The Motor Car
The invention and development of
the motor car, [aka the automobile], is undoubtedly one of the more
significant events in economic history.
It is a subject on which many people have profound convictions
and one capable of producing strong emotional reactions from various
points of view.
To consider the economic effect
of the motor car in any detail would require several volumes.
In a lecture of this duration and nature it is possible,
therefore, merely to refer to and discuss briefly some of the more
manifest effects, particularly as they apply in the modern world.
History.
Credit for the invention of the
motor car, often referred to in its early days, for obvious reasons, as
the horseless carriage, is generally given to the German, Karl Friedrich
Benz, who produced the first working vehicle driven by an internal
combustion engine in 1885. Previously
a number of vehicles had been invented in various countries using
electricity or steam as the driving force.
Before the motor car, personal
transportation within cities generally required walking, bicycling,
traveling by rail, riding on the back of an animal, such as a horse, or
sitting in a carriage pulled by one.
For many people, the motor car provided an advantageous
alternative. Unlike a
horse, it did not require saddling before use, or resting.
It also solved the manure problem.
In particular it freed the individual from the need for proximity
to fixed rail transport in order to move around, and greatly increased
his or her ability to choose where to live and to work.
Once invented, the motor car
moved quickly from being a toy for the wealthy and mechanically
inclined, to a widespread middle class necessity for everyday use.
Entreprenuers such as Henry Ford in the USA and William Morris,
[later Lord Nuffield] in the UK led the way in their respective
countries in establishing its production as a
significant new industry. Centres
such as Detroit in the USA and Coventry in England became major cities.
Similar developments occurred in other industrialized nations.
The closing decades of the last
century were marked by the consolidation of many nations’ leading car
makers into a few national brands, with the tendency for these then to
develop even further into a relatively small number of major
multinational companies. Conversely
the present century is seeing the development of a number of new car
makers, particularly in Eastern Europe and the emerging nations of Asia
and Latin America.
General Motors, the biggest
producer for most of the C20 has now been edged into second place by
Toyota, and American production of motor cars generally has ceased to
exceed that of the rest of the world.
Of the world’s 20 biggest car making companies 7 are Japanese,
3 American, 3 German, 2 French, 2 South Korean, 1 Italian, 1 Russian and
1 Indian
Some Effects of the Motor Car
- The
introduction and development of the motor car greatly promoted and
empowered individual autonomy, particularly that of women, enabling
people to travel far and wide to live, work and shop.
- The
design and structure of cities was revolutionized; streets and roads
were required to be wider and to be used primarily as thoroughfares
rather than as places of social interaction, sprawling suburbs
developed providing cheaper and more salubrious housing, single use
zoning became possible and shopping and entertainment centres were
located at the edge rather than in the center.
- Encouraged
the construction of highways thereby opening up the countryside and
diminishing regionalism.
- Created
a major cause of premature violent death and increased personal
injuries.
- Caused
significant atmospheric pollution and traffic congestion..
Present Problems
There are a number of problems
presently besetting the motor car industry, particularly in the West,
including
- The
spiraling price of petrol and diesel, the overwhelming choice of
fuel in the present generation of motor cars.
- The
parlous financial situation of many of the Western carmakers,
particularly the American, saddled with unsustainable employee
entitlements.
- The
looming worldwide economic uncertainty.
- A
growing intellectual and political reaction against what is
perceived as the culture of the motor car; wasteful of resources,
destructive of the environment, and anti-social.
Australia
There are presently 3 major
carmakers operating in Australia, Toyota, GM Holden and Ford, each of
which is foreign owned. Their
activities play a major part in the economies of at least 2 states,
Victoria and South Australia. In
2007, Australia produced 283,348 cars and 51,269 commercial vehicles, a
slight increase on the previous year.
By way of contrast, China produced 6,381,116 cars and 2,501,341
commercial vehicles, an increase of 22%, South Korea 3,723,482 cars and
362,826 commercial vehicles, up 6.4%, and the USA 3,924,268 cars and
6,856,461 commercial vehicles, down 4.5%
The Australian industry was
built on government protection. Currently
there is a tariff on imported cars of 10%, due to fall to 5% in 2010.
There is, however, a variety of other government assistance, both
State and Federal, such as to cause the Productivity Commission to
estimate total government aid to the industry in 2007 at $1.1 billion.
The relevant debate over the
years has largely been between those whom one could call the economists,
typified recently by the Productivity Commission, and those whom one
could call the lobbyists, typified by the automobile chambers of
commerce and various relevant unions.
Whilst the lobbyists have contended that it was essential for
Australia to have an operating viable car making industry the economists
have pointed out that it would be considerably cheaper for the
nations’ taxpayers if cheaper imported vehicles were permitted,
thereby enabling more people to afford cars and in the process expanding
the overall workforce actually involved in the automotive industry in
servicing and maintaining the expanded volume of motor cars.
In recent years the economists seemed to be winning.
In February the Federal
government announced a comprehensive review of the industry, to be
conducted by Steve Bracks, the former Labor Premier of Victoria rather
than the Productivity Commission. This
month the Federal government announced a $35 million grant to Toyota,
matched by a $35 million grant from Victoria, to fund the production by
Toyota in Australia of the Prius hybrid car.
Commentators have suggested that protection for the industry is
about to be revived. Economically, that would be unfortunate.
David
Sharp
24 June 2008
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