Renaissance (Congress)Man

by Don Boudreaux on May 29, 2006

in Energy, Politics, Property Rights, Regulation

Rep. Sherwood Boehlert (R-NY) believes that government must force automakers to increase the fuel-efficiency of the vehicles they sell.  Here’s part of a letter that he has in Saturday’s Wall Street Journal, explaining:

Your editorial opposing fuel economy standards ("Not So Grande CAFE,"
May 8) that the standards amount "to the government dictating the kind
of cars Americans will be able drive, even if those cars aren’t safe on
the road." This is wrong.

First, the goal of fuel economy standards is to enable
Americans to drive the cars they want — but that the automakers aren’t
producing. And what Americans want is the full range of vehicles
available now, including SUVs, but with greater gas mileage. The
technology exists to create those vehicles affordably, car buyers want
them, and the nation needs them. The fact that they are not on sale is
a classic market failure.


Rep. Sherwood Boehlert (R., N.Y.)
House Committee on Science

Rep. Boehlert whips the term "market failure" about too cavalierly.  The believable existence of genuine market failure requires an institutional setting in which a significant number of individual decision-makers each bears too few of the consequences of his or her choices — such as when, for example, an owner of a factory upstream pollutes a river in ways that harm downstream owners of riverside land because downstream owners have no effective way to enforce their property rights to an unpolluted river.

But the situation decried by Rep. Boehlert has none of the institutional prerequisites for "classic market failure."  If a sufficient number of consumers truly are willing to pay for more-fuel-efficient cars (as Rep. Boehlert asserts), surely at least one of the 20-plus automakers now supplying new cars to the U.S. market would discern this fact — and, out of pure self-interest, act to satisfy this consumer demand.  After all, if increasing a car’s fuel-efficiency would cost an automaker $X and if consumers are willing to pay $X+Y for such a car, then profits are to be had satisfying this consumer demand.  Importantly, consumers who don’t pay for more-fuel-efficient cars don’t get more-fuel-efficient cars, and all consumers who do pay for such cars will get them — ensuring no free-riding on the provision of fuel-efficient cars.

Rep. Boehlert doesn’t divulge in this letter his source of information about this alleged consumer demand, but surely now that he’s unearthed this valuable information, automakers will act on it voluntarily — assuming, of course, that the information’s source is credible.

Alas, I suspect that Rep. Boehlert’s source of information on this point is not credible — for, again, if Rep. Boehlert’s claim were credible, automakers wouldn’t have to be forced by government to satisfy their customers’ demands.

The arrogance and conceits of Rep. Boehlert and his ilk make me want to vomit.


28 comments    Share Share    Print    Email

Previous post:

Next post: