How Auto Manufacturers Benefit from The Current Auto Laws

As I mentioned in my last post, I hypothesize that auto manufacturers benefit from laws that support the perpetuation of the status-quo. Here is the federal National Highway Traffic and Safety Administration list of standards and regulations for building a road-legal vehicle.

It's a dizzying list for anyone who's not accustomed to reading the federal law code, which is most of us. From parts, to bumper specifications, to airbag features, to turn signals, there's pretty much no way to modify or improve your car without violating or risking violating something in the federal law code.

It's a little known fact that the automobiles being sold us today by the major manufacturers, Toyota, GM, Volkswagen, Ford, Jeep, Dodge, just about any other you can think of, are more of a product of legislators than innovative companies. That is to say, no matter how much those cliche car commercials boast about the rampant innovations of their newest model, the car itself--the end result--isn't an innovation built from the ground up to be the most efficient car possible. Rather it's innovations built with the hundreds of federal codes and restrictions to innovation in mind. Instead of being built from the ground-up, the ground up is established by the federal laws.

Major manufacturers have had decades to perfect their designs, and learn to manufacture parts in the cheapest and most efficient way possible. The federal list of standards and regulations for automobiles does not pose an economic problem for these manufacturers, because they've grown their companies in the system, they've been able to adjust to the laws one at a time and invest the money where, and when necessary to abide by the code.

Opponents of the free market often criticize it for allowing monopolies to exist. It's a fact that mom-pop shops and other business start-ups may have a hard time turning a profit if they can't sell as low as the other more established businesses can. It's ironic, then, that the same opponents of the free market also support the overlegislation of standards that hurt business startups arguably more than the monopolies themselves.

Haven't you ever wondered why the auto companies can sell basically the same cars year after year? Sure, there's some innovation, as far as features go, but it's pretty minimal as far as anything that's really out of the status-quo. Besides power windows, a few more MPG, heated seats, DVD players, and some differences in size, there's almost no difference between the cars being sold right now and the cars that were being sold in the 1960's. Some would say we've even devolved in terms of quality. They basically do the exact same thing, get us reliably from Point A to Point B, with maybe a few more bells and whistles than before.

So why is it the manufacturers can still stick a price tag well exceeding $10,000 on any new car, and we have no choice but to continue buying at that price? There's a hundred ways one could design a road-ready automobile for well below $10,000. There's more than a few inventors that have already done so. The only thing standing in their way is laws which are created for our presumed safety.

Why aren't these inventors allowed to challenge the crony stranglehold on the auto industry? There's only one reason--they are restricted from competing because they don't have the initial investment to bring their company up to speed with all the "safety" laws that already exist, or to perfect their manufacturing processes to efficiently and economically accommodate those laws.

You should be angry at the U.S. because the technology for viable electric cars has existed for decades, and we're only starting to see the first ones right now. You should be angry at the U.S. because big oil and big auto support legislation that allows them to continue to make imperfect and ineffective cars using outdated energy sources, and squash their competitors under the weight of their influence. Every time you pay $60 or more for a tank of gas, you should be angry at the U.S. government that their supposed laws for "safety" are actually jeopardizing millions of Americans who can barely afford to pay the bills, let alone pay hundreds of dollars in gas every month. You should be angry that the laws which are supposed to make us safe on the roads actually make us unsafe in our wallets.

You should free up the market. You and only you can do it. You're the voters of our nation, you can support the legislators who want to limit the extent of legislation, the governors who want to let us largely govern ourselves, and the innovators who genuinely want to create new and better ways to do things, rather than support the status-quo.

I only ask that you keep in mind that regulations on corporate production oftentimes backfire by simply extending the problems they try to solve out to a different place, rather than fixing them. It's noble of us to want safety for everyone, but we should be careful that we don't end up hurting more people than we are helping in the process. Unfortunately, regulations oftentimes have a tendency to create corporate advantages for companies that are already in the status-quo, and limit the market penetration ability of new inventors that have better ways to do things, and end up hurting the consumer in the long run.

In closing, I'd like to recommend a short 9-minute video by Milton Friedman addressing the topic of who protects the consumer in a free-market economy.  Perhaps if we understand the safeguards to protect the consumer already in place within the free market, we can understand the results of our intentions when we attempt to pile on additional laws to add more safety than what is already there.

What exactly are we believing about energy?

“Something is always born of excess. Great art was born of great terror, great loneliness, great inhibitions, [and great] instabilities, and it always balances them.”
― Anaïs Nin

It’s no secret that there is and continues to be a globally mounting fear of an energy crisis. You can hardly open up your newspaper or glance at the tabloid racks without seeing statements like:

“The Oil Shortage - When Will Our Joyride End?”
“Fossil Fuels - How Long Until They Fossilize Us?”
“Peak Oil - The Inevitable Doom of the Oil Industry”

I’m here to propose that none of these veiled threats are realistic. In fact, we do ourselves a disservice to even pay attention to them. Fearmongering publishers and government officials whose pensions depend on pleasing the right crowd would like you to believe that we depend on oil and that we need to subsidize it to keep the planet spinning. Oil companies are too busy counting their stacks of cash to care as long as we keep buying from them. One thing is clear: the market continues to choose oil and fossil fuels as its preferred choice of energy. But how long will that purchasing trend last? More importantly, why are we stuck with oil, when there’s so many other energy sources out there? Has the government struck a deal with oil companies to maintain a crony monopoly?

There are thousands of industries whose business model depends upon fossil fuels to succeed; they are companies whose entire way of operating is wrapped intrinsically around the useful exploitation of that wonderful black gold. Here are just a few examples:

Fossil fuels play a major role in manufacturing since hydrocarbonaceous materials are used to create the majority of plastics in plastics manufacturing. Even more prevalent than their role in producing plastics, though, is their role in the energy industry. Coal, natural gas, and petroleum sources produced 68% of the total electricity in the U.S. in 2012. The rest of the energy was created by renewable energy technologies. Perhaps the only market that eclipses the electricity generation market in its use of fossil fuels is the transportation energy market. In 2012, a whopping 95.4% of the U.S. transportation sector energy usage came from fossil fuels.2

Many detractors of the oil industry paint a picture of oil companies as nothing more than gigantic monopolies, invulnerable to any form of attack or competition from contrary market forces. What if we’ve overlooked some other energy options that are equally plausible, sometimes more so, than oil? What if the biggest competition to the oil giants is US? Not the U.S. per se, but US -- collectively. Individual, private investors owning our labor and our products, and our innovations in such a way that we can create more value for ourselves and others through the production and assimilation of alternative fuels?

It’s only logical, then, that US, the U.S., the collective labor of individual forces centralized in the United States, apply ourselves to our energy problem in productive ways wherein we can benefit as individuals, while also benefiting the nation as a whole. There may be more economically, ecologically, and nationally favorable methods of energy storage, distribution, transportation, and production than oil already available to us than what we are currently using.

Since we are a nation of the people, created by the people, and run for the people, why shouldn’t the people be able to choose their methods of transportation? Is it fair that the people are stuck using technology that is a hundred years old, when there’s so many people who want to advance to better automotive technologies, and energy based technologies?

It’s possible that the forces that shaped, and continue to shape these markets, are crony corruption. Cronyism is the solicitation of government favors from corporations with lots of money to contribute to campaigns, causes, or other means of legislative gain. Politicians can also blackmail companies by writing compromising legislation and forestalling projects that would otherwise benefit a company, or even writing laws that go directly against the specific interests of that company.

If it can be shown that the automobile industry as we know it, the energy industry as we know it, and the power industry as we know it have been shaped by crony corruption, it’s possible to negate, frustrate, even wholly dismantle the stranglehold that oil and fossil fuels have on the economy. That may be the first step in taking action, that is, making ourselves aware of the problem.

First, I’d like to take a look at the problem, as stated by those who are skeptical of the ability of fossil fuel to continue to provide a reliable, global source of energy. I’ll look into how a shortage of available energy in the oil, gas, and fossil fuel industry could affect communities, individuals, industries, and nations as a whole.

Next I’ll assess what I’d like to call “The Failed Hypothesis,” the idea that energy shortages can be effectively mitigated, avoided, and delayed, through government intervention, direct subsidization of alternative industries, or taxation of less desirable industries like oil and gas.

Once I've laid this groundwork, I’d like to explain an optimistically bright and beautiful alternative. The existing energy market is perfectly capable of dealing with any shortages of fossil fuels by making use of existing technology, and even more so once we get to advanced technologies. I’ll explain this using a supply and demand curve, and compare that curve to other industries. The overall demand for energy is high, but relative to the existing supply of energy is proportionately off the charts compared to any other industry. This is why Tesla believed free energy for everyone was inevitable, because even though he wasn’t an economist, he understood intuitively that the earth, the sky, and the universe are literally brimming with energy--so much energy that it’s almost unfathomable. [The trick is directing the energy towards useful work instead of destructive work]

Lastly, I’d like to deal with some of the natural consequences of this inevitable increase in energy and answer the question “Where do we go from here?” with regard to our energy problems.

I'll continue to publish content, as I come up with more answers. 

Citations:

1 "U.S. Energy Information Administration - EIA - Independent Statistics and Analysis." What Is U.S. Electricity Generation by Energy Source? Web. 20 May 2014. <http://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3>.

2 "Fossil Fuels Archives - IER. Fossil Fuels - Encyclopedia Entry "IER. Web. 20 May 2014.
<http://instituteforenergyresearch.org/topics/encyclopedia/fossil-fuels/>.