The National Center for Public Policy Research, a conservative think tank, argues in a press release that the President’s call for higher fuel efficiency standards will have at least one unintended consequence–lighter weight vehicles will mean less accident protection for vehicle occupants, and thus a greater incidence of traffic injuries and fatalities. In the press release, a spokeswoman for the center invokes the polemical tag line from one of its studies: "CAFE standards kill".
We plucked this item for today’s blog for a few reasons. First, we love arguments that open with an eye catching bit of hyperbole. Second, we appreciate hyperbole that can be shown to have a few grains of truth to it. And third, this issue provides an opportunity for us to riff on a few of our favorite themes: complex economic tradeoffs, heavy political lifting, and human capital.
Taking the last one first, it’s our belief that the accumulation of physical, financial, and human capital in a society, coupled with declining fertility rates, raises the social value of the individual. [If this topic is of interest, one of the best ways to read up on it is via a web search for the long running arguments between biologist Paul Ehrlich and economist Julian Simon--just be sure to read a variety of perspectives--there are plenty of cheerleaders on each side, and the truth probably lies somewhere in between the overly pessimistic and optimistic positions they staked out, respectively.] On its surface then, the "CAFE standards kill" argument has some significance–if lighter vehicles lead to a greater number of fatalities, then society might indeed be worse off as a result of higher fuel efficiency.
There are several complicating wrinkles though, that have to do with the inescapability and complexity of economic tradeoffs–there are a significant number of externalities imposed by the production and consumption of fossil fuels, such as rigid or unstable political systems, the accumulation of harmful pollutants, etc, that negatively impact the lives of individuals and thus lower the total quantity and quality of human capital available. So while the occupants of a heavier motor vehicle might be better protected from acute trauma, they and others who are exposed to its waste, and those living in proximity to refineries, sea lanes, pipelines, and wellheads, might incur a marginally higher cost in terms of personal well-being. [Rest assured, I'm not arguing for a ban on cars or fossil fuels--my grandmother would sometimes argue that the world would be far better off without motor vehicles, but my father would soon pull me aside and point out that we would all have to wear thigh high gollashes and carry shovels if the horse and buggy ever made a comeback!] This analysis also leaves out the beneficial (negative) effects of employment (unemployment) in the various industries affected. From this, it should be plain to see that an objective estimation of the net cost or benefit of CAFE standards is extremely complicated and prone to error (it also serves as a reminder to dig into the philosophies and funding behind any studies that claim to offer easy and unassailable answers to thorny issues).
It’s in complicated issues like this that the heavy lifting of political processes comes into play. Despite their design flaws, execution challenges, and other imperfections, modern political systems are intended to produce socially optimal outcomes. Life is, after all, a series of optimization challenges–eat or sleep, work or play, date or marry, buy or rent, one kid or five, and so on. Likewise in politics, where appropriate weights must be placed on such things as growth versus equality, risk versus safety, incentives versus entitlements, etc. There are two things that we would love to see more of in the world of politics. First is a more explicit recognition and articulation of this reality in political discourse; second is a commitment to ensuring that ALL competing interests are fairly represented whenever optimization decisions are made. We admit this is speculative, but we believe that the ‘political middle’, which is so important to electoral politics in this country, understands the reality of tradeoffs and divergent interests. If so, the political process itself could probably use some optimization, for example, taking fuller advantage of ‘collective’ or ‘market’ intelligence (a good source for this is James Surowiecki’s The Wisdom of Crowds). For example, legislative and regulatory proposals could be subjected to more open competition and higher frequency electoral feedback, which might provide a healthy counterbalance to the influence of lobbyists and special interests…though at this point we have admittedly departed the realm of speculation and entered the land of wishful thinking…!!!