Introducing The 2016 GM "Meanderer" 
(not quite the Flying Car of the Future I imagined as a child... but it does feel familiar)





In no particular order…

• How is it appropriate for the Government to require a company to build its products with specific costly features?  Minimal safety standards are certainly reasonable and desired, but forcing private industries to adopt uneconomical, undeveloped and unwanted technologies is abusive.

• Does it make sense to increase federally mandated fuel standard requirements on an auto industry that is in the process of failing because it is uncompetitive?  How will increasing the cost of a car by an estimated $1,300 per vehicle allow GM and Chrysler to sell more automobiles or make money?

• Part of the reason that the Auto Industry is bankrupt is that the Government continues to make its business unprofitable through dictates and mandates that change with the direction of the political wind.  Two years ago it was Congress subsidizing and mandating ethanol use.  Today it is 39 mile-per-gallon cars.  Two years from now it will be electric cars or some other Command Economy directive. 

• Gas mileage has always and will always improve with the passage of time and the inevitable march of technological progression.  If people demand more fuel efficient cars, the auto manufacturers will build them.  The forces of competition dictate this result.  If one manufacturer fails to adopt emerging technology which is demanded by the consumer, that company will lose sales to its competitors.  This is true for all industries.  The Government didn’t mandate the creation of flat screen TVs, laptop computers or Ipods.  The Government didn’t decide between Blue-ray and HD DVD.  

• Auto manufacturers will reduce the size and weight of cars to accommodate this Federal mandate, which will inevitably translate into increased traffic deaths.  If a person freely chooses to engage in risky behavior, so be it.  But when a Government forces its citizens to engage in such behavior it is an obvious abuse of power.

What is the goal of CAFE standards?

If the CAFE goal was overtly stated, it could be evaluated for its likelihood, and tested to verify whether these standards succeed in realizing the objective.

I assume based on the political rhetoric that the goal is to reduce oil consumption.  Such a result is desired by politicians in that it would theoretically reduce both carbon emissions and our dependence on foreign oil.

But the Government’s logic is obtuse.  Lowering the marginal cost of driving (the cost of a unit of gasoline necessary to drive a mile) will cause people to drive more.  This is economic reality.  Commuting to work is far more appealing when one gets 39 miles per gallon.  Just as people drove less last year when gas was at $4 a gallon, they will drive more when their fuel mileage improves.  History bears out this reality.  According to the CATO Institute, between 1970 and 2001 the U.S. made cars almost 50% more efficient, but the average number of miles a person drove doubled.  Based on this understanding, CAFE standards will fail to achieve their only stated goals.

And What if CAFE Does Succeed?

The Government collects substantial revenue from gasoline taxes.  Should its CAFE standards succeed, this revenue will decline materially.  The Government is not in the business of reducing its spending or giving up its sources of revenue.  My assumption is that Congress would further increase gasoline taxes.  So in addition to spending an extra $1,300 to buy a car, the professed benefit of the augmented technology (improved fuel mileage) would likely be off-set by rising taxes.

Dismal Reality

Mandated fuel efficiency standards are unnecessary, provide little social benefit, distort the economy, have made the auto industry uncompetitive and have burdened consumers with expensive, inefficient and largely unwanted technologies.