The wires have the story that today the government will announce it is moving up by four years, to 2016, the target date by which car companies must meet a corporate average fuel economy standard of 35 miles a gallon.
Even the most ardent libertarian would probably have to concede that cars and driving are an area where some government rules may make some sense. Driving without being able to see or without working brakes doesn't just put a driver's own life at risk, it can also endanger other drivers on the road. So the government gives vision tests for drivers' licenses and requires cars to periodically pass inspections.
The argument in favor of the fuel economy mandates is, basically, that driving a gas guzzler is as much of a danger to innocent bystanders as is a car with malfunctioning brakes or a visually impaired driver. Just the way a bystander might be killed by a car with bad brakes, he might be killed by a terrorist enriched by petrodollars, or he might be drowned by rising sea levels because of global warming caused by gas consumption.
The logic of requiring 35 mile-a-gallon cars is subject to question, though, even if (a big if) you buy the underlying assumptions about terrorism, global warming, and sea levels. After all, what really matters for the purposes of public policy isn't the mile-a-gallon rating of the car, but how it is used.
Here's a case that makes the point: My Bentley Arnage gets 11 miles a gallon. My neighbor's Toyota Prius gets 46 miles a gallon. But I walk to work and just use the Bentley to go to the supermarket each weekend, an 11 mile roundtrip. My neighbor commutes to work in her Prius five days a week, 46 miles roundtrip. Me and my Bentley use one gallon of gas a week, while my neighbor and her Prius use five gallons of gas a week. Who is doing more to counter terrorism and global warming, me and my gas guzzler or my neighbor and her Prius?
Or suppose that I start carpooling to the supermarket with my other neighbor, who also has a Bentley that he uses only for his weekend supermarket run. We've just cut our total weekly fuel consumption to one gallon of gas a week from two gallons of gas a week. But the miles-a-gallon ratings of both of the Bentleys are the same gas-guzzling 11 miles a gallon they ever were.
If terrorism and global warming really are what economists would call negative externalities, a kind of "tragedy of the commons" of gasoline consumption, then there may be a case for government action to curb gasoline consumption. The government could ban gasoline. It could tax gasoline more than the 18.4 cents a gallon federal tax that is already imposed. It could criminalize long commutes. But all of those actions would directly and adversely affect a lot of voters. It's easier to just bully the car companies. Instead of having to change the behavior of 300 million consumers, policymakers just have to change the behavior of a few automakers.
Rather than punishing drivers directly the way a gas tax does, an average fuel economy standard punishes consumers more subtly by causing automakers to design cars to please government bureaucrats rather than potential customers. The other ones punished are the shareholders of the auto companies. They thought the shares they purchased were of companies whose goal was to make profits. Instead the property of the shareholders — the company — is being used to achieve public policy goals such as reducing pollution and reducing dependence on foreign oil. And the debate on the tradeoffs between profits, private property rights, and public policy goals is warped by the fact that $35.6 billion in federal money has been dumped into General Motors, Chrysler, and their affiliated companies and suppliers.
The government doesn't own the car companies outright. But that $35.6 billion is leverage to dictate policy on corporate fuel economy standards in a way that would have been more difficult back when the companies were privately owned. The government asked banks that took federal money not to foreclose on homeowners. Now it is asking automakers that took federal money to build more fuel-efficient cars. Government money, it turns out, nearly always comes with strings attached. The issue, since in most cases the Obama and Bush administrations have stopped short of 100% nationalizations, is whether the remaining private shareholders will want to think twice about being partners with the government as it becomes clearer that the companies in which they are partners are being run for public policy purposes rather than to create profits for shareholders. As it becomes clearer that the Obama administration is calling the shots in managing the car companies, the administration also risks bearing the blame if the cars turn out to be lemons. Remember the Yugo?