(In)Effeciency
Legislation was recently passed to require something around 36 MPG on vehicles by 2016. And who was sitting there forcing smiles onto their faces, the recently bailed out automakers. These are some strange times we're living in.So is this a good idea? I'll admit that there's a part of me that gets excited to see what technology can do next (the car pictured is said to get over 200 mpg, but there's not much get-up with just the one cylinder), even if its hand is being forced. Does it make economic sense? The argument is that the new requirements will drive up sticker prices, but that the consumer will save money in the long run due to the lower operating costs. I'll agree that overall savings is possible, but the average consumer most definitely does not make buying decisions on the long term analysis. While cfls are getting more popular (and that's largely due to a drop in price, they've been around for 15 or 20 years with almost no one noticing), most people still go for the 3-pack of incandescents for 97 cents. If car companies stood to increase revenue by offering more expensive fuel efficient cars, I think they would've done it long ago.
Another interesting piece of legislation was to limit certain tactics of credit card companies to purportedly protect the consumer. Things that will be outlawed include arbitrary rate hikes, raising rates on those with delinquent payments, and raising rates without 45 days notice. On the one hand I can see that some of these tactics appear to be kicking those who have trouble making their payments while they're down. Additionally, after teaching a number of math-phobes, I'm convinced that a lot of these people don't know what they're agreeing regardless of the amount of disclosure they're given. On the other hand those who are delinquent are riskier to lend to and should have different arrangements.
They say that this will result in more annual fees and fewer promotional rates. So those who use credit responsibly will likely foot the bill for the credit card companies to keep up their bottom lines.
How again are these policies going to help the economy?
Comments
People buy less fuel efficient cars, not just because they are cheaper in the short term, but because they provide certain benefits that fuel efficient cars do not. For instance, some of these less fuel efficient cars contain more metal, which will protect the buyer and his family during a crash. Some of these vehicles are bigger and more comfortable. Some have more power, and, therefore, are more fun to drive.
I was just reading that there are something like 5 cars that meet the cafe standard that congress is thinking about passing. if the technology was in place to make a big, powerful, comfortable car that was more expensive, but got more miles to the gallon, I think people would pay the premium, factoring in how long they plan to keep the car, the price of gas, price of repairs, etc. unfortunately, fuel efficient cars just don't deliver these other benefits, and people are willing to pay a premium for these features at the gas pump.
If we're really serious about reducing fuel consumption, seems to me that we should just have a big gas tax. That would allow companies to innovate without gov. regulation, and allow people to change their behavior. Maybe person "A" buys a fuel efficient car to drive the same amount but pay less for gas. Person "B", however, decides to buy a now cheaper, less fuel efficient car, but decides to drive less.
I don't like these Cafe standards because they force us all to fall in line with one government vision of efficiency. A tax, on the other hand, would reduce consumption and let the market evolve more freely.
--rdh
I don't know much about the credit card stuff, but the weirder thing is that it was passed with a law that you can carry concealed weapons in national parks. Now we have to worry about a lunatic in the adjacent campsite.
-Theresa
--rdh
-Theresa
The issue of cafe standards illustrates well the larger question of global CO2 regulation and its costs. Sure having cars that get better gas mileage (and possibly doing it without a loss in performance with more aerodynamic designs and new technologies to recoup energy losses) would be great to reduce global warming gasses, but as I said earlier, it would almost certainly adversely affect the auto industry. We often hear the arguement that big filthy polluting businesses in America need to bite the bullet on carbon emmisions, even if it's costly, but I think a conversation we need more of is what is going to happen in China and India. Their names are mentioned often enough in conjuntion with global warming, but not necessarily the economic price they would pay to regulate carbon emmisions.
Sure there would likely be some deliterious effects of global warming, but are they more severe than keeping a country with over a billion people from emerging from 3rd world status? There's a lot we can and should do to reduce our CO2 emmisions, but we need to be cautious when putting that goal above peoples' livlihoods and possibly lives.
For example, almost in the same breath as saying that the government will require automakers to meet higher fuel efficency standards, he says were going to make American car companies profitable.
The other thing he frequently says is, the government is going to require/fund renewable energy and that will create X number of new green jobs.
The implication of these statements is that these regulations are good for the economy. Apparently Obama sees no downside or cost to regulating, no limits on our resources, and no trade offs.
In reality all of his proposals are going to take a toll on the economy. More fuel effienct cars will be more expensive. Renuable energy is more expensive too. We are going to have to reallocate resource that are being used for other things to these areas to meet these regulatory burdens.
Maybe the end result will be worth the cost. But the only way we can reach that decision is to weight the costs and benefits. I'm not persuaded by Obama pretending that there are no costs.
--rdh
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/29/AR2009052903235.html
--rdh
-Theresa
If you bringing up the Intergovernmental Panel on Climate Change to state a case that global warming is happening, I've already conceded to that. I'm not sure what they've said regarding the consequences of global warming, but off-hand I can see:
1. melting of glacial ice
2. rising sea levels displacing some coastal and island inhabitants (though I'm guessing far fewer than a billion)
3. climate changes disrupting ecosystems
4. increases in severe weather due to warmer oceans feeding hurricanes, etc.
The only one of these I see threatening lives is 4, though 2 would affect livelihoods. I guess the consequences of 3 could potentially severe, but are largely speculative.
On the positive side, I've heard that increased levels of CO2 will help crop/vegetation growth (I'm not the biologist though, so I'm not sure about that one).
On the whole I don't see these changes as all that threatening to the majority of the world's population. You said (more or less) that we shouldn't put a country's development above the well-being of the world, but when we're talking about China and India, that is 1/3 of the world.