Monday, March 13, 2017

Free Enterprise and CAFE

The modern US economy manages to supply a humongous variety of products to us citizens.  Groceries, auto parts, gasoline, new cars, clothing, housing, toys, smart phones, building materials, books, computer games, new movies, freeways, air travel, you name it, the US economy provides it. And provides the right amount.  When something is in short supply, the price goes up, which encourages more supply.  When we have too much of something, the price drops, and people stop making it and turn to other products.  Works beautifully and we produce just the right amount of  a zillion different things. 
   The old line Soviets didn't believe in the free market.  They set up a central planning bureau in Moscow to issue production quotas to all Soviet producers.  Central planning never got it right. Sometimes the producers could not produce as much as Central Planning demanded.  Many times Central Planning demanded more than the market could absorb. Result was constant shortages and surpluses. Clearly the free market worked better than the Soviet command economy.
   So then we invented the Corporate Average Fuel Economy program.  Auto makers are required by law to manufacture a fleet of cars that meet crazy fuel economy targets (54.5 mpg last time I looked) So they manufacture a vast number of tiny econoboxes that nobody will buy, but they get credit for on the fuel economy average, so that can produce the vehicles that customers will actually buy, mostly pickups and SUV's.  The greenies believe that virtue comes from reducing gasoline consumption no matter what.
   Me, I think people ought to be able to buy the car they want to buy.  If it uses a bit more fuel than the greenies approve of, too bad.  The frackers have increased US fuel production enormously, to the point that we will be independent of middle east oil producers in a few years. You want an SUV to haul your family around? Go for it.  It's free country, or at least it used to be.
   We (Congress) ought to repeal the entire CAFE law.  It would reduce the price of the cars we actually7 buy.  I don't know what Detroit does with the hordes of fuel efficient econoboxes they churn out to meet CAFE requirements.  I don't think even the rental car companies will take them.  It would mean cheaper cars for all if  Detroit didn't have to produce a horde of econoboxes that nobody wants to buy. 

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