“IT’S WHAT YOU NEED…”

5/19/09

Today we witnessed the spectacle of President Obama, in a celebratory ceremony on the White House lawn, announcing that all sides in the automotive/environmental debate had “agreed” to moving up the 35.5 mpg mandate for passenger vehicle in the U.S. by four years, from 2020 to 2016 in exchange for a national standard for fuel economy. Where does one begin criticizing this deal?

First, let me surprise my readers by not being critical for a brief moment. Even as one of the seven or so remaining defenders of federalism in this country, I applaud the portion of this deal that mandates a national standard for fuel economy. If there ever were a case in which the commerce clause genuinely applies, this is it.

Second, the Obama Administration and its lapdogs and lackeys in the emasculated car industry defend this deal, arguing that the $1,300 increase in the price of a typical light vehicle wrought by the imposition of this standard will be offset (Strangely, I have yet to hear the adverb “partially” used with the verb “offset” in these arguments…hmm….) by savings in fuel economy. The sensible response to this argument is that if the payback is so clear and certain, why must there be a mandate for such increases in mileage? Wouldn’t informed, smart, diligent, dollar conscious consumers see the advantages of such high mileage vehicles and cry out for them rather than have such purchases dictated by Big Brother?

There are two possible counters to the above argument. The first, and very likely, counter is that the payback is not so clear and obvious or the streets would be teeming with such econoboxes. Or perhaps the payback is not so clear and obvious at current fuel prices. If that is the case (and I suspect it is), this whole charade is just an effort to provide a convenient scapegoat for an inevitable increase in motor fuel taxes and/or other incentives to get people into cars they currently show little desire to buy. Already, Dave McCurdy, president of the Alliance of Automobile Manufacturers, is saying “Unless there is a huge spike in the price of gasoline…there will have to be incentives from the government.” Given that the purpose of trade associations is to seek handouts from the government while extolling the virtues of the free enterprise system, Mr. McCurdy’s fully extended and uplifted palm should not be surprising, but he has a point. But a sensible person might ask if the government is going to raise gas taxes anyway, why all this rigmarole with mandates, etc.? Why not just raise gas taxes and thus provide incentives for people to want cars with higher gas mileage, if that is what the government is intent on doing anyway? This is the approach used in Europe, and it seems to work there. I might even go along with such a scheme, provided that all the revenue generated by such a tax was rebated to consumers, thus providing even more incentive to conserve fuel. But such a rebate scheme is, to put it mildly, very unlikely.

The second possible counter to the “consumers can figure this out” argument is that consumers are not informed, smart, diligent, or dollar conscious and thus can’t figure it out. There might be something to this argument, but, as skeptical as I am about the sharpness, diligence, or resilience of the typical third millennium American, even I would argue that if there is one thing Americans are capable of doing it is shopping. Shopping is, after all, one of our few remaining roles in the daisy chain that constitutes the modern world economy. So I suspect that if there were such a clear payback to fuel efficient vehicles, dealers wouldn’t be able to keep Corollae, Foci, Civics, 3s, Cobalts, Fits, Versae, Prii, etc., in stock. Currently, the lots are littered with such cars. In fact, sales of compact cars, as a percent of all light vehicle sales, are down so far in May to 16.8% from 22.0% in May, 2008. And, yes, I know gas prices are way down from a year ago, but that only lends credence to the argument that Americans are still able to make rational shopping decisions, at least once in awhile.

Third, more important than what the perceived need to impose tighter fuel economy standards says about what the typical American consumer can do is what it says about the government’s perception of what the typical American consumer can do. What we are seeing here is yet another reflection of the thinking of most government officials, thinking that is especially virulent in the Obama administration; i.e., that we are all just a bunch of benighted saps who need the learned and benevolent guidance of our betters in the public sector in order to conduct our daily lives. We have to be told that we’ll save the extra $1,300 in gas; we couldn’t possibly figure that out for ourselves. After all, we didn’t go to Harvard. We didn’t work on the staff of an omniscient Congressperson or an omnipresent federal agency. We never worked at a think tank. We never organized communities. What could we possibly know?

Fourth, how about those tough guy captains of industry bleating like helpless little lambs as President Obama told them (and their customers) what to do? Of course, this is a special case; two of the Big 3 are effectively owned by the government. (What is scarier, thought, is that such a case will grow less special as the Obama administration continues with its industrial policy while the Republicans offer a veneer of token resistance while secretly salivating as they await their turn at the helm of the super industrial state.) But anyone who contends that a typical corporate chieftain is a champion of free enterprise is either, as Ace Rothstein might put, an idiot or in on it. If it suits them (I was going to say “their shareholders” before the reality of modern corporate governance slapped me in the face.), such corporate hard guys would row vigorously the boat that pulls us all to socialism or, more properly in this case, fascism, the latter in the economic sense. Economic fascism of the type that seems to be taking shape before our very eyes would put such corporate poohbahs in an even loftier position than the one they occupy in the charade of capitalism we currently employ in this country, so their enthusiasm for such a system is understandable; there is an element of the mercenary in all of us that is especially virulent in those who run corporations in which they personally hold very small stakes. However, that these people hold themselves up, and are often held up, as paragons of capitalism is misleading and laughable.