automatic for the people

“I don’t want to run auto companies,” President Barack Obama says, and given the current state of the domestic auto industry, who can blame him?

Instead, the President has adopted an informal consulting role at General Motors and Chrysler. His duties mainly include minor issues like global financial operations, human resources and engineering. You might consider him the backseat-driver-in-chief. He’s not actually running the operation, he’s just calling the shots.

Accordingly, Congress and the Obama Administration drafted a bankruptcy plan that exchanges the federal bailout money for a 60% ownership stake in GM. They also forced out Rick Wagoner and installed Fritz Henderson as CEO and presumptive leader of the new GM; he’s the one who will get to make all of the decisions that are pre-approved by the House, Senate, White House and assorted Czars.

The plan blocks GM from importing cars the company already manufactures overseas that are smaller and more fuel-efficient. Instead, Obama is asking GM to retool U.S. plants so they can create “greener” models here.

Who is Barack Obama to say what kind of cars should be made, and what we want to buy? In a free market these determinations are made naturally, without piling onto the federal deficit and without running afoul of the Constitution.

The Federal Government was never intended to run private industries like automobile manufacturing, banking and healthcare. Its powers were specifically limited so that citizens could be free to live, work and spend as they please, as long as they respect others’ rights to the same.

Since the government is run by politicians and not businessmen, it is mainly capable of making political decisions, rather than economic ones. Politicians are biased toward short-term gains that may help them in the next election, rather than long-term goals that are more efficient, practical or beneficial. They’re also biased toward headline-friendly actions, rather than thoughtful inquiry, patience and critical discovery.

An industry operated by the government will always be at the mercy of conflicting interests – politics vs. profit. So it’s no surprise to find Obama also raising the Corporate Average Fuel Economy (CAFE) standards, a political decision that will have a direct, negative impact on GM.

The higher CAFE standards will add at least $1,300 to the cost of producing a new car. This will result in fewer new car sales and older cars staying on the roads longer. The unintended consequences of this move led to a second fix; the “cash for clunkers” bill was signed into law last month, paying drivers who trade in their old cars (limited time offer, restrictions apply).

CAFE standards have never succeeded in reducing gasoline usage or slowing oil imports. Instead, they provide an incentive for people to drive more, thus negating any fuel consumption savings the government now projects.

Proponents say such legislation forces technological advances like the catalytic converter. But as Fred Schwarz writes in the National Review, its invention “amounted to something like a miracle,” sweeping its engineers into the National Inventors Hall of Fame. Says one, “in the catalytic converter we had two major breakthroughs: A new process and new materials that didn’t exist before.”

We’re told Obama is a miracle worker (or in the words of Newsweek Editor Evan Thomas, “a sort of God”). It looks like we’ll need one.