Letters to the Editor

• It Doesn't Take Courage to Attack Business

  [Read the article: Chris Dodd pushes the energy envelope]
  [Read more letters about this article: Here]

  It doesn't take courage to attack business. A carbon tax on just business and then the continuation of the failed strategy of mandating market choices through CAFE standards will not do very much to generate conservation.

  CAFE standards spawned the SUV market. As the CAFE numbers went up, the auto manufacturers did away with the likes of the Crown Vic station wagon trying to push people into either a Taurus Wagon or a Ford Explorer. Neither will serve a family with 4 kids, and neither will serve a family with 3 fully grown kids.

  At that time GM, not known for being a forward thinking marketing juggernaut, noticed that they were getting an unusual amount of orders for custom fitted suburbans. Historically the transport of choice for oil workers and for horse people, all of a sudden they were being requested with captain's chairs, leather, and two zone air conditioning.

  CAFE standards, you see, exempted any vehicle over 6,000 pounds as a sop to construction and farm workers who needed such large vehicles for business. When the CAFE number kicked in doing away with a large family transport PREFERRED by people, the market moved over to a large SUV that came with far higher profit margin potential, and hence the ensuing copy catting.

  So Chris Dodd calling for stiff CAFE standards simply means this old liberal hasn't learned the lesson.

  You want to push conservation, jack the taxes on the energy sources. In Economics text book parlance, that is called assigning the non-pecuniary costs -- or externalities -- back to the market. Gas pollutes. Transportation erodes the highway infrastructure (bridges are in that pile as well). We also focus and spend money in the middle east zone as a result of the dependence. Taxing the bejeezus out of the product would handle all of those externalities.

  And it would migrate people off SUVs in a way far superior to moralizing speeches from wealthy hollywood elites who drive their Prius to the airport to hop into the private jet and burn way more fuel on that flight than most average joes burn in their 4 year old SUV purchased off lease to save a few bucks.

  But to assign the externalities in that fashion gives liberals the heebie jeebies as it doesn't play into the class warfare rhetoric. It's not taxing the rich, and it's not taxing business, it would be forcing middle americans to rethink their purchase decisions based on finally paying the fully burdened costs associated with consuming a gallon of gasoline.

  Go back and look at when we've had pushes towards small cars and towards hybrids. The first oil embargo got us the Gremlin and the Pinto before going back to the Buick Riveria with a 455 V8. Last summer when gas climbed over $3 a gallon, Ford took it in the breezer as they had over built Heavy Duty trucks and SUVs when the market immediately shifted over to subcompacts (Honda Fit, Toyota Yaris) and renewed interest in Hybrids.

  That was price driven, which fits with another Economics 101 mantra that "price is the market clearing mechanism." Assign the externalities to the market through taxation and then let price clear the market.

  That's not what Dodd advocates, and its hardly heroic or "tough." It panders by taxing business and seemingly blaming the auto industry for building what customers want given we subsidize fuel consumption by not having the balls to assign the cost of the externalities back to these consumers at the pump.

  The truth is we should have at least $5 a gallon gasoline.

  Where's a politician with the death wish to make that statement?

  Permalink Monday, September 10, 2007 08:26 AM