“My god, I hope that a [federally appointed, $17.4b loan guarding] car czar does not get into the product strategy of the companies,” Ford CEO Alan Mulally said at a dinner with journalists last night (our invite got lost in the mail again). “The product strategy has to be led by the companies.” Since when? Did Big Al miss the memo on the latest Corporate Average Fuel Economy (CAFE) standards, and Congress decision to support California’s even higher tailpipe regs? Reading between the lines of his post-prandial pronouncements, perhaps not. “Mulally said he’s encouraged by president-elect Obama’s understanding of the challenges facing the industry. ‘I’ve been very pleased with the fact that it seems like he really understands that dealing the economy is a very, very high priority…. To have a policy where we’re trying to jam products out that people don’t want doesn’t make any sense at all.'” Very, very as in “can we talk about those federal standards again?” Very, very as in ditch CAFE for higher gas taxes? “We’re not presumptuous enough from the automobile industry frankly that we should lay out the energy strategy of the United States.” Shall we file that one under “beggars can’t be choosers” or “methinks he doth protest too much”?
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The czar that should be involved would be one that is not of government, but of the industry with a vast knowledge of it, then being appointed by the government. This individual would have no current ties to this industry other than previous successful long term tenure in that industry. Name names.
Politics being politics, my bet is the Car Czar will be a another patronage appointment and actual knowledge of the subject will not be the primary qualification.
That indeed will be the likely unwanted result.
I mean, he has a point though. If a car czar comes in and tells GM they have to stop making a set of product and focus solely on another set, then GM might not go under now, but in 10 years when they haven’t made any money on plug-ins or EVs, they will be gone. Instead, the government should be thinking about how to change consumer demand. The spike in oil prices did more to help the environment than any government mandate ever could.
The only way to change *real* consumer demand is to tax gas and keep it high. CAFE doesn’t change consumer demand – just consumer choice. And that eventually lowers overall demand and creates a dead-weight economic loss. This is a case where a higher tax on gas used exclusively for infrastructure makes sound economic sense by protecting from shocks and changing consumer demand for a complementary product that is dangerous to public health, the environment and a central theme in geopolitical instability.