Thursday, September 21, 2006

What’s the UAW Think About This?

California files suit against the major automotive manufacturers over ‘global warming’. Well, not California exactly, more like the politically ambitious Bill Lockmeyer. GM, Ford, Chrysler, Honda, Nissan, and Toyota on the hit list. Depending on the prospects for success, expect other politically ambitious State AGs to try to muscle in for a piece of the action.

The suit seems to feature many of the same claims as the tobacco suits – quasi-scientific but vague claims of huge damages to the environment, etc. etc. However, unlike the profitable tobacco companies, huge verdicts against Ford, GM, and Chrysler could push them over the financial edge. And if that happens, among the victims will be the US Taxpayer.

Another major difference is that unlike cigarettes, cars are very important to everyone. A large jury award or expensive out of court settlement could easily drive up the costs of new cars, limiting demand, and placing the automakers further into the financial hole.

Rich and upper middle class families will still buy cars. The poor and middle class will get squeezed as the cost of lower end models goes up. The remaining US production capacity likely gets hammered.

Indeed, to the extent that the suit is successful in keeping people off of the roads, there’s going to be lots of intermediate economic fallout and readjustments. Going out for that ‘casual dining’ experience or to shop at the mall? Possibly not. There go lots of starter and low end jobs that all depend on people having the freedom of relatively low cost mobility.

From the environmental point of view, it’s ironic that this will likely lead the poor and lower middle class to keep older vehicles on the road longer and those pollute significantly more than the newer models.

It’s also true that if there was a real concern about automotive greenhouse gases in California, the simple and most direct expedient would to simply double, triple, or quadruple the state taxes on gasoline. Pass new, large excise taxes on new cars, or something like the Virginia Car Tax. Make it expensive enough, and people won’t drive. However, there’s no way to get this passed through the legislature, so the left is reduced to using the courts to legislate for them.

So, we have the option of trying to sneak around through the courts. The end result is likely to be the same, with the costs directly hitting the consumers as well as the workers at the auto companies, but without that messy democratic stuff like voting, elections, and accountability of the legislature.