# Drudge et al upset by fictitious subsidy for the Chevy Volt

Reviews have been mixed for General Motors’s innovative plug-in hybrid, the Chevy Volt. It’s been lauded for its surprising power, decent styling, and so on, while criticized for its high price (over $40,000) and not-so-roomy back seats. But The Drudge Report and others on the right have lately gone a little bananas over a silly claim that the government subsidizes each Volt sold to the tune of a quarter-million dollars. Anton Wahlman — a free-market conservative opposed to government subsidies in general — has written a detailed debunking of that claim. In brief, the number was concocted by dividing a total subsidy figure that’s itself questionable by the number of Volts sold as of some time in November. As Wahlman points out, the same analysis done six months earlier, when only about half as many units had sold, would have shown the subsidy about twice as big. Take into account future sales, especially as the product improves and diversifies into more vehicle classes, and it plummets. Moreover, the supposed total subsidy is itself highly suspect. Almost all that Volt’s development costs were incurred by the fall of 2008, before the GM bailout began, but the alleged subsidy figures appear to ascribe Volt development to subsidy funds. Moreover, it treats loans and loan guarantees as if they were dead losses, despite the fact that the loan guarantees have not been needed and hence have been cost-free, and despite the fact that the direct loans are in the process of being paid back ahead of schedule and with interest. In brief, the$250,000-per-car figure is a bogus number being repeated by people who are less interested in factual accuracy than in generating page views or hyping anything that fits with their political agenda.

Of course, this leaves unanswered the separate question of whether any subsidy is justified. That’s of course a matter of opinion, and the best I can do is look at history. Nobody with any grasp of economic history would advocate replacing the free market with centralized government control, but experience also shows that some amount of intervention is beneficial.

All through American history the government has intervened in the market in ways that have often (if by no means always!) proved beneficial, and transportation is a primary example of that. Governments have underwritten in varying degrees post roads, water-borne commerce (ports, canals, river channels, etc.), railroads, highways, aviation, and satellites. Since it’s clearly in our long-run national interest to move past the centuries-old fossil-fuel economy to new and better technology, it makes sense to encourage development in that direction. Reasonable people can certainly disagree about the how and the how-much, but it doesn’t help that conversation to mislead people with twaddle about a fictitious quarter-million-dollar subsidy for the Chevy Volt.

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