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Libertarians, Government and Choice

by Mike Kimel

It has been a very long time since I looked at the National Review. Apparently it is still there.

Jonah Goldberg (apparently also still there) had a post that begins like this:

And now let us recall the “Fable of the Shoes.”

In his 1973 Libertarian Manifesto, the late Murray Rothbard argued that the biggest obstacle in the road out of serfdom was “status quo bias.” In society, we’re accustomed to rapid change. “New products, new life styles, new ideas are often embraced eagerly.” Not so with government. When it comes to police or firefighting or sanitation, government must do those things because that’s what government has (allegedly) always done.

“So identified has the State become in the public mind with the provision of these services,” Rothbard laments, “that an attack on State financing appears to many people as an attack on the service itself.” The libertarian who wants to get the government out of a certain business is “treated in the same way as he would be if the government had, for various reasons, been supplying shoes as a tax-financed monopoly from time immemorial.”

If everyone had always gotten their shoes from the government, writes Rothbard, the proponent of shoe privatization would be greeted as a kind of lunatic. “How could you?” defenders of the status quo would squeal. “You are opposed to the public, and to poor people, wearing shoes! And who would supply shoes . . . if the government got out of the business? Tell us that! Be constructive! It’s easy to be negative and smart-alecky about government; but tell us who would supply shoes? Which people? How many shoe stores would be available in each city and town? . . . What material would they use? . . . Suppose a poor person didn’t have the money to buy a pair?”

All that is true. But what Rothbard apparently didn’t get, and no doubt Goldberg doesn’t either, is that it goes the other way too. If people always got their shoes from the private sector, it would never occur to anyone that the government might provide shoes. Now it might seem stupid for the government to be in the business of footwear distribution, and in general, outside of the military, my guess is that it is.

But sometimes a different approach is what works. Sometimes when the government is doing things, it is doing them inefficiently and the private sector can do better. But sometimes it goes the other way. Sometimes when the private sector is doing things, it is doing them inefficiently and the government can do better. And sometimes, sometimes its a good idea for things to be done worse, and in a way that only the government can.

I’ll give you an example. I’ve noted a few times that you can stroll into most car dealerships in Brazil today and buy a tri-flex car. That is, the same car can run on any mix of gasoline, ethanol and natural gas. (There are two fuel tanks – one for ethanol and/or gasoline and one for natural gas.) You can then drive that vehicle into any number of fueling stations and fill up with whatever fuel is going to get you the most miles (er, kilometers) for your dollar (er, real). The technology to run cars on a number of different fuels, which you won’t see in the US for a very long time, is marketed under such exotic brand names as GM, Ford, Toyota, Honda, Volkswagen and Fiat to name a few. (Look ‘em up if you haven’t heard of ‘em.)

I’ve posted on how it came to be that Brazilians have choices that Americans do not, namely to buy a tri-flex vehicle. The Brazilian government wanted to reduce the country’s dependence on gasoline, but it realized that nobody would buy a car that ran on a fuel other than gasoline if there was no place to buy that fuel, and hence no manufacturer would make such cars. The government also realized that Shell and Esso and Texaco (remember them?) weren’t going to start selling other types of fuel because there weren’t enough cars on the road that could use those fuels. But the Brazilian government owned an oil company that had a chain of gas stations. One fine day, that chain of gas stations started selling ethanol even though there was no market for it. It wasn’t profitable. It was insane. No private company would have done something that stupid. But the result, a few decades later, is that about 80% of cars sold in Brazil in 2010 were flex-fuel. Guess what percentage of cars sold in the US in 2010 were tri-flex?

Rothbard would never approve of what the Brazilian government did. Neither would Goldberg. Personally, I like having choices. I wish I could pick among three different fuels for my car and go with whichever is cheapest. I suspect that in a few decades, when that technology finally arrives in the US, Goldberg might like having those choices too.

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Remember the Vega response? It’s a philosophy problem.

by DolB

After reading Tom Bozzo’s post via Vtcodger, I was inspired by the comments about bad management.

I’m not confident that the issue of the Big 3 management is the result of stupidity as much as it is from philosophy. Part of the bitching of the Big 3 in the first crisis was do to the need to move from focusing on money to focusing on a solution to a need: personal transportation. We got the Vega with unlined aluminum blocks and mickey mouse brakes. Infact, if you ever saw the casting of the engine, it looked like it was 1/2 a casting of the small block V8.

However, Japan’s business approach appears to be an extension of their life philosophy. Thus, Toyota brought out the Prius in Japan in 1997. 4 years after the creation by President Clinton of The Partnership for the Next Generation of Vehicles. This was 1 year after Toyota announces: January 16, 1992 – Toyota Motor Corporation (TMC) announces the Earth Charter, a document outlining goals to develop and market vehicles with the lowest emissions possible.

They set out to solve a need. We instead got a endless talking point that the purpose of a company is to make a profit. Well, the Big 3 made their profit. Now what?

And that PNGV program? “The 1994 PNGV Program Plan calls for a “concept vehicle” to be ready in about six years, and a “production prototype” to be ready in about ten years.”

Just a little late in their time planning, wouldn’t you say? Toyota was out 3 years post this report in their country and world production 2 years before the PNGV program called for a “prototype”! And Toyota didn’t need to be sweet talked into it. But we did spend some money:

“In FY1995, about $308 million was appropriated for ongoing PNGV-related R&D at eight federal agencies. Of this total, 88S went to three agencies: DOE, Department of Commerce (DOC), and National Science Foundation (NSF). Industry is spending about $100 million during this early, high-risk part of the program. For FY1996, the Administration requested $383 million. The House approved $228 million, a cut of $80 million or 26% from the FY1995 level, including zero funding for two agencies. However, the Conference mark is $312 million, which is nearly even with the FY1995 level, but is $71 million or 19%. lower than the Administration request.”

But, let’s speed forward.

By 1997, participants had settled on the specs of the “super car,” as it became known: the sedan would be a lightweight, diesel-electric hybrid. (Diesel engines, because they use a higher compression ratio, consume less fuel per mile than gasoline engines do.) By 2000, the Big Three had all produced concept cars, which were unveiled with much fanfare at the North American Auto Show, in Detroit. G.M.’s car, which was called the Precept, came equipped with two electric motors, one mounted on each axle. Ford’s Prodigy featured an aluminum body and rear-facing cameras in place of side-view mirrors, and the Dodge ESX3 was made in large part out of plastic.
The concept cars were wheeled out, then wheeled away, never to be seen again.

You do know the story of the EV-1?

In January, 2002, just months before the prototypes of the vehicles were supposed to be delivered and after more than a billion dollars of federal money had been spent, Energy Secretary Spencer Abraham announced that the Bush Administration was scrapping the project. When he delivered the announcement, Abraham was flanked by top executives from the Big Three, at least one of whom—G.M.’s chairman, Jack Smith—had stood next to President Clinton when he launched the program, eight years earlier. Abraham explained—and the auto executives seemed to agree—that the program had been based on a fundamentally flawed premise. The future of the car didn’t lie with diesel hybrids or any other technology that would allow vehicles to get eighty miles to the gallon. “We can do better than that,” Abraham declared. The Administration and the automakers, he said, were undertaking a new, even more ambitious venture, called FreedomCAR. The goal of this project was to produce vehicles that would run on pure hydrogen.

And thus was born the fable of hydrogen. Great! But what about the issue coming up like right about now? Toyota saw it. They solved it and I bet they already have something more in the works for the “more ambitious venture”. You know what else Toyota was doing in 2002?

Toyota announced they were now making a profit from the sale of each Prius. The success of hybrids had now become apparent.

How’s that stated purpose of a company working out for ya now? What’s the solution now? Another new purpose for a company? How about: It’s no longer to make money, it’s to not have it taxed away. That’s how the stock holders will get paid.

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