The United States of General Motors
How we squander our wealth on car dependency
The Conspiracy
“What’s good for General Motors is what’s good for the United States of America.”
—Apocryphal, attributed to General Motors CEO Charles E. Wilson
At the crux of Robert Caro’s The Power Broker is that control over jobs is power. Robert Moses came up through the progressive government reform movement, in opposition to the Tammany Hall machine. Machine politics were based on a simple exchange—"vote for us, and we’ll get jobs for you and your family." The tragedy of Moses is that he turned into what he sought to destroy. Through various government agencies and public authorities he created a road-building empire throughout New York City, and with this empire he fostered undying loyalty amongst the people he employed.
Car dependency is a massive jobs program. Through the auto manufacturers. Through the fossil fuel industry. Through the civil engineering departments. Through the construction trades. For the finance and insurance people. For auto-shops and people who own parking lots. These professional associations, unions, and small businesses owners all have disproportionate political clout, locally, regionally, and nationally. They replaced the Tammany approach with a bipartisan consensus on road-building.
In this way, it’s much like the US health insurance system. Creating a single-payer system or a public option would wipe out huge numbers of jobs in the health insurance racket. This would be a massive disruption to an entire sector of the economy—lots of people would lose their jobs overnight, and so we simply can’t muster the political will to get it done. It doesn’t matter that the output of those jobs is bad for society. It matters that the insurance industry provides jobs.
In 1953, Dwight Eisenhower nominated the President of General Motors to be Secretary of Defense. In his confirmation hearing with the senate, he was asked if he would be capable of making a decision adverse to the interests of GM for the good of the country, and he answered:
Yes, sir; I could. I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the Nation is quite considerable.
This turned over the years into the apocryphal quote at the top of this piece. That version may be a little more flagrant, but it captures his original sentiment quite accurately.
This is one of those conspiracy theories that is actually just true. When Ford got out as the world’s cutting edge automobile manufacturer, it became in the interests of the United States for automobiles to be widely adopted across the world. A world that bought and used more cars was good for the US economy. A world that built more roads was good for the US economy, so we embarked on a massive road-building campaign, and exported the norm abroad that roads and car dependency were the path to prosperity. A world that used more tires was good for the US economy. A world that used more fossil fuels was good for the US economy. A world that built more ticky-tacky houses off the sides of highways at the edge of the city was good for the US economy. A world that paved over paradise for a parking lot was good for the US economy. All these powerful interests aligned into a growth machine that demands that everyone drive, all the time.
This was all urged on by a false promise that utopian, traffic-free driving was always just around the corner. “Just one more lane, bro, I promise!” Due to induced demand, highway expansions utterly fail to fix traffic, every time. The highway gets expanded and travel times fall temporarily. Then more people decide to live further away from work and drive more often, and travel times go right back up to where they started. The project doesn’t really do much good except shovel enormous amounts of public wealth into jobs for the automobile-industrial complex.
In the post-war era, as military mobilization wound down, our war production machine needed to be channeled elsewhere, or we may have been at risk of falling into a new depression, as our young men came home to declining manufacturing needs and a massive housing shortage. Among other things, the Federal-Aid Highway Act was the answer. States and municipalities may need balanced budgets, but the federal government has the power of deficit spending. So we embarked on the largest public works project in American history, funded 90% by the feds, as long as the states chipped in 10%. And after the Great Depression and the war mobilization stunted housing construction for decades, we embarked on a massive home-building spree for the returning GIs and the Baby Boom. Along the edges of these highways we leveled forests and filled in wetlands to build abundant, luxurious new housing in this new car-centric development pattern: the suburban experiment. A generation passed, and by the time experiment definitively failed, we had forgotten it was ever an experiment. Now it’s just the status quo.
Ever since, it has been fiscally impossible for states and municipalities to maintain their own roadways. They constantly turn to the feds for more deficit spending just to maintain what they already have. But the feds don’t give grants for maintenance, they only give grants for “improvements.” So when the over-sized roads start falling apart, they have to make it even bigger (and therefore more expensive to maintain) in order to get the feds to foot the bill. And widening the main drag through town makes walking less pleasant and less safe, so more people default to hopping in the car even just to go half a mile through town.
The state DOT officials and traffic engineers who we consult for their supposed expertise on these issues will never wrap their heads around how contrary to the public good this strategy is. As Upton Sinclair said, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Taxes
Back in the 1920s and ‘30s, Robert Moses was an expert at finagling bits and pieces of money from the city, state, and federal governments to build projects that were so insanely expensive that no single government entity would even dream of spending that much. He would regularly provide lowball estimates of costs to get construction started, only to come back and ask for more. Once ground was already been broken, the politicians were stuck forking over more and more money, because no politician will leave behind a half-finished project as a monument to their failure.
So the highways got built, even though no responsible public servant ever would have agreed that the eventual price tag was a responsible use of taxpayer dollars. Once this started, construction unions and engineering firms all became addicted to this easy government money. Departments of transportation expanded their staff, and once a union workforce is expanded it is very hard to reduce it. All it took to keep the money flowing was repeating the populist pitch of more roads, less congestion, easy parking! Moses was hailed as a hero and futurist in his time, and his model was copied in cities across the country and across the world.
We’ve all been paying our taxes to the United States of General Motors ever since.
Our taxes to the United States of General Motors are not just the huge amounts of our local, state, and federal taxes that directly pay for roads and other public car infrastructure. It’s also the gas. The maintenance. The auto insurance. We might not pay these taxes to a government entity, but we are forced to pay them because of public policy choices at the federal, state, and local level.
This tax of car-dependency is incredibly regressive. If you live and work in a place where you have to have a car to get around and function as an independent adult, you simply have to spend a lot of money owning and operating that vehicle. There’s basically no cheaper option than buying a used Toyota, maintaining it well, and running it into the ground. That will easily cost you thousands of dollars a year on depreciation, insurance, gas, registration, tolls, parking. No matter how rich you are, you can still choose to buy and drive a used Toyota. No matter how poor you are, there is no cheaper option. As a percentage of income, this is a negligible tax for the upper middle class, and a massive one for the working poor.
The only way to even partially opt out is to walk, bike, or take public transportation, all of which can be difficult or completely non-viable options in large swathes of our country. Even if you do refrain from car ownership though, our taxes to the United States of General Motors come in many more hidden and indirect forms that you can never escape.
One of the most insidious car-dependency taxes came in the form of the widespread adoption of Minimum Parking Requirements in municipalities across the country. Suburban strip malls aren’t providing those massive free parking lots out of the goodness of their hearts, or because they’re good for business. They’re building them because the Leviathan demands it.
Building a parking lot to code is not cheap, especially in cases where fitting enough parking requires building a garage. And then there’s the opportunity cost: developers would much rather use the land they’ve invested in more efficiently, to rent out more square footage of retail, housing, offices, or whatever it is they’re building. The developers pass on these costs to the buyer or lessee, and in the case of commercial uses, the lessee passes on those costs to their customers. Everything is more expensive, downstream of parking requirements. Whenever you buy something from a store with a parking lot, or pay for services from a business with a parking lot for its employees, you’re paying for parking.1
Further, there’s a dispersed opportunity cost to society of all the developments that never happen because the parking requirements are such an insurmountable barrier. Pursuing the new suburban model of growth, Los Angeles adopted parking requirements city-wide in the 1930s. Even as land values skyrocketed and housing production plummeted in the 1970s and ‘80s, derelict buildings and vacant lots sat underutilized right in the middle of LA, but nothing could be built there because there simply wasn’t enough room to build parking lots in the tight urban quarters of downtown. In one of the most housing-constrained metros in the country, it took until 1999 for LA officials to acknowledge that downtown and the suburban fringe of the city had different needs, and to abolish parking requirements downtown so that new apartments could be built. Multiply this effect across the entire country, for not only urban apartments, but convenience stores, cafes, everything. These are entrepreneurial endeavors stymied, dreams squashed—all in the name of parking lots.
Providing parking can add value to a point of course, but these parking requirements are almost always excessive. Reflect on how rarely you actually see a suburban parking lot full. The numbers of parking spaces required by these zoning codes have nothing to do with how much parking is actually necessary—in many cases the numbers were just pulled out of thin air one day, and then copied over and over again across the country, resulting in a massive over-construction of parking spaces all across the nation. Every single excess parking space is wasted land, wasted asphalt, and more destroyed ecosystems. Every single one of those perpetually-empty parking spaces way out at the edge of the lot is a bit of the hard-earned prosperity of our nation lying fallow, thrown in the garbage.2
The same logic extends to street parking—every square foot of street parking in a city is public property that the city is choosing to use to provide parking instead of some higher and better use.
Think of those excessively wide suburban residential streets that have space for two lanes of traffic and street parking on both sides, even though everyone parks in their garages and driveways.3 Again: that asphalt is hard-earned collective wealth of the community, and it’s just being thrown in the garbage by all the people who designed, signed off on, and built that street to such an excessive width. And that’s not just in the cost of construction, it’s in the diminished property values on the street due to smaller yards and more speeding vehicles, and it’s in the perpetual maintenance: the wider street will be more expensive to resurface and rebuild every 25 years or so, forever.
Over the COVID pandemic, many cities converted parking spaces into outdoor dining parklets. Parklets make the entire street a more pleasant place, increasing the value of residences and commercial spaces on the block, which directly increases property tax revenues. Further, in-demand restaurants that can serve more customers by having a parklet generate more sales tax and business tax revenue. This foregone revenue is what an on-street parking spot is costing the city.
It’s vanishingly rare for a city to actually charge enough for parking. Just look at what happened when Chicago leased their street parking spots and parking meters out to private equity investors. The investors operating the parking meters increased prices nearly four-fold and stopped offering free parking on Sundays, and the city immediately realized they had sold the lease for far less than it was actually worth. The parking had always been worth as much as the new operators were charging—the city was just completely squandering this massive resource, oblivious to how much it was actually worth.
Everyone who uses street parking is getting their car storage subsidized. And everyone else paying rents, property taxes, and sales taxes in the city is paying for that subsidy.
Parking requirements, street-parking, and overly wide roads have many more intangible negative effects on the city, and tangible effects on municipal finances. The car-centric model of the city creates places that are just less pleasant to be in, which makes them less valuable. Would you pay more to live on a tree-lined street, with slow, quiet traffic; or a high-speed street with sparse tree coverage, where people are constantly honking at each other and making aggressive passing maneuvers? Every single one of these street designs meant to accommodate more traffic, more street parking, and higher speeds, is devaluing the adjacent buildings and reducing property tax revenues. Those foregone revenues entail higher tax rates, or lower-quality services.
Then one could begin to account for the medical bills and premature deaths caused by cars. There’s first the direct impact of collisions: 35,000 to 44,000 deaths per year in the last 10 years. Auto collisions are one of the leading causes of deaths among young people, who should have had the most years of life ahead. Obesity and other medical consequences of a sedentary lifestyle, caused by driving everywhere and walking nowhere. Elevated risks of asthma and cardiovascular issues for those who live near the air pollution of high-traffic roadways. Constant exposure to the noise pollution of cars elevates general stress levels, which causes innumerable adverse health impacts over time. Again, the incidence of all of these burdens is regressive: rich people don’t choose to live right by the noisiest, most dangerous, most polluted roads. These roads create such unpleasant places that people will only live by them if they can’t afford not to.
Wealth
One of the truisms of the personal-finance-advice world is that you can’t out-earn a spending problem. And the US has a massive spending problem when it comes to transportation. We are a fabulously wealthy country, but people are feeling so much scarcity and deprivation. We should feel like our lives are so much richer than the lives of people in Japan or Spain (countries with less than half of our GDP per capita), but so much of our abundance gets funneled into bigger cars, wider roads, longer commutes, easier parking—a whole load of bullshit that doesn’t actually make our lives better.
Money is about trade-offs. You can have anything you want, but you can’t have everything you want. And it seems we just accept this status quo tradeoff without thinking about it. Most people just never look at a half-empty suburban parking lot and think to ask: why is my city making me pay for all this asphalt? There’s this massive black hole in our budget that we just won’t look at.
In his Bowling Alone work, Robert Putnam estimated that each additional 10 minutes in daily commuting reduced people’s community involvement by 10%. He ranked suburbanization and long commutes as one of the most important causes of the 20th century decline in our civic and social fabric, only behind generational turnover and the rise of television. Putnam wrote, “Suburbanization of the last thirty years has increased not only our financial investment in the automobile, but also our investment of time.” The time sink and stress of driving in traffic leaves people collapsing on the couch at home, with no energy to do anything in the evening. All this driving not only empties our wallets, but hollows out our communities and starves us of the time to engage in more meaningful pursuits.
Joe Biden always used this great line: “show me your budget, and I’ll tell you your values.” And it seems Americans tacitly value driving big cars fast and parking right at the front door more than we value beautiful public spaces, more than we value arts and culture, more than we value community. Or, speaking more of concrete prosperity: we value our big dumb cars more than we value living in a nicer neighborhood, more than we value nicer vacations, more than we value paying for our kids’ college, more than we value extra years of retirement.
My personal finance education and my urbanist radicalization came hand-in-hand. Most middle class Americans are petrified by the cost of rent in America’s most urban, walkable cities. Living in a city like New York, San Francisco, or Boston seems completely out of reach. But rents being high in walkable cities isn’t a law of the universe: it’s a consequence of supply and demand. We have created a self-imposed scarcity of nice places.
Sometimes I worry that we have literally forgotten how to build the old-school walkable urbanism of these great cities. But some younger cities like Seattle and Portland have figured out walkability pretty well, and as we build more of it we will relearn those old lessons. Even very car-dependent sun-belt cities are building pockets of walkability as they revitalize their old urban cores. If we could build the housing abundance of a place like Houston in the walkable form of Portland, ordinary people could have affordable rents while also saving thousands of dollars every year on transportation expenses and taxes used to pay for roads. What would that mean for your budget?
---
Some other sources I’ve been inspired by besides the books I mentioned:
The All-In Cost of Car Dependency 2022
Cars Are a Disaster for Society—Here Are the Numbers
Can City Living Give You Financial Freedom?
///
Curing Your Clown-Like Car Habit
///
Paige Saunders' Solving the Housing Crisis series
You not only pay for that parking in the prices charged by the business, but again, in your local taxes. A half-acre of retail space is more valuable than a half-acre of parking lot, and therefore would be assessed to pay more property tax, meaning with smaller parking lots your city could either reduce your taxes or pay for higher quality public services.
Parking Reform Network maintains a catalogue of places that have abolished Parking Mandates. Progress is happening!
Again, garages and driveways that were required by the zoning code. Older houses that just have a walkway right up to a front porch are grandfathered in, but simply can’t be built anymore in most US cities. The standard American suburban home that addresses the public with a big fucking ugly garage door is essentially required by law in places that have parking requirements. This is what residential parking requirements took from us!
I've lived in places where I wasn't dependent on a car - Chicago, Philadelphia, Prague, Moscow. And I've lived in rural New Jersey, where my salary increase was whittled away by costs for gas and maintenance, as well as that state's notoriously high auto insurance premiums, and my overall Q of L was degraded by having to spend so much time driving.
Mind you, in a couple of those cities I did have access to a car, and used it when convenient or necessary. But I wasn't completely dependent on it, and that makes a huge difference.
I like the idea of more people being able to live in dense urban cores.
The United States has a number of pre-Civil War cities with this type of downtown, such as Philadelphia, Baltimore or St. Louis. Typically, these cities experienced population loss and deindustrialization after World War II. This was driven in part by rising crime.
Other cities, like New York, experienced similar challenges. But New York never lost its keystone industries of finance and media and eventually got crime under control. It remains a place where young, well-off people want to go to enjoy a high quality of life. The story in Boston was similar on a smaller scale.
I don't see any reason why a city like Philadelphia (once our nation's capital) shouldn't be able to do the same thing. It should be a place that talented, well-off people want to move to. Philadelphia would need to cut violent crime in half to get to New York levels. I think that would be a good start for a program of urban renewal.