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CEI General Counsel Sam Kazman about to take a spin in the Google car. (Photo by Marc Scribner)

CEI General Counsel Sam Kazman about to take a spin in a Google self-driving car in May 2012. (Photo by Marc Scribner)

As we prepare for another Human Achievement Hour (this Saturday, March 29, 8:30 pm – 9:30 pm), we at CEI are examining some of the latest, greatest innovations that will make the future even freer and more prosperous. One massively transformative technology currently in development is the autonomous vehicle, known more widely as “driverless” or “self-driving” cars. Google’s prototype has been covered extensively by the media, traditional automotive companies such as Bosch and Volkswagen are working hard on their prototypes, and new estimates put the potential societal benefits of autonomous vehicles at $3 trillion per year.

As I’ve noted in the past, we should be “thrilled that a technology that can greatly improve traffic safety, offer disabled people an unprecedented level of personal mobility and fundamentally change the way we travel is so close.” Soon, if you imbibe too much on a night on the town, your car or a rideshare provider’s car will be able to take you home. And thanks to reduced congestion due to optimized driving behavior, we will also enjoy improved local air quality. Whatever your political leanings, you should be excited about our driverless future — unless you’re reflexively and ideologically anti-technology.

In the last 10 years, the technology has progressed a great deal — to the point where it is quite possible that first generation highly automated vehicles will be available to consumers before the decade closes. To understand how we got to the stage of the Google self-driving car, it is instructive to see how far we’ve come. What follows is a brief history of autonomous vehicles that covers the technologies’ developments up until about 10 years ago.

Personal mobility has traditionally required active human monitoring and direction, from walking to riding horseback to bicycling. The physical and cognitive demands of travel have long been recognized, as has the capacity for and costs of human error in transportation. In the late fifteenth century, Leonardo da Vinci sketched out a design for a self-propelled cart with programmable steering, which was later compiled in the Atlantic Codex.

Engineering interest in vehicle automation stretches back to the 1920s, when auto ownership first became within reach of middle-class households. Inventor Francis P. Houdina demonstrated a radio-controlled car on the streets of Manhattan in 1925. Houdina’s invention was never treated as anything more than a novelty – although his company’s prominence led to a physical altercation with famed escape artist Harry Houdini, who thought Houdina was capitalizing on their similar names, which resulted in a disorderly conduct charge against Houdini – but the challenge of developing automated vehicles became recognized in research communities.

At the 1939-1940 New York World’s Fair, General Motors’ interactive Futurama exhibit predicted high-speed automated roadways in 20 years. While GM’s prediction of a driverless world proved premature, its prediction of individual automobile ownership becoming widespread rather than a luxury for the wealthy and upper-middle class — which sounded incredibly bizarre during the Great Depression – proved accurate.

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Post image for Here Are the Obama Administration’s 191 Big-Dollar “Economically Significant” Rules and Regulations

If you pay any attention to the debate over federal regulation (there are at least three or four of you), you inevitably hear about “economically significant” rules, and are then told that they have economic impacts (usually costs rather than liberalizations) of at least $100 million annually.

The technical definition is actually different, but such rules are also often referred to as “major” rules. In any event, while the total number of rules and regulations each year tops 3,500, the number of them in the economically significant category over the past decade has ranged from as low as 127 to as high as 224 in the Unified Agenda of Federal Regulatory and Deregulatory Actions each Fall.

The Agenda is like looking at a year-end pipeline, a flow of rules at the “Active” (pre-rule, proposed and final rule states), “Completed” and “Long-term” stages. Often rules are repeats from the year or years before. The Fall edition also includes a so-called “Regulatory Plan” for some agencies that singles out some rules for attention.

Items that get featured or prioritized in the Agenda vary over the years. For example, the Obama administration recently told agencies not to talk so much anymore about their languishing “Long-term” rules, which can be good or bad. It is also the case that Agencies are not legally bound to limit themselves only to what they present in their annual Agendas.

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Post image for The Great Italian Auto Bailout — Courtesy of U.S. Taxpayers

At the beginning of 2014, Detroit may be bankrupt, but they’re cheering the five-year-old U.S. auto bailout in Italy. That’s because after being the beneficiary of billions in U.S. taxpayer largesse, Fiat, the leading Italian auto company, is going to buy its final stake in Chrysler from that other big bailout recipient, the United Auto Workers (UAW).

“Chrysler’s Now Fully an Italian Auto Company,” reads the Time magazine online headline. But wait a minute! Wasn’t the bailout supposed to be about saving the American auto industry?

As Mark Beatty and wrote in The Daily Caller in November 2012, after presidential candidate Mitt Romney made the controversial claim that Fiat would be expanding production of Chrysler’s Jeep in China (a claim that turned out to be correct),

The real outrage arising from the 2009 Chrysler bailout is not that its parent company, Fiat, is planning to build plants in China. It’s that the politicized bankruptcy process limited Chrysler’s growth potential by tying it to an Italian dinosaur in the midst of the European fiscal crisis. The Obama administration literally gave away ownership of one of the Big Three American auto manufacturers to an Italian car maker struggling with labor and productivity issues worse than those that drove Chrysler to near-liquidation.

As we noted in the piece, much of Chrysler’s profits from its overhauled line are going to prop up Fiat’s failing, money-losing Italian business, rather than to expanding production and jobs in the U.S. Moody’s had downgraded Fiat’s credit rating to “junk” even before the Obama administration arranged for it to acquire a Chrysler stake, and in Autumn 2012, Moody’s gave Fiat another downgrade that the Financial Times described as even “further into ‘junk’ territory.”

Around this time, Barron’s put it like this in a headline, “This time, Chrysler could bail out Fiat.” Actually, the Barron’s headline is slightly misleading in one respect — Fiat didn’t contribute much of anything to the Chrysler’s bailout.

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The federal government’s Fall Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions finally appeared the Friday before Christmas (the Spring 2012 one never appeared).

In all, there are 4,062 rules at various stages in the regulatory/rulemaking pipeline. The last time there were fewer than 4,000 was back in 2007 (there were 3,882 then).

A portion of these rules are deemed “economically significant,” meaning they have impacts on the economy of at least (could be more) $100 million annually or significantly impact government operations. Those impacts could be to decrease costs, and it’s a cute sentiment, but that’s not how the regulatory enterprise usually works.

There are 224 economically significant rules in the pipeline now.

The Departments with the most (the top seven, in this instance) are as follows:

Dept. of Health & Human Services: 64
Dept. of Agriculture: 20
Environmental Protection Agency: 20
Dept. of Energy: 18
Dept. of Labor: 17
Dept. of Homeland Security: 15
Dept. of Transportation: 15

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Below is my statement released today on the government’s planned 15-month sale of its remaining General Motors stock:

On Wednesday, the government announced a plan to sell its remaining stake in General Motors at an estimated loss to taxpayers of $12 billion. If the losses on General Motors Acceptance Corporation (GMAC) are included, the total probably rises to nearly $20 billion.

It is good news the government is winding down its misguided involvement in Government Motors. It has announced an 15-month plan to divest its stock. It also is good news the auto industry is expanding – though most of the growth has been enjoyed by foreign automakers who have built plants in right-to-work Southern states and had nothing to do with the bailout.

But there is nothing new or remarkable about businesses showing signs of improvement thanks to massive infusions of public dollars. We will never know how many small businesses may have survived, expanded or moved into more profitable lines of business had the government pursued a more pro-growth alternative to this massive government bailout. We hear a lot about jobs allegedly “saved or created” by this bailout. But in reality, we will never know how much farther along the road to recovery we might be if we had foregone this “investment” and lowered tax rates so entrepreneurs could invest, grow and hire.

What we do know is it is long past time for the Obama administration to stop meddling in this or any other industry. We know its meddling – such as the Corporate Average Fuel Economy Standards – will harm GM’s top-selling Buicks, Cadillacs, and trucks and lighter vehicles and more vehicle deaths. We know that after the bailout, GM added less than 10,000  net new jobs, and that the bailout perhaps indirectly destroyed as many as 100,000 mostly blue-collar jobs through the administration’s insistence on rapid closures of auto dealerships. We do know the administration’s policies in Michigan favored the United Auto Workers over bondholders, stockholders – including the American people – employees and others.

And we do know, once and for all, this is not the path to economic recovery.

For more on the auto bailout’s costs to taxpayers, investors, shuttered auto dealers, and non-union workers, readers can view these articles by me and this by my CEI colleagues Matt Patterson and Crissy Brown.

Earlier, we noted that the auto bailouts temporarily look more successful right now than they likely will be in the long-run since Toyota’s bogus safety issues, and a series of massive natural disasters that temporarily devastated Japanese automakers, gave General Motors only a temporary advantage over its Japanese competitors in 2010-2012 that won’t last (the Obama administration left serious problems at GM unresolved, and failed to implement needed reforms that would have antagonized the powerful UAW Union but were essential to make GM cost-competitive in the long-run).

Writing in The Wall Street Journal, auto industry expert Edward Niedermeyer argues the Obama administration’s costly bailouts resulted in much higher costs to taxpayers, and poorer prospects for GM’s long-run survival, than if Romney’s cheaper plan for aiding the auto industry had been followed.

GM and Chrysler could have averted tens of thousands of lost jobs, and the government could have preserved billions of dollars in tax revenue, by undergoing a true bankruptcy reorganization, even if the government had provided full debtor-in-possession financing.

In a true bankruptcy guided by the law rather than by a sympathetic, rule-bending political task force, GM and Chrysler would have more fully faced their competitive challenges, enjoyed more leverage to secure union concessions, and had the chance to divest money-losing operations like GM’s moribund Opel unit. True bankruptcy would have lessened the chance that GM and Chrysler will stumble again, a very real possibility in the brutally competitive auto industry.

Certainly President Obama threw enough money at GM and Chrysler to create a short-term turnaround, but if the auto makers find themselves on hard times and return to Washington with hats in hand, his policy will have been no rescue at all.

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Post image for Chrysler And The Cratering Credit Rating Of Fiat

My piece yesterday in The Daily Caller, “The Real Fiat Scandal,” spotlights the real threat to Chrysler’s prospects in the immediate and long term: Fiat’s cratering credit rating caused by its bloated workforce in Italy and sinking auto demand in Europe due to the European fiscal crisis. As Barron’s put it in a headline, “This time, Chrysler could bail out Fiat.”

Actually, as I write with former CEI Research Associate Mark Beatty in the piece, Fiat didn’t contribute much of anything to Chrysler’s bailout “last time.” “In the 2009 deal overseen by the Obama administration’s auto task force, Fiat paid no money to acquire its initial 20 percent stake in Chrysler — only contributing some of its intellectual property, instead.” But even here, Fiat “made Chrysler profitable again not by producing more of Fiat’s mini-cars, as the Obama administration urged it to do, but rather by doubling down on Chrysler’s most ‘environmentally incorrect’ light trucks and sport-utility vehicles, such as the Jeep Grand Cherokee and Dodge Durango.”

But the woes of Chrysler’s Italian parent cast a big shadow over its prospects stateside, regardless of where its plants are built and/or relocated (which as we know has been an issue in political news recently). As we write, “Moody’s had downgraded Fiat’s credit rating to “junk” even before the Obama administration arranged for it to acquire a Chrysler stake, and last month Moody’s gave Fiat another downgrade that the Financial Times described as even ‘further into ‘junk’ territory.’” Due to antiquated Italian labor laws, Fiat keeps 63,000 workers on its payroll in its home country. These costs are almost certainly putting a crimp on the company expanding or even maintaining Chrysler’s operations in America.

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If you accept the dubious logic the federal government “saved” the auto industry (which requires ignoring other things that rescued General Motors, such as the Japanese earthquake and tsunami, and Thai floods, that battered its Japanese competitors, and ignores how government red tape weighs down the auto industry), then you have to give the credit primarily to President George W. Bush, not President Obama.

PolitiFact leaves out Bush, and refers to the bailouts as Obama’s “rescue of the auto industry,” in a flawed recent “fact-check” of a claim that is literally true but arguably misleading (the claim that “Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China”). It’s just the latest faulty pronouncement from a “fact-checker” that falsely claimed a costly energy-rationing scheme wouldn’t raise energy prices, and got the basic facts of a Supreme Court decision wrong.

PolitiFact says the claim about Chrysler building Jeeps in China creates the “impression that Jeeps built in China come at the expense of American workers,” and thus is false, although the claim does not literally say that. PolitiFact does not address related news that Fiat, which bought Chrysler, is now planning to produce some Jeeps in Italy, rather than in the United States. As the Detroit Free Press reported, Fiat plans to “export new . . . Jeep models from Italy to prevent plants from closing, protect Italian jobs and reduce Fiat’s dependence on Chrysler’s profits in the U.S. . . . by exporting premium brands from Italy to the U.S.”

As John Berlau and Mark Beatty note in The Daily Caller, “The real outrage arising from the 2009 Chrysler bailout is not that its parent company, Fiat, is planning to build plants in China. It’s that the politicized bankruptcy process limited Chrysler’s growth potential by tying it to an Italian dinosaur in the midst of the European fiscal crisis. The Obama administration literally gave away ownership of one of the Big Three American auto manufacturers to an Italian car maker struggling with labor and productivity issues worse than those that drove Chrysler to near-liquidation. As a result, much of Chrysler’s profits from its overhauled line are going to prop up Fiat’s failing, money-losing Italian business, rather than to expanding production and jobs in the U.S. Moody’s had downgraded Fiat’s credit rating to “junk” even before the Obama administration arranged for it to acquire a Chrysler stake, and last month Moody’s gave Fiat another downgrade that the Financial Times described as even “further into ‘junk’ territory.” Since Fiat has to keep paying idle Italian auto workers under Italy’s perverse labor laws, it has an incentive to shift production from America to Italy even if American auto workers are more productive than Italians.

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By Matt Patterson and Crissy Brown

Once upon a time, there was a company called General Motors. It made cars. But the company failed to adjust to changing market conditions, and that, combined with the high cost of its unionized workforce, drove it to insolvency. But before the doors were shuttered forever, a great and benevolent benefactor swooped in.

That benefactor was you — the American taxpayer..

It was you who stepped in back in 2008 and flooded GM with billions from the Troubled Asset Relief Program (TARP), a desperate attempt to shore up a variety of decrepit institutions whose imminent collapse threatened the entire U.S. economy (or so we were told). The initial bailout was followed in summer 2009 with another round of auto stimulus; all told, the taxpayer tab for General Motors bailout was a cool $50.7 billion.

What did we get for that money? Some jobs were saved. But President Barack Obama loves to embellish what the bailout actually achieved. He claimed at an April campaign event, for example, the bailout “saved probably a million jobs” and that “GM is now the No. 1 automaker again in the world.”

In truth, GM employed only 91,000 workers in the U.S. before it entered into bankruptcy in the summer of 2009. As John Lott notes for National Review, “[y]ou can reach a 400,000 total by assuming all of GM’s jobs, as well as all the jobs of its parts suppliers and car dealers, would have been lost.” In 2011, the entire U.S. auto industry employed only 717,000 people.

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There are lots of claims that the federal government saved the American auto industry by bailing it out. (Never mind that Ford didn’t get a bailout, and “foreign” companies such as Honda and Toyota make many of their cars in America.)

Critics of the bailout make the valid point “any company can be kept afloat indefinitely with taxpayer subsidies.” They also say the bailouts have resulted in GM becoming politicized and “spending lots of money” on a politically correct car that consumers and car-buyers don’t want “because of pressure from Washington rather than demand from consumers” (as even the liberal Washington Post has noted, discussing the GM Volt). But although these criticisms may be persuasive to newspaper editorialists and economists, they will be unpersuasive to an ordinary person in Ohio or Michigan who desperately wants a job, now, and does not care about how that happens or whether it costs taxpayers money. Such people are likely to be grateful for the bailout if no one explains to them that Mother Nature and good luck, not big government, saved the U.S. automakers.

General Motors never would have recovered as it did if not for the massive Japanese earthquake and Tsunami that devastated its rivals, such as Toyota.  The tsunami so crippled Toyota that GM could regain market share despite the Obama administration leaving GM’s uncompetitive, inefficient work rules and high labor costs largely intact.

General Motors also benefited from another factor that has often been overlooked: the massive Thai floods in 2011, which inundated and shut down Japanese car-parts factories in Thailand for many months, crippling Japanese automakers’ global supply chains. On Dec. 8, Toyota “cut its profit forecast by more than half after Thailand’s worst floods in almost 70 years disrupted output of Camry and Prius vehicles.” The World Bank estimates the floods did $45 billion in damage to the Thai economy and left half its factories under water for substantial periods. By harming Japanese automakers, the Thai floods gave a huge boost to their competitor, General Motors, enabling it to survive despite the Obama administration’s costly coddling of the UAW union in the bailout, which threatens the automaker with future losses in the billions.

GM also benefited from good luck — primarily the huge safety issues and recalls that befell Toyota in 2010. This helped GM and Ford move forward at a time when overall auto sales were rising rapidly. As The New York Times noted in March 2010 “Toyota Motor, estimating that it lost 18,000 sales in the United States last month while its chief competitors enjoyed big gains, introduced incentives Tuesday as it tried to restore consumers’ confidence in its vehicles after three big recalls,” as the company “acknowledged that the recalls had hurt Toyota’s ability to attract new buyers.” Toyota rebounded after it turned out its vehicles were safe, and that crashes of Toyota vehicles were the result of driver error, except for one crash that resulted from a dealer improperly installing a floor mat.

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