Back on Jan. 20, 1940, Winston Churchill said in a speech that "Each one hopes that if he feeds the crocodile enough, the crocodile will eat him last." This metaphor, about appeasement, appropriately describes what General Motors (GM) , Tesla (TSLA) and Nissan Motor (NSANY) are asking from the U.S. federal government regarding the $7,500 tax credit for electric cars.
Having already collected more of this benefit from this U.S. taxpayer program than any other companies, these companies are now upset that their turn at the taxpayer's teat is running out, and that other automakers are lining up to rob the taxpayer after they are no longer eligible. So, what are they effectively suggesting in this new lobbying effort? Rob the taxpayer even more!
This is so insane that I am having trouble believing what I am seeing. The problem with the automotive industry is not that it is under-regulated. The problem with the industry is that it is over-regulated.
I could have sworn that it was just a moment ago that the automakers were complaining about the government instituting tariffs, which will increase the prices of their products -- either from final assembly lines located abroad, or from components that are sourced from international plants. And they are right about that. Tariffs are bad, and a form of government intervention.
What the automakers don't seem to get -- or maybe they get it but choose to be shamelessly self-contradictory anyway -- is that if you concede the point that the government should or could regulate you, then you cannot complain when the government regulates you in a way you suddenly dislike. And that's where Churchill's words of wisdom from 1940 set in: "Each one hopes that if he feeds the crocodile enough, the crocodile will eat him last."
A government large enough to force the taxpayer to subsidize electric cars, is also large enough to impose tariffs. It's also large enough to impose a $100 per hour minimum wage. It's also large enough to ban the sale of cars. And to expropriate your entire company by the stroke of a pen.
The automakers are so short-sighted. They want to give the government the power to interfere in their business, not realizing what kind of a precedent it sets. If the government can do this, what can't it do? What's the limiting principle?
And guess what: The automakers won't like all those other things, that it will have unleashed.
So, what should these automakers do? What should they ask in terms of government policy?
It's very simple, actually. They should ask what every other business should ask:
- Stop telling producers what kind of cars they must build.
- Stop telling consumers what kind of cars they must buy.
- Don't tax, don't subsidize, and don't impose red tape. Leave us alone.
Car companies should be free to make whatever number of electric cars they want, that they think consumers will pay for with their own money. What they should not do, is to ask the taxpayer to pay for them, or to mandate their production or sale.
In other words, don't try to appease the crocodile, hoping he will eat you last.