|April 02, 2020|
A cruel April Fools' day prank on the economy and the environment
|On Tuesday, March 31, the Trump Administration announced it was rolling back Obama-era auto emission targets. Unfortunately, this is not an April Fools' Day joke -- it is official government policy, policy that makes a mockery of the name of one of the sponsoring agencies: The Environmental Protection Agency.|
Even for those gentle readers who are somehow not convinced of the overwhelming scientific evidence of fossil carbon emission-based climate change, the present Administration's rollback of efficiency requirements is simply bad public policy.
Its economic effects on consumers is damaging. Its likely effect on the competitiveness of American automakers is negative. Especially considering the current COVID-19 pandemic, its implications for public health are poor. And its effects on the global environment will be particularly bad at this critical time for human civilization.
Negative Effects on Consumers
Even if you have no interest in human civilization's future success and prosperity, presumably, you have concern for your own bottom line. The effect of this policy is, by the administration's own reckoning, an additional effective tax on consumers of around $400 on every new car purchased between now and 2025.
This fact was so obviously in opposition with President Trump's preferred image as a populist fighting for the little guy, that the administration hesitated in publishing the rules at all. Quoting the Times article linked above:
The chief cause of the delay has been an internal economic analysis concluding that the rule would harm consumers more than helping them. A draft of the rule sent to the White House in January calculated that the new fuel economy target would lower the prices of new cars and light trucks by about $1,000, but it would increase the amount consumers would pay for gasoline by about $1,400. The administration's draft analysis concluded that the rule could actually cost the American economy between $13 billion and $22 billion.
This ruling clearly does not help consumers. It also will not help automakers.
Negative Effects on American Automakers
Capitalism does one thing exceedingly well -- navigates around obstacles and finds solutions to problems. The Obama-era emission regulations set up the kinds of obstacles that spur innovation and increase the competitiveness of the innovating companies.
Those rules were stringent in comparison to OECD peers' regulations -- meaning that the international auto industry had to step up its innovation game to be able to compete effectively in the American market.
The Trump Administration's rules -- which mandate an average 1.5% efficiency increase over the next several years versus the Obama-era 5.0% increases -- essentially discourage innovation. Considering that innovation is one of the factors that has made the United States the most powerful, economically influential country in the history of mankind, the present policy of discouraging innovation is inherently damaging.
Your correspondent is not a legal scholar but, in addition to the intrinsic damage to innovation done as a result of these rules, American carmakers are concerned that legal challenges from states' attorneys general will end up creating an uncertain and possibly contradictory regulatory environment during a period of legal wrangling.
Even if the legal chips fall on the side of the Trump EPA's policy, consumers tend to favor more ecologically-friendly alternatives, so all things held equal, automakers failing to keep up with more stringent global standards should wind up at a competitive disadvantage.
Negative Effects on Public Health
A study published last year in the prestigious New England Journal of Medicine estimate that roughly 100,000 Americans die per year due to air pollution and that respiratory problems increase public expenditures for Medicare.
A study published late last year by Karen Clay and Nicholas Muller at Carnegie Mellon University found that particulate pollution increased by 5.5% during the first two years of the Trump administration after having declined by 24.2% during the Obama administration. The researchers estimated there was an increase in pollution-related fatalities by nearly 10,000 people in 2018 because of the increased pollution, and that "[a]t conventional valuations, these deaths represent damages of $89 billion" to the U.S. economy.
In these days of COVID-19 concerns, researchers tell us that people with chronic respiratory illnesses such as cystic fibrosis, chronic obstructive pulmonary disease, asthma, or allergies, as well as for people with lung damage linked to smoking and environmental conditions are at an increased risk for severe cases of the pandemic.
Negative Effects on the Environment
The new rules mean that U.S. drivers will emit nearly one billion additional tons of carbon dioxide emissions over the lives of their automobiles. For a world teetering on several important ecological tipping points (Amazon, Antarctica, Arctic) and sitting at a level of atmospheric carbon concentration that is without precedence in the history of mankind, your correspondent is confident in emphatically stating that our civilization cannot tolerate the marginal increase in emissions.
The new rules are bad policy on all levels. In this time of uncertainty, it is difficult to think of anything else than the immediate inconvenience of shelter-in-place orders and the immediate threat of disease. But for the good of our civilization, we must make sure that a message of displeasure is widely heard by politicians in a few months' time.