A Rube Goldberg Creation of Rare Perversity

By Kevin Meyer

Obviously with that kind of title I can only mean the insanity created, again, when the free market force of nature meets skewed politically-induced regulations.  Many thought that the taxpayers investing in failed auto companies was somehow a good idea.  Months later with independent Ford surging forward while our unintended investments, now managed by naive overseers, languish, we are shown yet another reason to bang our heads against the wall.

What a shocker that GM reportedly plans to invest $1 billion to
launch new versions of its big, fuel-guzzling pickups and SUVs. Does
this mean the whims of the Obama administration can't be expected to
trump economic reality after all, which would be a terrible precedent
for health care?  GM's surprise, of course, is no surprise, unless you live on some faraway world where the visions of the Sierra Club prevail.

Nothing really new there – if you want to make a buck, you need to make something the customer desires.  But wait!  What about CAFE standards and such?

GM says it has new ideas on how to build its large trucks while
still meeting Washington's tough new fuel-economy standards, but don't
let the spin kid you: Its main way of meeting those rules will be
simply to push small and electric cars into the market at a loss in
order to create the "fleet average" freedom to sell larger vehicles.

This is exactly the Faustian compromise that kept the industry
together for 25 years, albeit with one big difference today: Now GM
will be counting on direct taxpayer subsidies added to the mix. 

[Long ago] Detroit and Washington worked together to exploit the chicken tax to
create a protected niche for the Big Three to make large passenger
cars, call them "light trucks," and thereby shield them from foreign
competition as well as the stricter fuel economy rules that apply to
cars that are called "cars."

But the chicken loophole is no longer sufficient, so taxpayers will
have to pitch in too. They will do so with a $7,500 tax credit for
buyers of electric cars like the forthcoming Chevy Volt, plus some $25
billion in direct loans to carmakers to retool plants dedicated to
"green" cars.

Oh great… now my hard-earned tax dollars are going to subsidize a loss.  If the government nanny owns the "company" and also controls the standard, wouldn't it be just a tad more efficient to modify the standard so less good money goes after bad?  That's obviously assuming the overseers consider making a profit on trucks to be a worthy objective in the first place.  Sometimes you have to wonder.

Our buddy Mr. Ghosn of Nissan fame has already figured out how to play this game to suck up my tax dollars for his private enterprise.

Nissan sought and received a $1.6 billion U.S. Energy Department
loan to convert its Smyrna, Tenn., plant to churn out an all-new
electric car, the Leaf, which it plans to introduce late this year at a
price comparable to a small gasoline-powered sedan (i.e., far below
cost).

Mr. Ghosn, once dismissive of hybrids that couldn't legitimately
earn their way with consumers, has become a feverish believer in
electric cars to solve all the world's problems—as long as governments
are willing to assure their profitability. "We have to make money. If
we don't, the technology is doomed," he recently said. "And that's one
of the reasons we are negotiating with the U.S. government—to make sure
we have a reasonable return on our investments and continue to develop
the technology."

Oh brother.  So the free market is distorted by regulation, creating an absurd (and costly) opportunity for the free market.  Got a headache yet?

When Mr. Obama arrived in Washington, America's auto-cum-energy
policies were already a Rube Goldberg creation of rare perversity and,
let us admit, idiocy. But he can fairly claim: Taxpayers, you ain't
seen nothing yet.

No kidding.