New York Magazine’s Jonathan Chait Emits Highly Flawed Response to George Will Column on Determinants of Consumer Preference

by William Yeatman on January 10, 2014

in Blog

Yesterday, George Will wrote a column delighting in the fact that the # 1 selling vehicle in the U.S., for the 32nd year in a row, is the Ford F-150. He related the truck’s triumph to the President’s first term promise to put 1 million electric vehicles on the road by 2015. To this end, the administration gave subsidies to manufacturers and regressive tax credits to buyers. Despite these goals and the carrots to achieve them, the American car-buying public largely has shunned electric vehicles, and instead has continued its love affair with large, powerful cars of the sort that are loathed by environmentalists. Will concludes that consumers won’t be forced by Big Brother.

I, for one, liked the column, and would add only that the President’s pledge for 1 million green cars was part of an equally silly promise to create 5 million green jobs. Of course, his administration fell embarrassingly short of meeting either goal. An evident corollary to the fact that the government can’t dictate consumer preferences is the state’s inability to centrally plan an industry, like “green energy.”

New York Magazine’s Jonathan Chait, however, took issue with the piece. After condescending to Will for a few paragraphs, Chait asks & answers:

“So, are Americans on the whole flocking toward gas-guzzling vehicles? No, just the opposite”

As evidence, he posts the graph below, without commentary as to how it relates to his contention.

Chaits Choad1 Quite clearly, there’s an uptick in fuel efficiency, of all vehicles-makes, starting right before 2005. Automobiles, of course, are complex machines engineered well in advance of manufacture. It follows that automakers started designing these 2005 models in 2003 or thereabouts. At that time, the height of the “war on terror,” the U.S. was initiating military action against Iraq. Mideast strife, as always, exerted an upwards pressure on gas prices. Auto manufacturers understood this obvious historical trend, and they acted on it, by allocating more resources to design concepts that would maximize fuel efficiency.

Chait, on the other hand, interprets the above graph as a success story in government market manipulation. As he understands it, auto manufacturers gave priority to fuel efficiency due to fuel efficiency mandates, known as Corporate Average Fuel Economy standards, that were legislated by the 2007 Energy Independence and Security Act. President Obama then melded this regime with the Clean Air Act tailpipe emissions standards for greenhouse gases. In so doing, his administration accelerated and increased the targets.

As noted above, auto manufacturers require long lead in times to put out a finished product. Therefore, fuel efficiency standards enacted by Congress in December 2007, which Chait identified as the causal factor for the increased fuel efficiency depicted by his chart, couldn’t have impacted the market until 2009 at the earliest, and more likely 2010. And that’s assuming these regulations had any effect. As is visualized in the historical gas prices chart below, gas prices have remained high, due both to geopolitics and rising demand from developing countries. This is a pretty big confounding variable, conspicuously absent from Chait’s analysis.

Chaits Choad3 In any case, Will is right regarding whether Americans are flocking to gas guzzlers. See the chart below. It depicts domestic auto and light truck sales since 2005; the data comes from the Bureau of Economic Analysis. The X axis is ‘months since January 2005.’ The Y axis is ‘units sold.’ The blue line is ‘domestic autos. The red line is light trucks, defined by the Bureau of Economic Analysis as “trucks up to 14,000 pounds gross vehicle weight, including minivans and sport utility vehicles.” The red line’s rise is conspicuously steeper:

Chaits Choad2This is actually the second time in a week that Chait’s made a weird claim about environmental regulation.

Seven days ago, in a short post to his New York magazine blog, he claimed that, “When President Obama leaves office three years from now, the major policy story of his second term—barring some kind of unforeseen invasion—is likely to be climate change.”

When I read it a week back, Chait’s contention struck me as strange. He wrote that climate change would be “the major policy story” of Obama’s second term, only days after one in a series of significant deadlines for the implementation of the Affordable Care Act, the President’s signature legislative achievement. Given that the press has been obsessing over the Affordable Care Act, and, moreover, that the law’s execution will unfold over the next few years, it would be weird if the media suddenly put healthcare on the backburner, and instead elevated climate change to the top right fold of page A1.

Indeed, Chait mistakenly seems to believe that the President’ climate policies are under the Krieg lights. For example, the EPA on Wednesday published the Carbon Pollution Standard, the agency’s signature climate initiative was published in the Federal Register. This is a major move, but media coverage was sparse. As far as I can tell, not even the New York Times bothered to report the rule’s publication.

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