Tuesday, September 26, 2017

[akmdjseh] What if no SUV?

CAFE and the Gas Guzzler Tax are (probably) examples of regulation gone terribly wrong: attempting to increase fuel economy instead brought about popularity of the SUV, not classified as a passenger car, and fuel economy did not increase.  The market did what the market does.

What would the streets of America be like today if those laws had not been passed?  We would probably have gas guzzling cars instead of gas guzzling SUVs, which seems better in several respects.  A gas guzzling car tends to be smaller and lighter than a gas guzzling SUV, increasing average safety: there is less total kinetic energy on the streets.  The large SUVs on the streets induced a zero-sum game where everyone else felt they needed a large SUV to feel safe.  A gas guzzling car, being smaller, likely has better fuel economy than a gas guzzling SUV.

The correct way to increase fuel economy would have been a gasoline tax, inducing market mechanisms toward better fuel economy (or possibly black markets or other ways to avoid the tax).  Even more problematically, even after the SUV made it clear the regulations weren't working, there were no attempts to repeal them or improve them.

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