Those familiar with the theory of “
Baptists and bootleggers” will likely appreciate the following passage in a new National Review article about the auto industry accepting more stringent vehicle mileage mandates:
When industry and government shake hands over a product mandate, consumers had better run for the hills. President Obama promised that the costly technologies required under the new standards would rapidly pay for themselves in reduced gasoline costs, but he sounded like a used-car salesman. If these technologies were so great for consumers, then they’d be great for carmakers’ bottom lines. In that case, they wouldn’t need to be mandated by government.
Author Sam Kazman goes on to explain that the “bootleggers” in the auto industry have “one reason to celebrate”: new standards from Washington should help them avoid being forced to comply with a range of different mileage standards in different states.
But Kazman warns that smaller, lighter, more dangerous vehicles might continue to prove less appealing to the buying public than the current fleet of cars on the roads. If so, drivers would be inclined to keep their current vehicles ? rather than buying new cars.
So we have a Bizarro World in which the auto industry may root for high gas prices because they make CAFE [government mileage standards] easier, even though they also make driving more expensive.
For a reminder of how the “Baptists and bootleggers” phenomenon affected the housing meltdown, click play below to hear Bruce Yandle’s explanation.
