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Government Motors: For Your Own Good

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07/29/2015

Eric Peters reminds us of why customers don't have a choice when it comes to safety features on cars and other mandatory "amenities." It's all mandated. And, much like the airlines — who do nothing to oppose the TSA — and banks — who do nothing to oppose mandates to spy on all their customers, auto companies are happy to help the government dream up new ways to make cars more expensive and become obsolete more quickly. 

Perhaps the the key insight Peters makes here is that the government, and not you, is the most important customer that auto companies have. You, the ordinary consumer are a mere afterthought. In an atmosphere of weak regulation or no regulation, the consumer still exercises a large amount of influence and sovereignty. Nowadays, not so much. 

It's hard to not see a few parallels here with the health care industries and other regulated industries. The more government regulation grows, the more expensive the product becomes, and the fewer choices we have. You are no longer the most important customer to your physician, for example. The myriad of regulatory agencies and government subsidies exercise a far greater pull on your doctor's decisions than you do. 

Internet service providers, thanks to Net Neutrality, are going in this same direction as well.

Peters writes: 

What’s happened is that the car companies decided about 20 years ago to work with the government rather than for their customers – on the theory that if you can’t beat ’em, join ’em. Instead of fighting mandates tooth and nail – government bureaucrats decreeing the features and equipment your next new car will have (and which you will pay for)  – the car companies came to the realization it was less hassle (and more profitable) to embrace the mandates. Even to the extent of anticipating the next one.

To assist the government in thinking up new things to charge people for.

For example, back-up cameras. These will no longer be optional after model year 2017. If you want to buy a 2018 model, you will have no choice about buying the camera. 

For “safety,” of course.

And de facto, this is already the case.

It is hard to find a 2015 model car or truck that doesn’t have a back-up camera as part of its suit of standard equipment. Often, it is “bundled” with features you might actually find useful or desirable – like an upgraded audio system or GPS.

Rather than wait for the mandate to kick in, the car companies went all-in early.

Not because buyers were clamoring for the cameras. But because the cameras add $$$ to their bottom line – and not just to the purchase price of a new car, but also to the cost of repairing the car. It’s inevitable that, at some point, either the camera itself (which is located outside the vehicle, usually built into the bumper or trunk/decklid and so exposed to the elements) will crap out. Or the LCD display inside the car (typically either built into the center stack or the rearview mirror) will develop a fritz. And because these cameras will be part of the federally mandated suit of “safety” equipment, it is a legal requirement that the system be maintained in operational condition on your dime. Else the car fails the mandatory (in many states) “safety” checks one must submit to every year in order to renew the registration...

In the past, the car companies would have fought this force-feeding on the theory (now severely anachronistic in Mussolini-ized America) that customers weren’t clamoring for it.. Or at least, let’s offer it and see whether they’re freely willing to buy it. If they are – great. Sell it to ’em. But if not, drop it.

That was the approach taken with air bags – initially.

But when people did not buy them willingly, the government decided this was unacceptable – and ordered them to buy.

This occurred in the ’90s and marked a turning point, a sea-change attitude shift. The car companies realized (perhaps accepted is the better word) that, like it or not, government had become their “demographic” –  the car industry term for the object of their efforts, the audience they build cars for.

The reason today’s cars are so bleakly homogenous is a function of this. They are all designed to fit within a certain template – the big one being “crashworthiness” requirements but there are other templates, too. These templates are dictated by the government but nowadays, they are full-hug embraced by the car companies, too. For example, their engineers and “product planners” work directly with government bureaucrats to develop, implement and anticipate crash test requirements. This effectively dictates vehicle design – including the overall shape – of new cars generally. Irrespective of brand. Because everyone’s got to comply with the same standards. There is no possibility – legally – of a “rogue” car company going its own way and designing something along the lines of a 1959 Cadillac (or a ’69 VW Bug) because such a car would not fit the template.

Whether it appealed to buyers being an irrelevance.

And then, of course, there are the laws about fuel efficiency:

Next year (2016) all new vehicles – this includes trucks, incidentally – will be required to average at least 35.5 MPG on the government’s test loop. Those that average less will cost you more – in the form of gas guzzler taxes. But also in the form of more complex/expensive engines (i.e., those with turbos, “auto-stop” and so on). This is why the new Ford F-150 pickup comes with tiny – but turbo’d – V6 engines now.

Rather than fight the federales‘ fuel economy fatwas, the car companies have bought in. Or rather, you have.

 

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for Mises Wire and The Austrian, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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