 5, 10, 20 years from now.

General Motors Corporation (NYSE: GM) rose 69 cents to $4.77, while Ford Motor Company (NYSE: F) added 53 cents to $3.25 per share in Monday afternoon trading. Chrysler is privately held.


In Friday testimony on the auto rescue bill before the House Financial Services Committee, Sachs, director of Columbia's University's
Earth Institute, said contrary to conventional wisdom, the massive infrastructure, economies of scale, engineering and design talent, and other tangibles, of the auto sector are not a burden but a huge national asset, C-SPAN reported.

"The U.S. auto industry can be the technological leader in the sector, supplying cars to the hundreds of millions of new drivers that will be added to the global market," after the global recovery starts, Sach said and C-SPAN reported.

Sachs said a comprehensive plan, with strong oversight and incentives, and comprehensive funding (loans from Congress, or through the Federal Reserve, and using some bailout money approved for the financial markets, and funds previously-approved for auto maker fuel efficiency programs), could set in motion in a wave of innovation by the Big Three that literally leads to a new auto age.

The key: the supercar

Further, $2-per-hour auto workers in China do not derail the above, in Sachs' forecast. The key is innovation, Sachs says. In his model, a low-cost/lower-cost car market exists, but in no way does it blot-out the next-generation/breakthrough car.

For example, a 100-mile-per gallon car -- whether it's a plug-in hybrid, an all-electric vehicle, a fuel cell car, or some other technology -- would capture a global market, and simultaneously increase U.S. national security, climate security, and U.S. global competitiveness, Sach said.

Auto Sector/Economic Analysis: Sachs shows the U.S. Congress -- and the American people - part of the way home. The U.S. auto sector remains a rich asset: some just don't see it right now. In the future, China, et all will build cheap, functional cars, but the United States will develop and build the supercar -- the car for the postmodern, energy-conservation, climate-conscious, multi-purpose age.
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