Government Regulation of the Automobile

Federal regulation of passenger automobiles is by far the most extensive case of government influence on a consumer product. There is no close second. Moreover, that regulation is extremely burdensome and the outlook is for more rather than less.

Specific regulations cover almost every aspect of the vehicle, including design, production, and operation. Government is directly involved in setting standards for such basic items as engines, bumpers, headrests, seat belts, door latches, brakes, fuel systems, and windshields, as well as the type of fuel that can be used. Yet among this vast array of government paperwork and directives there is no coordination of the various regulatory agencies administering them. The regulations, and the regulators, often work at cross-purposes.

For example, the law to control emissions reduces fuel efficiency. The government's requirements concerning side-door guard beams, energy-absorbing steering columns, and other safety features have added about 200 pounds to the weight of an automobile. These government actions lower fuel economy--and generate more pollution in the process.

In turn, fuel economy standards have forced the manufacture of smaller, lighter cars that are inherently less safe than the heavier cars that would otherwise be produced. When two cars of different size collide, the safety advantage lies with the occupants of the heavier vehicle. Also, in single vehicle accidents (such as hitting a tree), the occupants of heavier cars are likely to suffer fewer injuries.

The fuel efficiency standards applied to cars made in the United States after 1990 are estimated to result in over 2,200 additional traffic deaths every year. Overall, safety and emissions requirements add more than $2,500 to the price of the average new automobile. That's a stiff hidden tax on the American motorist.

In turn, the higher cost of new automobiles resulting from the hidden regulatory tax means that many people are driving their old cars longer because they cannot afford to replace them. As a result, the nation is not getting the intended benefits of the host of expensive safety-environmental-energy regulations that have been promulgated.

From the viewpoint of the bureaucracy, it is easy for government to regulate business--but not always effective. For example, by far the major cause of automobile accidents is driver error, often on the part of drunken motorists. Nevertheless, regulation concentrates on the companies that make and distribute the products that people use, rather than on the way people use them.

Perhaps the saddest example of the unanticipated effects of regulation is the case of airbags. Because some automobile passengers do not use their seat belts, the federal government requires the installation of more expensive passive-restraint systems, notably airbags that inflate in a frontal collision. Yet, airbags have generated serious adverse side effects not taken into account by the people writing the regulations.

Approximately 30 children and 20 adults were killed by airbags in the years 1991 to 1996. The problem arose because the National Highway Traffic Safety Administration (NHTSA) required the bags to have enough force to protect a physically mature adult male not wearing a seat belt. The regulators ignored warnings about the different impacts on children and smaller adults, especially women.

Public outrage is forcing a modification of this poorly thought-through requirement. However, NHTSA still seems determined to focus primarily on the case of adult males not using their seat belts, relying on special modification for women and children. Nevertheless, children would be safer without airbags.

Seat belts could greatly reduce fatalities at a lower cost than airbags--and without their adverse side effects--if a combination of education and enforcement increased their usage substantially. Similarly, stronger enforcement of anti-drunk driving laws would be much more effective than the status quo in motor vehicle safety regulation.

The government's CAFE standards, covering "corporate average fuel economy," are also counterproductive. By raising the cost of new automobiles, the standards make it less likely that consumers will trade in their older, less fuel-efficient cars. On balance, the CAFE standards do not reduce auto emissions or even reduce fuel consumption. Eliminating CAFE standards would surely be helpful.

The costs of the many programs to regulate automobile safety, fuel economy, and emissions are far greater than their benefits. It is time to adopt less costly alternatives to achieve desired public policy.

Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University in St. Louis.

For more information ...

Ten Thousand Commandments. Federal regulations have a more significant impact on the economy than does the federal budget. (Competitive Enterprise Institute, 1998).

Request PolicyBot documents #7200304 (summary, 2 pp.), #7200417 (part 1, 16 pp.), #7200418 (part 2, 17 pp.), and #7200420 (part 3, 13 pp.)