Unintended Consequences
By Mitch Berg
A Canadian government scheme to promote hybrid cars is…
…accelerating sales of pickup trucks:
Stephen Harper’s Conservative government exempted pickup trucks when it unveiled its so-called eco-AUTO program in March because it said many people use them for work. It argued that makes them more of a need than a transportation choice. The government’s program promises rebates of up to $2,000 to buyers of certain fuel-efficient vehicles and slaps an excise tax of up to $4,000 on the biggest gas guzzlers – typically SUVs or sports cars.
The exemption has pushed consumers thinking of buying an SUV to pick a pickup instead, said Dennis DesRosiers, president of the consultancy and a harsh critic of Ottawa’s green-car program.
“Leave a loophole and consumers and dealers will exploit it,” Mr. DesRosiers said. “Why doesn’t the federal government just admit that this whole thing has been a fiasco from day one and is not working?”
Er…because they’d have to re-evaluate the notion of trying to enact social change via tinkering with the economy, and that’d drive them screaming from the room in terror?
(Via Blair)
August 23rd, 2007 at 8:51 am
Two rules that those advocates of the nanny state don’t understand.
A) When the gov’t tries to control you, there are unintended consequences.
B) The forces of the free market are incredibly strong.
Example. Gov’t tries to control campaign spending and contributions, so we have groups like MoveOn.org that thrive and spend huge buckos to promote their causes and attack their opponents.
August 23rd, 2007 at 9:43 am
Just yesterday I read just how deadly those unintended consequences can be: CAFE standards (Corporate Average Fuel Economy) have killed at least , at least 60,000 people over the past 30 years. And also brought about the SUV and the demise of the Big Three auto makers.
http://www.fee.org/publications/the-freeman/article.asp?aid=5775.
August 23rd, 2007 at 11:07 am
And also brought about the SUV and the demise of the Big Three auto makers.
That’s not entirely true. The UAW as well as the entrenched mindset of the US corporate automotive industry have done much to contribute to that demise as well. It took General Motors 30 years to realize something was wrong (and 20 to overcome the denial that their #1 rank was slipping), and it will take at least another 5 to make significant change to their practices and mindset to combat the downward slide. They’ve started, but have not done nearly enough. The first couple commercials announcing Ford’s “Bold Moves” campaign, with statements of “we now recognize something is wrong and we’re working to change” were quite eye opening. But those are just words, and I am waiting to see if actual changes are made. They too have made some changes, but not nearly enough to combat Toyota and Honda, and the other Japanese automakers to a lesser extent. Also Hyundai; they are seriously taking names and kicking ass with their cars.
I also lay some of the blame with the American consumer as well. Being the ultimate pragmatist that I am, I consider “Buy American” to be a ridiculous concept when “Buy American” equals “Buy Utterly Inferior Crap”.
August 23rd, 2007 at 1:15 pm
The Big Three have no one to blame but themselves. They signed those sweetheart labor deals that now force them to try to swim with lead shoes. They designed cars that no one wanted and built ones that barely made it off the dealer’s lot before starting to fall apart. By the time they woke up from their stupor and realized that the Japanese sun was rising while their’s set, it was already too late in the game. The next time they come begging for the government bailouts that will only delay the inevitable, US taxpayers should unite in saying, “Not a dime!”
August 23rd, 2007 at 2:31 pm
Cill and Chad. Yes. Think about giant Bethlehem steel. In the 1950’s, they promised their employees the world…including incredible retirement benies. Kkind of like the City of Duluth does today…..hint, don’t buy a house in Duluth….it’s a timebomb waiting to happen. I hope T-Paw doesn’t cave and help bail them out.
Towards the end, I want to say the numbers were like 12,000 employees supporting full retirement benifits for 80,000 retiries. And we no longer have Bethlehem. Do an internet search on how much of the selling price of each GM/Ford car goes to cover health insurance to active and retired employees.
August 23rd, 2007 at 3:04 pm
Governmental policy often faces the laws of unintended consequence, but this also illustrates very clearly that Governmental policy can be used, and often is, a massive stimulus for market change, very often to good effect, like renewable fuels. Energy corps didn’t really want to get into the renewable fuels game, but Governmental incentive and also pressure made getting into the water really both palatable and mandatory. The result, most Energy Corps see profitable and useful market space in renewables.
So while you strumpet the cannard that Governmental tinkering is all bad.. .ok you didn’t say it, but care to deny that’s the natural logical conclusion?… the fact is, Government can be a very effective tool to also move the market. May not have worked entirely here.. so what.
Chad.. I’m sorry, but your comment is not exactly right. They signed onto building trucks because trucks were where the market was. They got Bushie to give 100% tax breaks on vehicles with GVW above 6000 pounds.. and the Big Three hitched their horse to that cart. Sure, pensions are a problem, but what is killing Detroit right now is hardly labor costs, Toyota builds more parts for it’s cars here than ANY OTHER MANUFACTURER, period. I’m speculating, but I’d be shocked if they didn’t have the same labor deals, and yet, Toyota outsells all other manufacturers now, and has outsold Detroit (each automaker individually) in sedans for what, 10 years plus??
Detroit sank itself, but it wasn’t labor, it was being beholden to big trucks. When will the right stop bashing labor (organized or not).. wages have fallen since 1980, not increased, profits are through the roof for many corps – in many respects because we’ve squeezed labor to the hilt – hell Ben Stein said as much here in a speech two weeks ago. If you continue to squish labor’s ability to get a fair share of profits, we’re gonna be Mexico. The better question is, what did Detroit do with it’s profits in the late 90’s and early 2000s? The banked em, they didn’t pay off pension debt, they gave em out as dividends or options or buybacks.. THAT’s just as much of their problem as anything. They rode the sacred cow of Big Trucks like a one trick pony, and when Tixie died, so did they.
August 23rd, 2007 at 3:11 pm
“Trumpet” – to say loudly and without restraint.
“Strumpet” – a cheap floozie.
Just saying.
August 23rd, 2007 at 3:29 pm
“The result, most Energy Corps see profitable and useful market space in renewables.”
Profitable at a taxpayer’s expense ’cause of all the subsidies. And don’t forget, definitely NOT greener. You bring up another perfect example of unintended consequences of government meddling – to disprove the point you are trying to make.
August 23rd, 2007 at 3:31 pm
This is my hypothesis of the next “unintended consequence”.
1. Gas tax is raised to pay for “needed” bridge repair to reduce highway fatalities.
2. Higher fuel costs cause lower income families to purchase smaller less safe vehicles.
3. Highway fatalities increase.
4. DFL claims victory.
August 23rd, 2007 at 3:37 pm
I don’t know, Mitch. Maybe PB likes thinking about you strumpeting a canard.
August 23rd, 2007 at 3:52 pm
This reminds me of that story a few months ago that showed that all of those anti-smoking commercials do nothing to curb teen smoking. In fact some decided to take up smoking because an authority figure told them not to!
August 23rd, 2007 at 4:01 pm
Peev-
Detroit’s troubles began long before Big Trucks (is this the new bogeyman after Big Tobacco and Big Oil?) and Bush came along. The Big Truck provided them a temporary breathe of air, but now they’re sinking under the waves again.
Toyota has nothing like the labor problems of the Big Three. I can’t recall the exact stats (and I’m too lazy to look them up), but Toyota carries the lifetime health care and pension benefits for something like 9000 employees on their books. GM alone has something like 500,000.
August 23rd, 2007 at 6:42 pm
CAFE standards created the SUV and fueled the demand for trucks. Americans hate small, powerless cars. The Japanese exploited the market by making small but relatively quick cars. They also excelled in quality when Detroit was turning out crap.
The next round of CAFE standarsd will just distort the market further. If you want to reduce the sales of trucks and SUV’s, drop the CAFE standards.
Toyota has about $500 in benefit costs per car, GM Has $1500. The Japanese dont’t have the same contracts as the Big Three. They are also moving manufacturing back to Japan.