Monday, April 5, 2010

Why We Regulate.

CAFE standards or Corporate Average Fuel Economy have not been raised in a long time. Which begs the question, what have the car companies been doing for the last 20 years?

For those of you who insist that the Government should stay out of the way of business at all cost, because they believe business knows best, I ask you, what have the American Automotive Industry been doing in terms of fuel efficiency? Where is the innovation?

The Vine writes about CAFE Standards today.

The changes have been long overdue. While engine-efficiency technology has continued to improve, the country’s fuel-efficiency standardshave not followed suit. The standard for cars has been stuck at 27.5 mpg since 1990, while the light-truck standard rose from 20.0 mpg in 1990 to just 23.5 mpg in 2010. Due to these minimal increases the country’s average fuel efficiency has barely risen in the past two decades.

My life thesis is this. Government and Big Business must continually be at odds, in terms of regulation and stimulation, for the every man to benefit.

What I mean by this is simple. If Big Business is left unchecked for too long you get what we are seeing now, in terms of fuel efficiency, 2-4 mpg increases in 20 years, Wow really innovative. Without regulation, Big Business makes the same car at a cheaper price, but we don't get a cheaper car. They get a larger margin.

Big Business, in this case American Auto Manufactures, are not going to redesign the wheel if they do not have too. Which not only keeps us dependent on Foreign Oil, but more of it as our population increases, which is bad for the people, but good for Big Automotive.

The Vine continues.

In the case of today’s announcement, the increases to 39.5 mpg for cars and 29.8 mpg for light trucks—all by 2016—mark a drastic about face. And there are quite a few reasons to like the change. First, it will reduce auto-sourced environmental pollutants. Second, it will reduce both our national consumption of oil and purchases of foreign oil. Third, it will save American households a projected $3,000 in gas purchases over the life of a new vehicle.

These new standards should spur innovation, while making us less dependent on foreign oil.

Regulation is not Socialism, One State Owned Car Company is.

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