Yesterday, I was having a conversation with a co-worker over lunch about how much better cars are today than in the 1960s. For instance, I remember that in the 1960s, living in the snow belt, it was not uncommon to see a 5 year old car with rusted fenders flapping in the breeze as it tooled down the road. Today, with greatly improved paints and corrosion protection, that is a rare sight, even for unprotected cars in the rust belt. My co-worker mentioned that cars also last longer. In the 1960s, a car was pretty much used up by about 100,000 miles. Today, it is not uncommon for a car to last 200,000, or even 300,000 miles. The conversation shifted to fuel economy. He mentioned that the 15 passenger van he was driving got 16 miles per gallon (mpg). I mentioned that in the 1960s, 16 mpg would have been a good mileage for a 5 passenger sedan. He said it was even worse than that-between 8 and 10 mpg. Turns out he was right. The average fuel economy was apparently 13 mpg.
About that time, the resident Leftist in the group asked if I thought the Environmental Protection Agency's (EPA) fuel standards might have had anything to do with forcing car companies to raise gas mileage. There followed this exchange, paraphrased because I can't remember well enough to quote:
Me: "Well, I think market forces should have been tried instead."
Him (frowning): "Market forces! How would that work?"
Me: "Consumers would have demanded higher mileage as gas prices rose."
Him: "Aw, that's just ridiculous. There is no hammer to force companies to build higher fuel mileage vehicles!"
Me: "True, but it works in other areas of our lives." Realizing that again, he was looking to pick a fight, and this being work after all, I tired to close the conversation peacefuI and said, "but we will never know. The government chose to regulate, and thus foreclosed any market based solution that might have come about. What might have developed never did, and we have instead a more powerful EPA."
It occurred to me later that if I could show that average mileages were trending upward in the years before the Corporate Average Fuel Economy (CAFE) standards took effect, that would add weight to my contention. I know, for example, that in 1975, I traded in my Plymouth Fury for a new, 1975 Volkswagen Rabbit, a horrible mistake, but one driven by increasing gasoline prices. The closest I have come to finding an answer is a 2006 article from Freeman magazine by Michael Heberling entitled Government Mandated Fuel Efficiency Standards. While somewhat dated, it is a pretty good overview of the CAFE and the unintended consequences of its passage. The article says that indeed, the average mileage of automobiles during that period was getting higher, in no small measure, because of purchases of foreign made vehicles. But at the same time, there were several experiments in producing an American made car that got good mileage, such as the Corvair.
Francis Porretto spoke about a similar incident he had with a liberal here.
Now, I truly don't know whether or not market based solutions would have worked or not. But as I said at the time, it has often worked in the past, and I think leaving it up to each individual, it would in time have found a balance between fuel economy and the other factors in selection of a car. The price of gasoline is only a small factor in purchasing an automobile. Other factors include size of your family, or the need to haul stuff, the image one wants to convey, the price one can afford, and so on. By letting individuals make their own decisions, everyone would be happier with the choices and government would be smaller by at least the amount required to administer the CAFE. Of course, this situation would not have made our betters happy, since no doubt some Americans would have made the "wrong" choices.
On the other hand, I was stunned by the utter surety of my co-worker that regulation was the only way. Regulation has had unintended consequences that have not been good for Americans. The family station wagon has been replaced by the SUV and the minivan. The SUV, being built on a truck frame, has looser CAFE requirements than the station wagon had, which is built on an automobile frame. Many green types decry the SUV, but they have only themselves to blame. The Japanese auto giants gained a foothold in the American market as a result of imposition of CAFE, and have exploited that foothold for everything it is worth (and I don't dismiss the mistakes that the Big 3 made along the way either.)
Now, imagine the government imposed a one size fits all healthcare solution...oh, wait.