Tuesday, September 16, 2008

Some regulation here too, please

So I always read Greg Easterbrook on ESPN (or Tuesday Morning Quarterback, as he goes by), even though he hates my Patriots and thinks he knows everything about everything (even though he doesn't), because his football commentary is some of the best out there. Anyway, buried deep within this morning's column was a really spot-on criticism of the North American auto industry and its inability to adjust to reality:

More on Mileage and Politics: Last fall, after 20 years of strident inaction, Congress finally passed a bill to increase the fuel efficiency of cars, SUVs and pickup trucks. There was a lot self-congratulation on Capitol Hill. The law seemed to mandate roughly a one-third increase in new-vehicle MPG by 2020 - enough to eliminate the oil the United States imports from the Persian Gulf. Sounds great! But as your columnist wrote in December 2007, "TMQ is hugely suspicious … [there is] a waiver provision that says that if the new standards prove too onerous, automakers can ask they be waived. That is a formula for what Washington specializes in: the appearance of dramatic action while nothing actually happens." So what's going on in Washington right now? Pleading poormouth, the big three automakers are already asking for a waiver from the 2015 interim standard, which requires roughly a 15 percent improvement in fuel efficiency. That standard does not take effect for seven years, and already Detroit automakers are saying they can't meet it.

Or perhaps, they don't want to try. Lee Hyun-Soon, president of Hyundai, told the Wall Street Journal last week his company will meet the entire 2020 standard by 2015, and will do so entirely with conventional vehicles -- no complex plug-in hybrids, just sensible engineering using existing technology. Whenever Washington seems to get serious about oil waste, Toyota, Honda, Hyundai and Subaru put their engineers to work -- then build, at American factories staffed by American workers, vehicles that comply with MPG rules. Whenever Washington seems to get serious about oil waste, Chrysler, Ford and General Motors put their lobbyists at work to dilute or evade the standards. There are only 535 people in the United States so gullible they would believe Korean engineers can meet a technical standard, yet American engineers cannot. Unfortunately, those 535 people are the members of the United States Congress.

Has anyone from the mainstream media followed up on how last year's seemingly strict MPG bill is being watered down? As Eric Patashnik of the University of Virginia details in his powerful and timely new book "Reforms at Risk," reporters are often present when "dramatic" legislation passes, then treat the enactment as the end of the story -- paying no attention as lobbyists later water down a bill. As Thomas Friedman points out in his important new book "Hot, Flat and Crowded," the refusal of Congress and the White House to take any real action against oil waste has had the effect of transferring hundreds of billions of dollars to Moscow, and to the oil sheiks who support anti-Western and anti-Israel terrorism. If MPG standards were higher, oil demand would fall. Instead, high demand holds up barrel prices, enriching Persian Gulf dictatorships and Vladimir Putin. Why, Friedman asks, is Russia suddenly confrontational? Because in the past two years, Russian elites have gotten super-rich, owing to rising oil prices brought on at least in part by U.S. stupidity regarding petroleum waste. If Congress grants Detroit the MPG waivers it seeks, the stupidity will march on.

This is precisely the problem. Every time the US Congress tries to impose stricter fuel efficiency standards, the industry's lobbyists whine and moan about how damn hard it will be, and how it will hurt competitiveness, and how it will help the Japanese, and how Americans need gas guzzling cars for their self-esteem, and how the Earth as we know it will end if we make are cars just a little bit more efficient.

And Congress goes along with it. I doubt it's a question of "gullibility"; I'd like to know about the money changing hands before I accept that even Congressmen are that stupid.

Of course, this strategy has proved more than a little counterproductive. The Big Three of American auto makers have suffered a massive loss in market share to Japanese manufacturers like Honda, Toyota, and Nissan. Why? Many reasons, but not least because those cars are more fuel efficient. So directly contrary to the lobbyists' claims of higher efficiency standards hurting competitivity, the lack of standards can be directly blamed for at least some of the misfortune currently afflicting the industry.

And still they whine. If this keeps up, the domestic American automobile industry will go the same route as the domestic American financial industry.

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