5.20.2009

With Higher Efficiency Standards, Lower Efficiency


It appears I have another bone to pick with Bill Chameides, Dean of Duke's Nicholas School of the Environment, who sang the praises of President Obama's plan to increase fuel efficiency standards for American cars on his Green Grok blog: "Obama Steers American Cars Into the 21st Century." Here is a classic example of government intervention leading to the exact opposite of its noble intention:

* If you want to encourage American manufacturers towards more fuel efficient fleets and American drivers towards more fuel efficient driving, a federal gas tax is vastly more effective, since the problem isn't manufacturers for making gas guzzlers so much as its us drivers for buying them.

* Let me say it again: the problem with emissions isn't that our cars are too inefficient, but that it costs too little for us to drive them, a market failure that a gas tax would help solve.

* Imposing higher standards on car manufacturers will just make cars more expensive, encouraging people to hold on to their cars longer before they buy new ones, thus reducing the efficiency of the total universe of cars being driven (since older cars are less efficient than newer ones).

* Depending on how the legislation is written, manufacturers may be able to exploit loopholes so as to "trade down" their fleet towards categories with lower standards, and/or "get to" make low-efficient models if they have enough offsetting high-efficient models.

As David Brooks notes in his column this week, this is par for the course for the Obama administration: having identified the right ends, and apparently with a mandate to be the means, they have created a tidal wave of support, without a proper vetting of whether the means actually lead us closer to those ends or if in fact they get us further away. In the case of fuel efficiency, government has identified a problem, and it has a role to play in the solution; but this isn't it.
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