Saturday, January 26, 2008

"A Job-Killer for the Auto Industry"

by Ken Houghton

Treading on Tom's bailiwick, James Inhofe (R - CloudCuckooLand) argues that selling cars internationally is not a good idea:
The lone Republican senator to attend the hearing, Sen. James Inhofe of Oklahoma, was the only one to come to the administrator's defense. Inhofe dismissed the proceedings as "more theater" and called California's law a "job killer" for the auto industry.

California's first-in-the-nation tailpipe rules would force automakers to cut greenhouse gas emissions by 30 percent in new cars and light trucks by 2016, with reductions starting with the 2009 model year.

Twelve other states have already adopted those rules - Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington - with others preparing to do so.

Let's see if we have this straight:
  1. There is increasing world-wide demand for more cost-effective cars
  2. The mileage and emission standards required by California are remarkably similar to those required by Europe
  3. Cars can be sold internationally.
  4. Designing a car to fit two different standards is more expensive than designing it to fit one; economies of scale is still a truism.
  5. Economies grow, per Brad DeLong's favorite dead economist, through "creative destruction":
    1. That implies that producing the same product ten years later while everyone else—e.g., Toyota—has been innovating and changing the model will lose you mark share.
    2. Losing market share generally reduces demand (or at the least, doesn't allow it to keep up with the natural expansion of the population.
    3. Not keeping up means that you have to cut costs.
    4. Cutting costs eventually means cutting jobs.

  6. The preceeding notes (and remedial subnotes) do not jibe with Inhofe's "do nothing or it will cost jobs" argument.

Why does James Inhofe hate American automobile workers?

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I'm sure the people in the South would actually welcome further declines of auto-makers whose corporate headquarters happens to be in the U.S. since most of the facilities in the South are geared towards producing of cars for corporations whose headquarters happen to be outside of the U.S.
The argument to force auto-makers to abide by a standard is only compelling if you completely ignore the fact that there is no law prohibiting manufacturers from producing autos that are more efficient than U.S. standards.
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