STAFF NEWS & ANALYSIS
Bye, Bye SUVs
By Staff News & Analysis - April 06, 2010

In a coup that achieves something President Clinton promised but never delivered, President Obama has forced the big three US carmakers, and their unions, to accept tough mileage rules for cars and SUVs. The rules will cut emissions from vehicles by more than a third over the next four years. Whether the new rules end America's love affair with huge cars remains to be seen. But they are being introduced at a time when SUV sales are at a fraction of their peak level five years ago. Their demise coincides with the country's first mass-produced "plug-in" electric car, which finally rolled off a Michigan production line this week. From 2016, new cars and SUVs will have to deliver an average of 35.5 miles per gallon (42.6 miles per British gallon), comparable for the first time with European and Japanese requirements. … The rules were welcomed yesterday by the industry and environmentalists. The US Alliance of Automobile Manufacturers, which had little choice but to accept the standards after the $25 billion bailout of Chrysler and General Motors, said they gave the industry "a clear road map" instead of a patchwork of differing state rules. The Natural Resources Defense Council said they were "good for consumers, companies, the country and the planet". Ray LaHood, Mr. Obama's Transportation Secretary, called them "historic", claiming they would save consumers $3,000 per new vehicle and cut emissions by 1 billion tons. – Times of London

Dominant Social Theme: Finally, the Dracula of cars has a stake driven through its V8 by courageous US President Barack Obama.

Free-Market Analysis: We weren't surprised by this move. The American president does nothing by suggestion when he can demand it. Barack Obama is indeed the most amiable and soft spoken of authoritarians. First, he "bailed out" two of America's three car companies and in the process instructed them to make smaller, greener (electric) cars. Now he's trying to make sure the competition can't fill the void (which it doubtless would) by mandating higher gas mileage.

Of course, our suspicion is that America's car companies know darn well how to make cars and trucks that go a good deal further on a tank of gas than they have. So perhaps the new rules were aimed at oil companies that have reportedly discouraged higher gas-mileage American vehicles in the past. And thus it is, that nothing much will change. But it is generally the rationale behind the dictates that is most troublesome.

The capitalist cycle of American decline is no more evident anywhere than in its car industry. First Congress empowered unions to demand unreasonable wage and pension benefits. Detroit cynically went along to keep labor peace, assuming that when the crunch hit, Washington would be forced bail out the Big Three it had put into such untenable positions. And this is in fact just what has happened – though only to two of the Big Three thus far.

However, in doing so, Washington and Barack Obama – who happened to be president when the merry-go-round ground to a halt – has extracted its pound of flesh. GM especially has been given virtual marching orders on how to build the next generation of cars. They will be small and electric. They will plug in. No doubt they will nearly drive themselves, and not very far. The days of wide-ranging and immediate mobility may be passing for Americans, as for Europeans.

Now it is clear that the American consumer especially may not want small electric cars. To ensure that GM doesn't get snagged by such an inconvenient thing as consumer choice, Obama has attempted to even the playing field by setting standards that accommodate and encourage the kinds of cars that GM intends to build – at Washington's urging. It's plenty astonishing. Once upon a time these actions would have been viewed as corrupt, illegal and downright anti-competitive. How far the US has come!

The American mainstream press – like the London Times (article above) – has been mainly filled with Hosannas over Obama's stroke of authoritarian zeal. The idea that the government was participating in a profoundly anti-democratic act doesn't really seem to have occurred to reporters or editors this time around. And not across the pond, either. Here's some more from the Times article:

The new rules end a notorious loophole in US law by which SUVs were exempt from emissions standards that applied to cars. This made them so much more profitable that at the peak of the sport utility boom, a single Ford plant was generating up to $15 million (£9.8 million) a day in pre-tax profits. The rules were welcomed yesterday by the industry and environmentalists. The US Alliance of Automobile Manufacturers, which had little choice but to accept the standards after the $25 billion bailout of Chrysler and General Motors, said they gave the industry "a clear road map" instead of a patchwork of differing state rules. The Natural Resources Defense Council said they were "good for consumers, companies, the country and the planet". Ray LaHood, Mr. Obama's Transportation Secretary, called them "historic", claiming they would save consumers $3,000 per new vehicle and cut emissions by 1 billion tons.

A normal person (certainly a free-market thinker) could not be blamed, in our estimation, for concluding that the sort of reporting the Times indulges in (above) has strayed from reality. While the Times may be seen as a "pro-business" paper, the article never even questions the propriety of Obama's actions. On the contrary it hails the American president for closing a "notorious" loophole. It then approvingly quotes US Transportation Secretary Ray LaHood as claiming the standards were "historic."

We note the euphemism "emissions" – used in the Times article. The idea is that cars and trucks contribute to dangerous greenhouse gases that are cooking the planet. But as we point out in the other article in today's Bell, the scientific consensus for this sort of mumbo-jumbo is severely lacking and has been exposed several times over by now. Plus, the power for electric cars has to come from somewhere, and in America it looks increasingly likely it will be supplied for the near term by nasty coal-power plants providing the energy that cars plug into.

In truth, as with most things political, the new guidelines are mostly for show. They will do little or nothing to cut the emission of greenhouse gases – and in any event there is not credible evidence at this point that such gases are creating global warming or that global warming – were it to occur – would be especially bad for the planet. The rules therefore tackle a problem that doesn't exist to ameliorate a weather pattern that has not arrived.

We have a sneaking suspicions that all of this automotive reconfiguration is not aimed at saving the environment so much as it is reducing the ease-of-movement of the American middle class, rightly wedded to the independence and relative efficiency of the auto. The power elite in our opinion has always looked with suspicion at the kind of mobility that "the masses" achieved with gas-powered cars. It may be harder in the future to go wherever one wants in a modest-sized electric car that needs a regular charge up, especially "off the beaten track."

It is frankly surprising and a little disappointing that the mainstream press has been so quiet about the twin mandates that the Obama administration has pursued as regards American car companies of late. By demanding that GM build a certain kind of car and then coming out with rules to give an advantage to that kind of vehicle, the administration is not just tipping the playing field in GM's direction, it is virtually depositing the field in its lap.

After Thoughts

The new rules, along with the administration's previous actions, constitute an outrageous interference in the marketplace, one that looks to us as unconstitutional as health care, which is currently being challenged in court by a dozen states or more. But even more outrageous is what may be the real reason behind the shenanigans: to reduce the unconstrained mobility of average American.

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