To begin with, CAFE standards were only necessary because the federal government was regulating the price of gasoline. Had consumers been forced to pay full price for gas, they would have purchased more fuel-efficient cars and forced automakers to adjust.
But the bigger problem is that Washington functionaries have taken over from G.M.’s once cocky executives. They think they can select an MPG number and, by ordering automakers to comply, force them to make a better car. But if it was that easy, everyone would do it. Bureaucrats live in rarified air. They can dream of many things, but can engineers really deliver?
It’s also worth noting that the federal government is about the least innovative place on Earth. In the last five years, taxpayers have shelled out some $1.2 million to pay elevator operators at the U.S. Senate so that lawmakers won’t have to endanger their carefully manicured fingers by pressing buttons.
As for the auto industry, Uncle Sam seems to have decided years ago that electric cars are the wave of the future. So the government is promoting them on all cylinders. “Over the next seven years, the federal government will spend $7.5 billion on policies to boost the U.S. electric-vehicle industry,” The Washington Post reports. Even so, the Congressional Budget Office projects there will be only about a quarter of a million electric vehicles on the road by 2020.
Further, in recent years, federally-supported companies including battery makers A123 and Ener1 and electric car maker Fisker have all declared bankruptcy.
“The problem for government is that while market-produced losers usually fail and go away, making room for winners, government-produced losers tend to stick around for a while, sucking resources away from potential winners,” The Economist noted last year. “No one knows in advance whether something will work; government's failure is in its relative unwillingness to clear away the chaff.”
The federal government would be better off simply trying to skip a generation of technology. Set up a pot of money, say $1 billion, to be delivered to the person or company that invents a mass-producible non-internal combustion engine car.
Will it be hydrogen powered, solar powered, electric, fusion driven, or something else? Nobody knows. Let’s let scientists and the market decide. And since the money doesn’t have to be paid off until the car exists and works, taxpayers would save billions that are now set to be spent on questionable technology.
American ingenuity enabled the modern, car-centered society. It can create the next big thing in transportation as well. But only if the federal government gets out of the way and lets markets work.