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Re: Manufacturer's Profits at Buyer's Expense

Subject: Re: Manufacturer's Profits at Buyer's Expense
From: "David Breneman" <>
Date: Fri, 6 Dec 2002 13:42:56 -0800 (PST)
Hi, Max - I'll attempt to put my gloss on your points, then I'll
leave this thread to others, as I'll be away from my terminal
the rest of the day.

Max Heim SEZ -
> RE Reason: why is the government essentially subsidizing one class of
> vehicles versus another? This is not the purpose of regulation in a rational
> system.

How are SUVs (the vehicles I assume you're referring to here) subsidized?

> Unlike you, I do not dispute the value of appropriate regulations in the
> public interest. 

Unlike you, I don't presume to know what you think.  :-)  I never said
I disputed the value of appropriate regulations.  For instance, when I
buy a gallon of gas, I expect it to be a gallon, not 63 ounces, and
government regulation has a purpose in protecting people from dishonest
business practices.  However, I don't see the benefit in the government
dictating to auto manufacturers how their heater controls must be marked.

>                  There is no such thing as an unregulated free market, and
> if you look at US history, you will see that the growth of federal
> regulations has (not coincidentally) paralleled the general expansion of the
> economy and the improvement of individual health and safety. 

Correlation does not prove causality.  If one carries your premise
out to its implied conclusion, he'd be led to believe that a police
state would be the most prosperous and safe society in which to live.
Like I said, there is a place for regulation, but too much of anything
is still too much.

>                                                               The current
> reactionary mania for deregulation is both unsound in principle and proven
> detrimental in practice (see Enron, Andersen, Worldcom, etc., ad nauseam),
> although admittedly highly profitable to a few influential individuals.

Well, one man's "reactionary mania" is another man's "prudent reform".
People at the companies you mention were dishonest, self-serving,
corrupt charlatans placed in positions of trust by incompetent 
directors elected by disinterested stockholders.  None of that has
anything to do with "deregulation".  It has mostly to do with the
"spirit of the 90s" which held that you were entitled to anything you
could get away with.  Needless to say, government was not brake on
this activity, it was a role model.  Now market forces are cleaning
up the mess, and government regulators are left to, at best, posture
and demagogue; at worst, to make a recovery much more difficult with
even more misguided regulation.

> RE Public Interest: furthermore, why is the government subsidizing a class
> of vehicles that use more diminishing resources (for access which to we are
> apparently prepared to go to war), and that contribute disproportionately to
> pollution and other detrimental environmental effects, as well as
> endangering other motorists both by being involved in a disproportionate
> number of accidents, and by causing more damage per accident? Not to mention
> increasing congestion...

One could just as easily argue that government regulations have
caused cars to become proportionally more dangerous than trucks
because of the reactionary mania for ever better fuel economy.

> Individual vehicle purchasers are looking at their short-term interests,
> including up-front costs, available financing, and perceived value; plus
> acting under the influence of peer pressure and marketing hype. The fact is
> that all these factors are skewed in one direction in the US market. Compare
> European markets if you don't believe me.
> Also, it is absurd to claim that minimal safety and fuel economy
> regulations, which are basically the same in all advanced industrial
> countries, are the reason for MG not entering the US market. The real reason
> more likely is lack of capital.

Yes, it is absurd to claim that minimal safety and fuel economy 
regulations are the reason for MG not entering the US market.
But the US has the most punative safety and fuel economy regulations
in the world, and they are a definite barrier to entry for small
competitors, unless they produce extremely expensive cars.

And here I thought my "Abingdon Pillow" remark would draw the
most fire today.  :-)

David Breneman                   |       And on the tree a star,
Distributed Systems S/W Analyst  |       Of shiny Christmas gold.
Airborne Express, Inc.           |       A candle in a jar      |       Of razzleberry dressing.

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