The Right State

I am a firm believer in the law of supply and demand.  If a product does not sell, a company will either change their product or go out of business.  By the same token, if a company does not continually upgrade their products, consumers will buy some other company’s products.  Most people understand this simple concept, so why does the government insist on involving itself in the marketplace once again?

A proposal to increase U.S. fuel economy standards would force Detroit-based automakers to “hand over” the market for trucks and sport-utility vehicles to Japanese manufacturers, a senior General Motors Corp. executive said.

Bob Lutz, GM’s vice chairman and the head of the company’s global product development team, said the proposed changes to the government’s Corporate Average Fuel Economy (CAFE) standards would represent an unfair burden on the traditional Big Three automakers.

Government fuel standards have remained unchanged for the past decade, but some government bureaucracies are concerned because in 2005 the fuel economy of vehicles built in the United States slipped.  One of the main reasons for this change is the country’s love of SUVs and large trucks.  As a truck owner I do not mind having to visit the gas station a little more often than others.  It is the price I pay to own a truck.  As long as consumers are willing to buy these gas hogs why should the government care?

Lutz, a long-time critic of government fuel economy regulations, compared the attempt to force carmakers to sell smaller vehicles to “fighting the nation’s obesity problem by forcing clothing manufacturers to sell garments only in small sizes.”

Absolutely!  The Volkswagen Bug entered the US market in the early 1950s and the Japanese imports soon afterwards, but the cars had minimal impact on the US markets.  That is until the Arab oil embargo in 1973.  During the embargo gas prices skyrocketed.  All of a sudden the imports looked better and better since they had much better gas mileage.  With consumers turning to imports for their automobiles, the big three automakers were forced to make changes to make their cars more appealing.  Once again market forces forced changes on US companies.

Another problem with cars in the US during the 1970s was how long the vehicle lasted.  Consumers of American cars could expect their cars to only last three years.  Initially imports were poorly made.  Then came an American whom the big three rejected, quality control guru W. Edward Deming who revolutionized the way Japanese cars were made.  With imports lasting several years the big three automakers once again threatened with the prospect of straightening out their act and started building cars which would last longer, or go out of business.  They decided to change.  American cars were marketed with promises of long warranties.  This is how the law of supply and demand works, change with the market or go out of business.

The government is not the solution to every problem including regulating the gas mileage of vehicles.  Government control of market forces does not work very well, but this does not seem to stop the bureaucrats from trying.

A group called the Energy Security Leadership Council, which includes more than a dozen prominent U.S. executives and retired military officers, issued a report earlier this month calling on Congress to take steps reduce the reliance on imported oil.

If these bureaucrats and Congress werereally interested in reducing this country’s reliance on foreign oil, then maybe they should allow market forces to work in the oil industry as well.  There is an abundance of oil in both ANWR and the Gulf of Mexico, neither of which is being exploited (largely due to the Democratic filibusters).  The United States is the world leader in oil exploration and yet Congress continually hamstrings the oil companies’ ability to find and pump oil.  This interference by bureaucrats and Congress will guarantee the United States remains addicted to foreign oil.  Supply and demand works, government interference does not.

Tags: Culture //