Monday, May 24, 2010

The propaganda campaign against Obama's tougher fuel economy rules

Los Angeles Times editorial "The propaganda campaign against Obama's tougher fuel economy rules" (May 26th, 2010) offers a diatribe in favor of higher fuel economy for cars. Within its arguments, it offers a pecuniary externality:

To recap the benefits of fuel economy: Consumers win by saving money on gas; public health improves because cars emit fewer toxic pollutants; the nation becomes less reliant on foreign oil; and greenhouse gas emissions drop.

The first is false. If the government imposes higher fuel economy, Corrections suggests that it is a fact of competition that they will lose more money/utility on their more expensive cars than they will on fuel economy. If a car company could produce cars that has savings that consumers want, then they could make money off it. The fact that car companies are not making it now indicates that the "saving money" argument is fallacious--were it worth it for consumers, the profit motive is there, and it would already be being done.

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