Likelihood of Success

Here in my car

Jun 27, 2007 Gelt, Stragety

“If people wanted cars with great mileage, they’d be buying them”:

Is it just Murdoc, or is energy conservation one of the most liberal of all issues? (And by liberal, I mean that proponents campaign for other people to give up things for the supposed greater good, i.e. today’s practical definition of “liberal”, not the actual definition.)Lunatics everywhere think that raising CAFE standards will somehow help gas prices or Global Warming or something. If almost everyone is so positive that higher gas mileage is a good thing, why isn’t almost everyone driving vehicles that get 35 MPG or more? There are a lot of them out there folks, and many of them aren’t too terribly expensive. . . .

Basically, Murdoc is saying that the problem isn’t car manufacturers (who have enough of their own problems these days, thankyouverymuch) but car buyers. It’s those damn people again.

And not only lunatics say it, Murdoc. The question comes down, as I mention in the article at the last link, to whether there is a rational externality-based argument — there we briefly discussed national security — for government regulation of prices, unless you are a libertarian or even a firm free-marketer and don’t believe there is ever such an argument. Murdoc mentions global warming as one “something” from which people make this case. Not only lunatic people.

But these arguments may be beside the point or, at least, may be guilty of obstructing a large part of the point, because they ignore the question of whether increased CAFE standards are a net positive for social welfare. One body of literature has argued for years that CAFE kills, because lighter cars are less safe cars, at least for the people riding in them. Another urges that they don’t even really help reduce fuel consumption. The thinking is that more efficient cars encourage more driving — it’s cheaper per mile. Now, I have argued that the cost of gasoline, at this point in history and given the overall increase in wealth, probably has very little at all to do with how much most of us drive, and indeed the Heritage data tending to prove more driving is based on decades-old data.

I don’t know. It’s complicated, isn’t it? That’s why I’m saying that pushing for increased CAFE standards as a cure-all is almost certainly simplistic, because it makes the cardinal mistake in microeconomics of not allowing for the large multiplicity of moving parts in economic policy-making. But as demagoguery, it is right on.