The Decline of the Auto-sector: The upside of down

The decline of American auto companies comes at a cost, but creates an important opportunity for positive change in public policy.

With the auto-sector bailout now behind us, it is worth looking back and noticing that none of the commentary on the sector’s dramatic North American decline has touched on how this change will impact the continent's political and policy landscape. This is interesting because, while it isn't polite to talk about it, the fact is, there are upsides to the decline of the North American auto-sector.

Indeed, even those opposed to the bailout haven’t talked so much about an upside, just the downside of our choices. For example, pieces on the auto-sector bailouts tend to restrict their criticisms to the moral hazard the bailout creates, the (unfair) treatment the bailout affords autoworkers, and the concerns over the enormous burden the bailouts imposes on taxpayers. And even within this narrow discourse, few commentators have been outspoken. Maclean's has probably been the most interesting. It bluntly outlined the gong show the industry has become with this set of amazing statistics and its columnist Andrew Coyne has posted piece after piece where he rightly points out the opportunity cost of bailing out the auto industry.

The fact is, however, bailout or no bailout, the decline of the auto industry has real impact on our politics, and economics – long-term consequences that have so far not factored into many news stories.

Start with the fact that we will soon only have one or two (smaller) American auto companies and their relative importance to the U.S. economy will be dramatically diminished. It is hard to imagine that the political muscle of this sector will not equally diminish. This is no small matter. Huge swaths of American (and thus, in part, Canadian) public policy is explicitly and/or implicitly focused on ensuring that people either need cars, or that cars are never a burden. (Remember, these are companies that, with political and government acquiescence, bought up public transport companies across the U.S. just so they could tear up the tracks their trams ran on to push people into cars or, if they had to, the buses the car companies built.) It is also worth recalling that early cities were downright hostile places for cars – roads were narrow and often terrible and people (and horses) were often in the way. Commuting from place to place was at best an ordeal; at worst, a nightmare.

Think about that. This means that everything from highways, to urban planning, to emission controls, to business hours – so much of what we take for granted in our society – has been shaped by the large and integral role cars and the auto-sector have played in North America’s economy, politics and culture.

Now, all these decisions, all these debates about how North Americans should structure their society, are all going to open up again as American auto companies cease to exist or decline in relative importance. The U.S. Congress is much more likely to impose tougher emission restrictions if those restrictions likely impact foreign companies. If more roads don't create more American jobs and profits, then public transport – not the auto-sector – becomes important to foster.

It is true that Americans (and Canadians) love their cars. But this love didn't come out of nowhere; it was nursed by decades of social policy and economic planning. Today, the incentives, money and influence that created and sustained that process have potentially been irrevocably weakened. The consequences are terrible for those who work in the sector, but they may end up being liberating and renewing for society at large. For cities, citizens, and communities, the explicit, and more importantly, the implicit legal, political, and policy barriers that have prevented alternatives are already beginning to decay. Ultimately, the change won’t happen overnight, and it certainly won’t happen tomorrow, but over time this decay will create a space where it will be freer to re-imagine models for development and growth.

At that's a big upside.