Government is Not the Cure for Ineffiency
Originally written on May 21, 2009.
New hubbub has arisen after the Obama administration announced plans to raise the national fuel mileage limit for vehicles to 35.5 MPG by 2016 . It is said that this is a major step forward to end dependence on foreign oil, promote "green" technologies, and somehow help consumers make better choices, despite the likelihood of it increasing production costs by $1,300 per vehicle. But there is a better way.
Let's stop for a moment and consider what decreases cost and increases efficiency better than any government agency, regulation, or bureaucrat. Competition. Look at the technology industry over the past 15 or 20 years as a great example.
In the early 1990s cell phones and computers cost a bundle, were limited in their capabilities, and were largely a luxury item. These are some of the items that have escaped much of government's grasp and intervention over the past couple decades, and look what happened. Competition flourished, prices decreased relatively quickly (and continue to decrease in many areas of the industry), and the features on cell phones and computers have reached incredible levels. This was not thanks to the government trying to manage the industry and set the standards for consumers. People choose for themselves, competition is free and open, and prices greatly decrease while the quality of the items reach new highs everyday.
The problems with inefficiency in Detroit will not be solved by more government intervention, bailouts, and special treatment. Nor will it solve our dependence on foreign oil. Competition in the market will solve these problems in a far more efficient, reliable, and less costly manner.
The first step is to let the Big 3 go bankrupt if necessary and reorganize into a viable business (or businesses). There is nothing with GM, Ford, or Chrysler that justifies preventing their bankruptcy by bailing them out with taxpayer dollars, and continuing the parenting treatment. They can grow up, accept the consequences of dumb mistakes, and readjust like everyone else. Yes, it would be painful for a year or two, but they would be required to come back with a smart business plan, efficient vehicles, and the ability to compete against the stronger Japanese automakers.
This would do much more good in the long run than the government's endless involvement in the industry. Government limits consumer choice when it prevents an inefficient business from failing and subsequently readjusting to what consumers prefer.
If it is dependence on foreign oil you're worried about, why not open up competition there as well? It makes little sense to ban nuclear power, heavily limit coal production, prevent a good deal of domestic oil drilling, and complain that we are too dependent on foreign oil. Why don't consumers, communities, and states choose for themselves which energy sources are worthwhile, instead of the federal government? Give people the power of choice.
There is not one ideal energy source for every person, community, state, or country. Energy should not necessarily be treated as such a national issue, because at the heart of it energy needs start at the local level. Just look at some of the major problems caused by the federal government's involvement in energy: a costly foreign policy partially built around the prospect of oil, the numerous subsidies to fund inefficient corn ethanol and E85, and even with the cries against CO2 we are prohibited from expanding the one major energy source that does not emit any CO2, nuclear power.
Choice of energy would tear down our need for foreign oil. It makes little sense to put the control of energy in the hands of the federal government, which can't come close to taking into account local energy needs, preferences, and sensibility. Plus, it is the general governing, such as energy policy, that is constitutionally a state issue. The Rule of Law can't simply be ignored when it is inconvenient for the government's agenda.
A level playing field comes best with the free market. People should be free to make their own decisions (through their communities and state governments, if need be) with energy. Oil, nuclear power, coal, solar power, wind power, biofuels, and many other sources all have their ups and downs, and it is ridiculous to think that the federal government can effectively manage and distribute them. Give the market the ability to explore and innovate current energy sources as well as the new alternatives popping up.
The auto and energy industry will likely see increased intervention by the federal government in their affairs, while free and competitive choice slowly slides to the back of the room. People don't have the influence they once had with their own decisions, because the federal government has apparently given itself the power to choose which businesses can fail, which products we can and can't use, and even the power to take taxpayer dollars and hand it to private corporations.
More individual freedom and choice will hardly run our situation further into the ground. Rather, it is the choice and freedom of these industries that will further expand their sustainable development, efficiency, and promote the interests of the people over the long run.