Brain-Jockey

I Want My SUV: More Unintended Consequences On The Horizon

Written by Audrie Zettick on April 27, 2009

Being involved in government policy making is like watching sausage being made: after you’ve seen it done, you want no part of it. 

 

Guess that’s why I managed to escape my policy stints in some of the world’s largest government bureaucracies with a modicum of increased wisdom based on experience and a healthy dose of skepticism about government.  Among my lessons: 

 

Always assume your first try at a new policy won’t go as planned.  Triple the probability of it going wrong if you’re hell-bent on rocketing warp speed toward change. 

 

For good or ill (and usually for ill), there will be unintended consequences. Among many misfires we have had this year:

 

·         Banks on the dole.  Call it corporate welfare, bailout or stimulus, I was amused to see the supposedly strange (but predictable) behavior of some financial institutions: buying jets, remodeling offices and the like. (Reminder at old Slate article here:  I See Dead Bankers! Wall Street has become The Sixth Sense-filled with corpses who think they’re still alive.)

 

·         A knee jerk reaction as the U.S. House passed a bill requiring a whopping 90% tax on bonuses at AIG and other institutions that took TARP money–but it turns out many of these folks were working under a retention contract which promised them pay after they stayed a set length of time…and many were with the financially-healthy subsidiaries of AIG. So are we surprised when the talent needed at companies like this flee? Or that other financial institutions, hesitant to face micromanagement by the feds are scurrying to pay back TARP funds rather than stick with the Obama plan?  Oh, then there’s that problem with the bill being unconstitutional.

 

·         U.S. automakers GM and Chrysler had to be thrown multiple lifelines in the form of $17.4 billion to avoid bankruptcy, but it’s only the threat of that very bankruptcy that has resulted in movement toward hauling in labor and healthcare costs (see Chrysler in Canada here). 

 

Which leads me to the next unintended outcome of any new “economic stimulus” measures:  The success of car companies like KIA. 

 

With the U.S. government at the helm of GM and Chrysler, market forces go out the window.  President Obama has made it clear that he will “remake” the U.S. auto industry, ”forcing” consumers into smaller cars that are clean, economical and green.  During his campaign, he scolded auto makers for focusing on popular SUVS and not cars with improved fuel efficiency.     

 

 

Yet, KIA is currently building their first U.S. auto plant where their value-priced SUV, the Sorento, will be built.  My neighbors, many of whom had trailers hooked to their big SUVs at the recycling center this past Saturday to pick up free mulch, will be glad to know at least one company will still provide an SUV.