Arguing for CAFE with out an argument
Look, America. It's time we all say this together: "There's no such thing as a free lunch." As I mentioned earlier, we seem to be either unable or unwilling to look beyond the tips of our noses to see how whatever it is we're doing now is going to play out in the future. Today's case in point: New CAFE standards for automobiles.
Let's back this up and proceed deliberately here. What are CAFE standards? Corporate Average Fuel Economy standards were imposed on automakers in the wake of the OPEC oil crisis of the 1970s to help reduce fuel consumption by automobiles. The idea, of course, was to force automakers to make more fuel-efficient vehicles. It worked, but with a wrinkle. Fuel economy standards were broken out by type of vehicle. "Average fuel economy" is actually a fairly complicated formula, not a simple arithmetic mean, but that doesn't much matter to the purposes of this discussion. The end message for the automakers was not that each vehicle had to be more efficient, but that the fleet as a whole and each category of the fleet had to be more efficient.
So if your passenger cars have to get more efficient in a hurry, what's the easiest thing to do? Drop the least efficient vehicles for starters. It's not exactly coincidence that the large station wagons of yesteryear disappeared right before the large SUVs of today. The stubborn fact that would not change is that millions and millions of Americans have families, sometimes large families, and families have stuff, and all of those bodies and their associated stuff needs to get transported to and fro. Of course SUVs are not passenger cars and therefore do not hurt the average fuel economy for that line. A large SUV is no more fuel efficient than a large station wagon, but automakers met their CAFE requirements. Again, the perverse incentives and unintended consequences of regulation and not thinking beyond Stage One.
Well here we are again, with our government poised to save the world and our wallets by mandating much higher standards by 2016. Alan Reynolds of the Cato institute recently wrote a compelling summary of the problems inherent in the new regulations. Reacting to it in yesterday's Wall Street Journal are Rob Kleinbaum and WalterMcManus, affiliated with RAK & Co. and the Automotive Analysis Division of the University of Michigan Transportation Research Institute, respectively. Unfortunately for Kleinbaum and McManus, the editors must have eliminated all of their arguments, because the resulting piece refutes nothing in Reynolds' article and introduces new laughable assertions that makes one wonder just who it is they think they're trying to fool.
The thing is, we don't want to step on the gas and have to wait to go anywhere. Most of us don't want to drive around in death-trap toasters.
But here's the one that gets me:
First, it's fairly dishonest. Yes, there are small improvements that can be made to the internal combustion engine, but those are not the sort that will be needed for the gigantic leap required by the new CAFE standards. Hybrid technology is not going to get us all the way there either. Raising fleet averages to 35.5 mpg is going to mean very harsh things. It means larger cars will simply not be available. Smaller cars will have to be even smaller, lighter and slower. Fuel economy will have to be increased regardless of the cost of incremental gains, so overpriced electric and skeleton hybrids will sit unbought, or become heavily subsidized by the government.
The notion that domestic manufacturers will benefit more because "a major competitive disadvantage has been removed" is simply absurd. What do you mean "has been removed?" As if the government magic wand makes GM's problems disappear. As if GM doesn't want to make each of its vehicles more fuel-efficient while still preserving qualities that make them sellable. So it's government's place to decide product strategy for automakers? Well, technically if they own 60% of one, they have a stake in that company and can do what they like. But to decide it for the industry as a whole is troubling, to say the least. In what other industries will they know better than the product managers who are experts in their fields?
The government is pissing in Big Auto's ear, and Kleinbaum and McManus are trying to tell them (or is it us?) that it's raining.
Let's back this up and proceed deliberately here. What are CAFE standards? Corporate Average Fuel Economy standards were imposed on automakers in the wake of the OPEC oil crisis of the 1970s to help reduce fuel consumption by automobiles. The idea, of course, was to force automakers to make more fuel-efficient vehicles. It worked, but with a wrinkle. Fuel economy standards were broken out by type of vehicle. "Average fuel economy" is actually a fairly complicated formula, not a simple arithmetic mean, but that doesn't much matter to the purposes of this discussion. The end message for the automakers was not that each vehicle had to be more efficient, but that the fleet as a whole and each category of the fleet had to be more efficient.
So if your passenger cars have to get more efficient in a hurry, what's the easiest thing to do? Drop the least efficient vehicles for starters. It's not exactly coincidence that the large station wagons of yesteryear disappeared right before the large SUVs of today. The stubborn fact that would not change is that millions and millions of Americans have families, sometimes large families, and families have stuff, and all of those bodies and their associated stuff needs to get transported to and fro. Of course SUVs are not passenger cars and therefore do not hurt the average fuel economy for that line. A large SUV is no more fuel efficient than a large station wagon, but automakers met their CAFE requirements. Again, the perverse incentives and unintended consequences of regulation and not thinking beyond Stage One.
Well here we are again, with our government poised to save the world and our wallets by mandating much higher standards by 2016. Alan Reynolds of the Cato institute recently wrote a compelling summary of the problems inherent in the new regulations. Reacting to it in yesterday's Wall Street Journal are Rob Kleinbaum and WalterMcManus, affiliated with RAK & Co. and the Automotive Analysis Division of the University of Michigan Transportation Research Institute, respectively. Unfortunately for Kleinbaum and McManus, the editors must have eliminated all of their arguments, because the resulting piece refutes nothing in Reynolds' article and introduces new laughable assertions that makes one wonder just who it is they think they're trying to fool.
When CAFE was first introduced in 1975, there was a sharp increase in vehicle fuel economy within a very few years, despite the industry's protests that it would not be possible. The success of the initial CAFE rules despite these protests was a major wound in the industry's credibility.Well let's look at that. I doubt automakers actually said it couldn't be done. But they may have said it couldn't be done without radically changing the types of cars that rolled off the assembly lines. How do you make these dramatic increases in efficiency in just a few years? There are two main options: you decrease power and weight. Computer-controlled fuel injection would help a great deal in later years, but the emasculated, shortened Mustang of the era is the poster-child of the trade-offs necessary for fuel-efficiency.
The thing is, we don't want to step on the gas and have to wait to go anywhere. Most of us don't want to drive around in death-trap toasters.
But here's the one that gets me:
Increasing fuel efficiency of the fleet does not mean simply switching to smaller vehicles. Cars and trucks of all sizes can be made more fuel efficient by a series of technologies from materials to power trains. Further, domestic manufacturers benefit more than importers because a major competitive disadvantage has been removed.
First, it's fairly dishonest. Yes, there are small improvements that can be made to the internal combustion engine, but those are not the sort that will be needed for the gigantic leap required by the new CAFE standards. Hybrid technology is not going to get us all the way there either. Raising fleet averages to 35.5 mpg is going to mean very harsh things. It means larger cars will simply not be available. Smaller cars will have to be even smaller, lighter and slower. Fuel economy will have to be increased regardless of the cost of incremental gains, so overpriced electric and skeleton hybrids will sit unbought, or become heavily subsidized by the government.
The notion that domestic manufacturers will benefit more because "a major competitive disadvantage has been removed" is simply absurd. What do you mean "has been removed?" As if the government magic wand makes GM's problems disappear. As if GM doesn't want to make each of its vehicles more fuel-efficient while still preserving qualities that make them sellable. So it's government's place to decide product strategy for automakers? Well, technically if they own 60% of one, they have a stake in that company and can do what they like. But to decide it for the industry as a whole is troubling, to say the least. In what other industries will they know better than the product managers who are experts in their fields?
The government is pissing in Big Auto's ear, and Kleinbaum and McManus are trying to tell them (or is it us?) that it's raining.
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