Why, Even Some Automakers Support it!

by Don Boudreaux on August 14, 2011

in Competition, Crony Capitalism, Hubris and humility, Man of System, Myths and Fallacies, Other People's Money, Reality Is Not Optional, Regulation

Here’s a letter to the Boston Globe:

Contra Jeff Jacoby, Berl Hartman believes that the new government-imposed fuel-economy standard of 54.5 mpg is realistic because “many leading carmakers … endorsed the new standards.  Chrysler said it could use ‘plain-vanilla technology’ to meet the new standards, and all agreed that technology already in the pipeline could suffice” (Letters, Aug. 14).

Before rejecting Mr. Jacoby’s argument, Mr. Hartman should ask why some “leading carmakers” endorse this mandate.  If such a magnificent increase in fuel economy is easily and cost-effectively achieved, government no more has to force automakers to offer it than government has to force automakers to offer air-conditioning, cup holders, and other amenities that consumers willingly buy.

Perhaps this ‘endorsement’ is simply the simpering “yes, massa” of corporate executives now servile to leviathan.

Or maybe this support reflects some automakers’ realization that satisfying this mandate will be more costly for their competitors than for them – and, hence, that the mandate will increase the market power of these supportive automakers by differentially burdening, and perhaps even bankrupting, some of their rivals.

Either way, the very statement from Chrysler that Mr. Hartman finds so reassuring should plant in him deep suspicion of Chrysler’s motives.

Donald J. Boudreaux


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