Pictured at right is The Honda Clarity, a new hydrogen cell fuel car and the reason we the taxpayers are being asked to bailout the auto industry -- failure to innovate.

The Clarity offers the kinds of attributes that would make an advertising executive drool in the current economic climate -- "No emissions, 79 mpg and $600 a month."

If that isn't a recipe for success, I had better go back to riding a horse around town.

But there's a catch. (Isn't there always?) This slick looking model runs on hydrogen. Yes, that far-off technology that Detroit has been telling us can't possibly be designed, much less manufactured, without years of research and millions of dollars of taxpayer-funded incentives.

And yet, here we have it. Already researched, already manufactured and being test-marketed in the most receptive market of all, southern California.

It's called capitalism and the Japanese are kicking our asses at it. And frankly, we deserve the ass-kicking.

It's hard to imagine a more moribund, short-sighted, intellectually defunct or otherwise shiftless industry in America than the one based in Detroit.

America's former auto giants got that way by convincing Americans they wanted something they didn't need just as the words "disposable income" were becoming commonplace.

But once it came to interpreting the market instead of creating it and defining it, we fell behind. In other words, once car companies had to figure out what people wanted instead of telling them what they wanted, they lost their way.

Certainly, their success in making us believe we needed a converted pick-up truck with leather seats just to drive around town, convinced them they still had it. But it what they didn't realize is it was the last hurrah. When the price of running these SUV monsters became too much for even besotted Americans to stomach, Detroit just couldn't convince itself the honeymoon was over.

Which brings us to the present. At the worst possible time, when we would look to them to be a bulwark against what economists are now calling a world-wide recession, Detroit has its hand out.

As New York Times columnist Thomas Friedman, whose new book on the future is titled "Hot, Flat and Crowded," ranted in the Nov. 11 edition, "I could not help but shout back at the TV screen: We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation? If we give you another $25 billion, will you also do accounting?"

Since I like to recycle everything, including good writing, allow me to let Mr. Friedman say for me what I couldn't say as well myself (besides, he's better paid): "Instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers."

In the meantime, Honda and Toyota were investing in innovation and while working to give us what we need, crafted designs that made us want them too.

As the Associated Press reported in its review: "the Clarity opens a window into the possible: the combination of environmental responsibility and zero emissions with a fun, hip ride. If only refueling was a matter of pulling into the nearest filling station."

But that's how it is with innovation. It doesn't spring fully formed from the brain of the entrepreneur into the market ready to go. You see the direction the market is taking, you make the investment and you (and your workers) reap the reward.

As Friedman wrote: "Not every automaker is at death’s door. Look at this article that ran two weeks ago on autochannel.com: ALLISTON, Ontario, Canada — Honda of Canada Mfg. officially opened its newest investment in Canada — a state-of-the art $154 million engine plant. The new facility will produce 200,000 fuel-efficient four-cylinder engines annually for Civic production in response to growing North American demand for vehicles that provide excellent fuel economy.”

(In a side note, if you're wondering why Canada got this plant and not us, take a look at who will be paying the health care costs for the workers of that new plant and then look at what is bankrupting GM: health care costs. Just a little food for thought.)

If, on the other hand, you are a struggling manufacturing giant in the electoral vote-rich Mid-west, innovation becomes something you deride from a distance while your Congressional delegation protects you from having to survive on your own, blocking government efforts to require improvements in fuel economy. And now the time has arrived to pay the piper for this lack of vision.

As CNN reports, "Congressional Democrats want the Treasury Department to offer the troubled automakers loans from an unspecified portion of the $700 billion bailout package originally passed to help the financial industry, which is reeling from the global credit crisis.
The White House and congressional Republicans have not signed on to support such a move.

The Republicans rightly point out that a $25 billion package to aid lawmakers has already been passed, but GM recently revealed that it is running out of cash and cannot survive the year without help.

The question becomes, is GM another company that is "too big to fail?" The answer is probably yes, not because it is deserving but because of what a GM collapse would do to a U.S. and world economy already on its knees and gasping.

CNN reports that "It is estimated that a GM bankruptcy alone would cascade widely throughout the economy and cost as many as 2.5 million jobs."

Some of those jobs will be in places like Pottstown, where the sole surviving auto parts plant, Dana, is already waiting to hear if it will be among the 10 plants and 2,000 jobs the company recently announced it would cut.

Time is running out as the news gets quickly and steadily worse. On Tuesday, General Motors stock continued to slide downward, reaching $2.92 a share, the lowest it has closed since April 1943. The company has also laid off 5,600 employees in less than a week.

And last week Ford announced that it has lost $3 billion dollars in the third quarter and was also planning to reduce its salaried and hourly workforce.

But if we are going to spend money to save the auto industry, let's remember whose money it is -- ours.

So the money should come with strings, lots of them. Not the least of which is to fire the entire management team (and maybe the enabling boards of directors as well) that got us into this mess and replace them with innovators who don't get paid million-dollar salaries if they don't succeed.

Set requirements for fuel economy, flex fuel, plug-in hybrids and all the things that may be the future.

Philosophically, we should let them sink or swim on their own. As Friedman pointed out recently on The Daily Show, right now there should be thousands of entrepreneurs in thousands of garages working on thousands of solutions, maybe three of which will end up working.

But practically, the country simply cannot afford, in the midst of an economic crisis, the collapse of an industry on which so much of its economy is built. And so we will be forced to reward what amounts to capitalistic malpractice.

As bitter as it may taste, the least we should insist upon is that our money be put toward investment in the right direction. At least then, we and our planet get something for our money.

Like that ubiquitous Energizer bunny, talk of oil prices and energy production is threatening to overtake talk of the economy on the campaign trail this year.

One of the less-discussed aspects of John McCain's selection of Alaska Gov. Sarah Palin as his running mate is her street cred in standing up to the oil companies that essentially own the state.

Of course, she was demanding that they do more drilling, but anyone who can be said to have a reputation for staring down big oil brings something to the table in this strange and historic election year.

What is increasingly lacking at the table, however, is common sense.

I know you all hate it when I constantly quote The New York Times, but they haven't been the "newspaper of record" for 100 years by being wrong all the time.

An Aug. 9 editorial concluded with this irrefutable truth -- "Here is the underlying reality: A nation that uses one-quarter of the world’s oil while possessing less than 3 percent of its reserves cannot drill its way to happiness at the pump, much less self-sufficiency. The only plausible strategy is to cut consumption while embarking on a serious program of alternative fuels and energy sources. This is a point the honest candidate should be making at every turn. "
(Click here to read the full editorial.)

I find it hard to argue with this statement, although I have learned that anybody can argue with anything at any time.

Nevertheless, if we are to bring this country back from the brink, it is time to recognize a few realities and stop arguing for argument's sake.

Some of my regular correspondents like to argue that "the market" will solve this problem in a more effective way than government interference ever could.

Not one to blindly trust government at any level, I nevertheless continue to believe that good or ill, government can be a democracy's clearest manifestation of the public will and it's time we started exercising that will over the corporate interests that have hi-jacked it.

On the same day The Times published the above-cited editorial, Pulitzer Prize-winning columnist Thomas Friedman made some interesting observations about a place where government saw the writing on the wall and changed the course of a nation for the better.

(Hint: It wasn't here.)

Like the U.S., Denmark was hit hard by the Arab oil embargo of 1973. Unlike the U.S., which breathed a sigh of relief when it was over and started building SUVs, Denmark decided it would never again allow itself and its economy to held over a barrel (pun intended) by sheiks in Saudi Arabia (the country where our attackers actually came from).

Instead, the Danes "responded to that crisis in such a sustained, focused and systematic way that today it is energy independent," Friedman wrote.

"Danes imposed on themselves a set of gasoline taxes, CO2 taxes and building-and-appliance efficiency standards that allowed them to grow their economy — while barely growing their energy consumption — and gave birth to a Danish clean-power industry that is one of the most competitive in the world today. Denmark today gets nearly 20 percent of its electricity from wind. America? About 1 percent."

They pay $10 a gallon for gas, but it has not crippled their economy because they undertook a green revolution, the kind Barack Obama has outlined. If you want to know what that might look like eight years from now, just look across the Atlantic.

"In the last 10 years, Denmark’s exports of energy efficiency products have tripled. Energy technology exports rose 8 percent in 2007 to more than $10.5 billion in 2006, compared with a 2 percent rise in 2007 for Danish exports as a whole.

"It is one reason that unemployment in Denmark today is 1.6 percent," Friedman wrote. In 1973, Denmark obtained 99 percent of its energy from the Middle East. Today it is zero.

"Because it was smart taxes and incentives that spurred Danish energy companies to innovate, Ditlev Engel, the president of Vestas — Denmark’s and the world’s biggest wind turbine company — told me that he simply can’t understand how the U.S. Congress could have just failed to extend the production tax credits for wind development in America," Friedman wrote.
Why should we care about Denmark? Friedman asks.

“We’ve had 35 new competitors coming out of China in the last 18 months,” said Engel, “and not one out of the U.S."

But instead of continuing those incentives to innovate and make us energy independent and thus break the chain that lashes us to the global madness that is the Middle East, we give subsidies to oil companies enjoying record profits and consider giving them leases to drill in our struggling oceans when they aren't even drilling in the places on dry land which we gave them for a song.

And in case you were wondering, those subsidies may be killing us.

This article in Reuters notes that a recent U.N. study has concluded that fuel subsidies envisioned as a way to bring energy to poor countries not only benefit the rich instead (SURPRISE!) but are hastening global warming.

As Alister Doyle writes, "Abolishing subsidies on fossil fuels could cut world greenhouse gas emissions by up to 6 percent and also nudge up world economic growth," the report showed.

"Some countries spend more on subsidies than on health and education combined ... they stand in the way of more environmentally friendly technologies," Kaveh Zahedi, climate change coordinator at UNEP, told a news conference.

"Smarter subsidies such as tax breaks, financial incentives or other market mechanisms could generate benefits for the economy and environment if properly targeted, it said. It pointed to subsidies to promote wind energy in Germany and Spain aimed at helping to shift from fossil fuels," the report said.

Hello! Are we tired of being the dumbest people in the world yet? Why are we hesitating to do something that countries all over Europe are already demonstrating can be done, with a little focus, a little backbone and a little faith in ourselves?

If hundreds of thousands of small personal donations can overcome the grip large donors have on politics, why can't the same strategy overcome the grip fossil fuels have on our economy?

Surely, it can't because it is beyond our reach. We've reached the moon. The only explanation is that we're too lazy to try, and that does not seem terribly American to me.

As Barack Obama said, we're a better country than that.

That seems like the sort of drumbeat that bunny should be setting.