Thomas Friedman warns that in bailing out Detroit’s automakers, the U.S. government is doing “the equivalent of pouring billions of dollars of taxpayer money into the mail-order catalog business on the eve of the birth of E-bay.” I am not crazy about the analogy (I poured some of my hard-earned money into buying on ebay what turned out to be defective fountain pens.) But Friedman’s point is still well taken. In today’s industry, the pace of innovation has speeded up wildly-- quantitative change morphs instantly into qualitative (it’s called leapfrogging)--and so funding quantitative changes in the U.S. auto business may simply delay rather than prevent its collapse.

But what’s the alternative? Friedman cites the example of Better Place, a Palo Alto company that constructs networks of battery-charging stations for electric cars. Drivers would pay for electricity the way they now pay for cell phone minutes. It’s an interesting idea, and as Friedman notes, several countries, plus the state of Hawaii, have decided on pilot programs. And it may work, or it may not catch on, like those one-wheeled scooters--I can’t even remember their name--that were supposed to transform urban transportation. But it’s worth thinking about qualitative change like this in designing the auto bailout--and not simply settling for rules that govern executive pay or even gas mileage.

And Friedman’s column is not an argument against government getting in the auto business. If anything, it’s the opposite.  If you look at the example of Better Place’s product, it is going to get tested because Japan, Israel, Denmark, and Hawaii are going to put government money into it, along with interested car companies like Renault and Nissan. (American companies predictably took a pass.) So  it’s not a question of keeping government out and letting the market decide. But it is a question of putting money into a domestic industry that is capable of leapfrogging. And that’s the question that Congress should be asking about the American auto companies.

I’m no expert on the subject, but it seems to me that in the last fifty years the best-known innovator in the American car business was Lee Iacocca. Iacocca  excelled at marketing mediocre cars--his original claim to fame was the Ford Mustang. And that’s been the story of the American auto industry over the last fifty years. So as Congress designs a bailout, it has to think about how it can prod Detroit to embrace a culture of innovation. Are the current CEOs ready to do so? Iacocca has urged not changing “coaches in the middle of a game,” but it seems to me, especially in the case of General Motors, that we are talking about people who have already had many losing seasons.

Update of Sorts: I have to commend the comment by Rhubarbs below. He writes,"There are two things of which we can be reasonably certain regarding the future of the automotive industry: The gasoline-burning internal combustion engine is on the way out, and whoever brings to market whatever successor power train eventually achieves ubiquity will be bankrupt and out of business long before seeing his innovation win."

This is very funny and also probably dead-on. I did a story in 1991 on John Sculley at Apple, and at the time he was touting a new device--a personal digital assistance to be called the "Newton." It didn't work worth a damn, and helped cost Sculley his job, but within five years, every hotshot consumer had to have a Palm.

--John B. Judis