Jackass of the week
Posted by seed @ 1:14 PM
General Motors Vice Chairman Bob Lutz, a long-time critic of government fuel economy regulations, recently compared the attempt to force carmakers to sell smaller vehicles to the notion of “fighting the nation's obesity problem by forcing clothing manufacturers to sell garments only in small sizes.”
That, folks, tops the week. Lutz’ analogy is bogus. The nation’s obesity problem is dealt with in a number of ways. On the Fed side, things like nutritional labels, minimum dietary requirements and regulation of additives are implemented. These restrictions are congruent to CAFE standards, and fuel additive and emissions regulation used in the auto industry. To compare these to dress sizes is twaddle. To spell things out, the Fed is not saying you can only buy a dress in a size two. They are saying that if you are driven to consume more nutrition than the national average, and in doing so pull over to the side of the road and take a shit eight times a day, you pay more. Num-nutz.
We’ve discussed CAFE standards here before. If you haven’t read it, here’s a recap. By raising the federal requirements for fuel efficiency, and keep in mind that the number is an average among a fleet of cars—so, the ’Vette and the Cobalt cancel each other out—the Fed is actually lowering the cost of fuel to the consumer. Basically, if I used to get 25 miles to a gallon and now I get 30, gas is essentially 20% cheaper because my fill-up goes further than it used to, before the CAFE increase. Extend that economic externality across a population and you find that people value fuel less, they are willing to commute greater distances, and the level of consumption remains the same. In short, CAFE standards are are great way to make more efficient cars. They do not, however, keep people from consuming MORE fuel.
With that said, where does that leave us? The Fed can push and pull on the equation—give an incentive for more efficiency and disincentive for less. Which, to get back to Lutz’ poor analogy, would be like clothiers charging an incremental amount for larger clothing. Which, now that I think of it, seems completely logical. A XXXL takes more material and time to produce, that equals a larger price tag. Simple enough?
Well, you might suggest that cars are not sold by weight. Fair enough. People do not get fat because they can find a pair of pants that more closely resembles a trash can liner. Lutz’ judgement is compromised because his cash cow is going to follow fuel prices out to pasture.
Comments
Good points all.
Here's a good talk about a pretty sensible view of things.
Posted by: Savage Henry | January 18, 2007 2:20 PM