It wasn't (just)the Reagan tax cuts that lead to economic growth in the 1980s; it was the development of cellphones, personal computers, and the networks that connected them. It wasn't (just) Clinton's tax hikes that led to economic growth in the 1990s; it was the development of whole new layers of software for personal computers and the development of the Internet. Macroeconomic policies can create a favorable environment for this kind of entrepreneurship. But the environment will not determine the success of an economy anymore than the weather will determine the success of a farm.
Which brings me to today's Times. On page one, we learn how—on the very day it is reported that economic growth is slowing slightly—President Obama is visiting, among other companies, General Motors. On the editorial page, we learn from a contributor, Edward Niedermeyer, that GM's Chevy Volt is a lemon. Make no mistake: if the second claim is true, then the first story is not going to have a happy ending.
HAPPILY, HOWEVER, NIEDERMEYER’S article is not only misguided as an assessment of how electric car technology can enter the mainstream market, but it misses the larger point—that of the significance of electric cars to the economy as a whole. (I say this respectfully, and regretfully, because his website, “The Truth About Cars,” is unusually well done.)
In the first place, most people—that is, according to DOT figures, 78% of people—drive less than 40 miles back-and-forth to work or doing chores around the home. So 36,000 miles over three years is not different from what most lease contracts assume.
By the way, Niedermeyer also falls into the trap of speaking about the batteries as a Korean, not an American, innovation. But the battery cells the Koreans make--and make well--are to the battery pack in the Volt what protoplasm is to, say, an organ. It is the way the cells are put together, the way their voltage is regulated, they are heated and cooled, and so forth, that is the critical intellectual property. General Motors has a lead here, too, which they could blow. But it is absurd not to acknowledge it.
WHICH BRINGS ME to the final point. It is precisely because the Volt is the first car with a real shot at the mainstream car market that we should be thinking about its impact, and the impact of all electric vehicles, on the economy as a whole. What makes the Volt such a landmark is that electric cars are the killer app for the smart grid.