While I agree with the concept of creative destruction, we should look at Japan and how they managed to achieve dominance of the U.S. automotive industry over the past 40 years and ask how. Of course higher quality products people wanted, but why were these companies, based in a country with little natural resources, able to achieve this yet the American one's weren't as effectively. Higher quality products people wanted, surely had something to do with it. But I don't think theres anything physiologically different about the Japanese/other Asians that means that only they are capable of reading the market and making high quality vehicles the market wanted.

I think it has to do with the structure and short-term constraints of U.S. companies. Ford was sitting pretty in 1999 when they were selling half a million Explorers a year, just as they were selling similar sized cars in the early 70s before the oil shocks. Ford's senior management wouldn't think to develop a hybrid like the Prius or HCH via investing billions, because if it flopped they knew that due to shareholder activism their jobs might be endangered. It limited their risk-taking and hence limited their competitiveness when the environment changed.

On Japan paying for babies I agree. I don't think reality has set in for most of the world though that industrial growth is at major risk with $100 oil and no feasible substitutes available in sufficient quantity to avert hardship. Their problem, like in the US, is that they have massive government wealth redistribution programs (ie: like medicare and social security) that are based on a pay as you go system. These systems are not viable long-term and the US will face fiscal disaster as the ratio of workers to retirees drops precipitously.