A Bit Of Long-Awaited Good News From The Car Industry

The reason so many young people like socialism more than capitalism is that they can’t tell the difference between capitalism and corporatism.

Conservatives have done a very poor job over the years differentiating between the two.

And Barack Obama did a great deal of damage in creating an environment that destroyed a vast swath of small business in America, which was something that Bush Republicans had already been doing a pretty sufficient job of. In each of the eight years Obama was president there were fewer businesses extant in America than in the previous year.

Obama even announced that the cartelization of the American economy was what he wanted to do. In my book Racism, Revenge and Ruin: It’s All Obama, I recounted a story from a previous biography of the 44th president which told the story of his telegraphing the full tilt into economic fascism he was plunging America into…

In May 2009, four months after his inauguration, Obama held a dinner at the White House with nine prominent leftof-center historians, including Doris Kearns Goodwin and Michael Beschloss, during which he touted his vision for a command economy managed by federal bureaucrats, along with big employers and big unions.

It hardly need to be said that under such “state capitalism,” the government would be picking winners and losers.

With that in mind, it’s not surprising that at first more than a few serious capitalists actually welcomed Obamanomics. “He makes my job easy,” as one quantitative analyst at a big-money hedge fund put it at the time. “You get some free-market Republican in office, and he’ll deregulate the economy and set it loose, but you’ve really got to do your homework trying to pick winners. It’s safer with a socialist like Obama. All I have to do is read the paper and I’ll know what to do, because his people will pick all the winners for me.”

What he and few others fully grasped was the insidious form this new regulatory state would take; the degree it would become an all-out assault on the private sector; or that it would lead to the consolidation of the private economy into fewer and fewer hands.

The evil genius of Obamunism was in creating fascist economics by other means.

While Obama liked to claim he saved the U.S. economy, in fact he enervated it. Labor participation plummeted; during his time in office, the American standard of living sank, and business startups evaporated, declining to chilling levels.

As a result, these kids have grown up in an America where most of the large sectors of the economy are absolutely dominated by a small number of national companies who all have the same basic corporate philosophy and are run by hired guns rather than their founders.

The big project that needs to be worked on, perhaps at the state level primarily, is for Republicans to reorient the party toward small businesses and entrepreneurs and away from the oligopoly. They’ve got to teach the American people that there is a difference between capitalism and corporatism. And there are opportunities to do that.

But there is good news, in that the Trump administration just knocked out one regulatory barrier to a capitalist economy, this coming in the auto market…

The Trump administration has rolled back car fuel efficiency standards requiring automakers to ensure their cars and light trucks were using less fuel.

While the Biden-era standards would have been expected to get the nation’s car fleet to average 50.4 miles per gallon by 2031, the Trump administration on Monday brought that number down to 34.9 miles per gallon. 

The administration argued that this would make cars cheaper, though opponents of the move point out that car owners could spend more on gasoline as a result. The change could also lead to more pollution and worsen climate change.

The Trump administration says that the move will make new cars $1,300 cheaper on average.

The Biden administration said its change, which would have increased fuel economy requirements by 2 percent per year for model years 2027 through 2031, would have saved drivers more than $600 in fuel costs over the lifetime of a vehicle. 

I don’t want to oversell this, because a 34.9 mpg fleet standard is still far too high. The thing to recognize about this is automakers are required to hit that number as an average of all the models in their fleet – so, let’s say, you make a sports car, a sedan, an SUV and a truck, you’d have to insure that the four of them together have to hit that 34.9 mpg average.

This makes it difficult for a new automaker to come into the market and offer a vehicle which is profitable. Because nobody wants to buy a little rice-burner with no style or heft to it; those cars are generally unsafe, you can’t carry much in them, they aren’t fun to drive. People buy them because they have to, but not in the volume that would make a new automaker any money. A big SUV or a truck with a different look which commands the road? Yes.

But good look getting that vehicle to 34.9 mpg unless it’s a hybrid or an EV. Which will force that vehicle into a higher price-range tier and make for tougher competition for a new entry into the market.

It’s debatable and probably unlikely that Trump cutting these fleet efficiency standards will incentivize somebody into making an investment into the auto market where the hole is. Namely, cars, SUVs and trucks which are fun to drive, are not loaded with technology and therefore don’t require truckloads of money for repairs – or worse, a monthly subscription to keep the electronic features running – which look good and have function. Were somebody to make pickup trucks, let’s say, that somebody could buy for $25,000 new, because they were inexpensively built and bare-bones on features but were nonetheless comfortable to ride in and sturdy, they’d clean up against the overpriced stock of the incumbent companies.

You probably can’t get there at a 34.9 mpg standard. It would absolutely never happen at 50.4 mpg – at that number every SUV and truck would have to be electric, and that’s a disaster.

But bending down the fuel efficiency curve means you get closer to an environment where someone would make vehicles the bottom end of the market would purchase new. That environment would yield new competitors in the auto market, and that would mean new factories, new jobs, new innovation.

Capitalism.

We haven’t had it in the car market since Obama’s cramdown of 2009. Lots of other industries are just as distorted. It’s not a surprise that Obama is now weighing in on behalf of Dario Amodei and Sam Altman as they’re trying to cartelize AI in the same fashion.

The real question is whether this is just honest economic illiteracy on Obama’s part or if he’s trying to trojan-horse us into socialism. I’d guess the latter. But what’s good to know is that the Trump administration is taking active steps to push back against corporate fascism in various places within our economy.

More, please.