Wednesday, May 03, 2006

What Consumers Want

An editorial in the Detroit News rails against state intervention in setting mileage standards:

The market determines what consumers want, not bureaucrats. Automakers respond to consumer demand, but increasingly can't do that because there are so many political opportunists imposing rules on their business.
Which explains why Detroit churned out an endless supply of SUVs - and why BushCo offered generous tax breaks to SUV buyers - during a period of steadily climbing gas prices and devastating competition from smaller, more efficient foreign brands.

Here's my favorite part of the editorial:
[G]overnment has no business mandating what automakers produce.
All together now: 9/11 changed everything! Energy is a national security issue, if not the national security issue. If our government has a right to torture prisoners in defense of the Homeland, or to tap citizens' phones without a warrant, it certainly has the right to mandate what automakers produce. (If any CEOs complain, you can always accuse them of being soft on terrorism. It's the ultimate argument-settler!)

The problem, of course, is that the federal government is currently run by and for oil companies. Thus, state governments are obliged to take up the regulatory slack.

Now, I think that spouting free-market platitudes to overcompensate for your pathological fear of change is pretty goddamn lame at the best of times. But it's particularly absurd when you're getting your ass handed to you in the marketplace, and are abjectly begging for taxpayer-funded bailouts. While this DN editorialist lashes out at "environmentalist activists," cooler heads note the obvious:
Toyota, Honda, and many European carmakers saw sales grow, while year-to-date sales are down 6.7 percent at GM, 3.9 percent at Ford, and 0.1 percent at Chrysler.
Here's GM's thoughtful, innovative response:
"Given this crucial time in their recovery, they're going with the tried and true - large trucks," says Greg Gardner, an analyst at Harbour Consulting in Troy, Mich.
Ford, meanwhile, recently posted a quarterly loss of over $1 billion, with more losses expected.
Citigroup reiterated a sell rating on the shares. "Ford faces major headwinds in 2006-2008, including North American restructuring, lower financial earnings, and an aging product," according to Citigroup.
As for Chrysler, it's no longer American-owned.

Apparently, these are the sorts of innovations that are threatened by "government meddling": Manufacturing oversized gas-guzzlers whether people want them or not, losing a billion dollars per quarter, and selling off iconic American firms to foreigners.

It'd be a real shame if we gave up any of those winning strategies - to say nothing of the irrefutable philosophical principles behind them - just because of momentary hysteria over skyrocketing gas prices, and a "global war" that's supposed to last for decades.

2 comments:

WHT said...

Right on. I wouldn't be surprised if Detroit trots out the "authenticity" of SUV producers and owners and how authentic people should get bailed out. Because we all know how inauthentic environmentalists are.

Phila said...

Because we all know how inauthentic environmentalists are.

They're certainly not the sort of people you'd want to...you know...have a beer with.