Regulatory Climate is the True Culprit.

I have written in prior posts on the benefits of reducing a regulatory environment to promote business, and still stand on the assertion that for every bill passed into law by congress and a capitulating Presidential signature, there are several businesses breaking out the padlocks for their front doors.  We CANNOT continue to support the continued environmental juggernaut, and expect the automakers, or ANY manufacturer to survive long.

Often, the supporters of left leaning politicos decry the “capitalist” solution as anathema to job growth in this country.   They use the movement of employment and factories as an example, citing “greed” and “avarice” by business owners as motivations of such decision making. What is not considered readily by skeptics of those decisions is that the cost of continuing business in the local environments makes such a possibility a certain death sentence for the business involved.  It COSTS more to build here because of GOVERNMENT.

Speaking to the pain and position of the automakers, the fact that in the last several years there has been a step up in legislation supporting mandates on fuel economies and safety standards.  Automakers have for DECADES endured the boat anchor that is the UAW, but with the increased manipulation of design by a congressional engineering team, they now have “Mickey Rat” telling them what they can or cannot make. The Unions as a side note are a insidious monopolistic plague mandated by rules and force of law; a creation of congressional activity in the decades old establishment of the NLRB.

Add to this..  The same congressional muck-a-mucks derailing oil and gas exploration at a critical time of war, and essential need, the fuel prices exploded for long enough to scare the buyers off of the cars they really wanted to buy.  All the automakers felt the pain though some were better positioned to benefit the result of the congressional manipulation.  Congress merely entering into session is job security for itself.  For every “problem” it attempts to deal with, it merely creates more, and usually in multiples.

There is a fix for the automakers.

It is a simple fix and allows the free markets to function in the best manner and for the healthiest results. Eliminate CAFE standards. Allow Exploration and recovery of needed resources to continue, and eliminate the NLRB.  Free markets would FLOOD the automakers with new cash, and the automakers could efficiently deal with workers and worker organizations which are laden with wasteful procedure and needless rules.  Designs “could turn on a dime,” and the companies would be more quickly responsive to the needs of consumers.  Add to this, the fuels costs would be more consistent as well.

Russ Harding of the Mackinac Center notes:

Fuel economy would increase if Congress repealed CAFE requirements and imposed a substantial increase in gasoline taxes. The gas tax increase could be made revenue neutral by cutting federal income taxes. This approach would allow the auto manufacturers to respond to market conditions rather than artificial government mandates.

He is Correct. And even if there was a slight increase in the tax to provide for direct relief to road infrastructure, the lower BASE cost of the fuel would spur sales of vehicles which we WANT to drive.  Harding delves further into the regulatory roadblocks as well.  It is worth a visit.

Government in its efforts to “protect” or “save” business and the environment often steps on its own untied shoelaces.  The pitfalls of allowing legislators and lawyers “design” product by fiat has become glaringly clear as we face the greatest financial crisis most alive have ever seen.  Government needs to be told to let up and allow business to flourish naturally.

Added a couple hours later – 22lbs of UAW rules Malkin’s pic of the day

2 comments for “Regulatory Climate is the True Culprit.

  1. December 13, 2008 at 12:33 pm

    Cut… federal… income… taxes. Now there is something that will never happen. Revenue… neutral. Govmint heads would spin off their necks over that. The only thing we would see is a substantial increase in gasoline taxes. Now there is something that the govmint can wrap their brains around.

    Russ is right, but can you see the government actually doing that? Me, no.

  2. December 13, 2008 at 4:01 pm

    Slightly off topic.

    Why deregulation did _not_ cause the housing/financial crisis. Worth a read:

    Is Deregulation to Blame?
    Katherine Mangu-Ward
    Reason
    http://reason.com/news/show/130348.html

    It is an answer by example to those who will object to the Feds getting out of the car business.

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