Government intervenes; hilarity ensues; quality of life suffers

5 04 2010

This will be kind of long, but I’m actually sort of proud of some of the points I make.  So stick with it.  Italics are used liberally throughout—so you know I mean business.

I hate it when the government messes with cars, since I love cars and what they represent.  You may recall that there is a mandated 40% increase in fuel economy coming by 2015, which will really stand to hurt consumers (who will be facing dramatically higher sticker prices) as well as struggling automakers (who will be faced with less sales due to said higher prices and also because we don’t want sucky small cars).

But then there’s this, by Michigan’s own Henry Payne:

Green Washington Wants Less-efficient Fuel

Payne almost always has the right idea.

It’s no secret that corn-based ethanol is a boondoggle that I struggle to even call well-intentioned.  For one, it’s not even green.  I’d venture a guess that biofuel has been waaaay overhyped by the corn lobby, but I know that virtuous lot would never use money and political influence for rent-seeking purposes.

More importantly, as Payne points out, increasing the ethanol component of gasoline actually decreases fuel economy.  So in 2015, automakers are going to be forced to increase the fuel economy of their fleets using gasoline that decreases inherently decreases fuel economy.  But what’s another couple MPGs to a bunch of Washington bureaucrats?  Hell, why not make cars that run on water?  After all, we’re the richest nation on earth!  We have the technology!

This brings me to the synergistic fusion part of the article.

Any of you dolts out there who still, for some reason, have a shred of faith in the government’s ability to not screw up everything it glances sideways at may be wondering: “How could all those bright young minds in DC make such a terrible mistake?  Surely, they will straighten this little misunderstanding up on the double!  Why, I remember when FDR beat the Nazis and saved us from the Depression!”

There is no nice way to put this: you are deluded.  For some reason, you seem to think that the government has an incentive to operate efficiently.  Here’s a hint: government does not deal with reality in the same way that the private sector does.

Take, for example, Representative Henry Waxman’s response to the business world’s realization that, hey, this Obamacare crap is going to cost us.  A lot.  What did Waxman do?

He sent CEOs threatening letters informing them that Obamacare was going to reduce costs, no matter what their numbers said.  It was irresponsible to claim otherwise, you follow?  It’s the kind of letter a mafia don would send to…I don’t know, a bookie, or some legitimate business that was monkeying with the books.  I’m not sure exactly what one would call this except thuggery.  Except usually mafia dons dressed better than Waxman, who, along with Pelosi, need to be made the official Faces of Statism.

STATISM IS NOT SEXY

Yesterday, Glenn Reynolds penned a column on the “knowledge problem” discussed by Hayek and other free-market economists.  Essentially, the point is that centrally-planned economies fail because there is no way for economic dictators (for that’s what central planners are) to correctly asses supply, demand, or the complete, top-down effects of a given policy or regulation on the market.  The whole thing eventually melts down, Soviet-style, as inefficiencies grow exponentially.  The result, inevitably and tragically, is the Trabant.

I’m not sure how Waxman and the Gang could claim to be unaware of the massive corporate writedowns that would occur in the wake of Obamacare’s signing, but that’s beside the point.

The crux of the matter is that it really doesn’t matter to them.

Washington is an alternate reality where the market is simply a point on a graph formed by the intersection of supply and demand curves—curves that can simply be shifted by subsidies, taxes, price floors, price ceilings, quotas, regulations, or whatever the current “market-based” social engineering strategy du jour happens to be.

Does this seem like an accurate description of reality to you?  I hope not—the world you must inhabit if it does has got to be awfully static and boring.  The world that the rest of us live in is full of individuals making dynamic decisions on the fly, the opinions of economic experts be damned.

Yet it is a denial of this reality—the gritty, market-based reality that businessmen deal with on a daily basis—that is a hallmark of government regulation.  Why does the EPA care that they are making unrealistic demands on both automakers and consumers?  All they are doing is shifting the demand curve for automobiles to increase amorphous, ordinal constructions like “social utility.”  Or something.  Hell, I’m studying this crap and I don’t even understand what the basis for most of their assumptions are.

I contend that the “knowledge problem” is not merely a disastrous symptom of central economic planning.  Instead, it is a function of the central planners’ conscious rejection of economic reality.  Government planners have no incentive to deal with reality because they can simply force participants in the market to conform to whatever dictates catch their fancy.

Hence, the completely predictable scenario in which automakers (and other industries) will be forced to jump over higher and higher (but completely arbitrary) hurdles no matter what the cost.  Enjoy your Trabant.

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