Sunday, April 3, 2016

When Giants Collude

Sometimes governments and industries work against consumers

An edited version appears as a "Local Opinion" in The Washington Post.

A subsequent "Letter to the Editor" by another reader can be found here.

Oh no. The dreaded "Check Engine" light. And my annual Virginia Vehicle Safety Inspection was due in a month. I knew my car wouldn't pass and couldn't stay on the road with that light on. Never mind that the light had nothing to do with the safe operation of the vehicle.

And never mind that in a 2015 study the U.S. Government Accountability Office "examined the effect of inspection programs on crash rates related to vehicle component failure, but showed no clear influence." AAA Public Affairs Vice President Mike Wright added, "Nobody can prove with any degree of certainty that spending the money, suffering the inconvenience of getting your vehicle inspected, actually produces desired results."

I was fortunate to find a repair shop that found that my car's motor was "running a little lean". With a little cleaning and TLC, the light went out and I was back on the road with my windshield stick in place. Just think of all the lives saved ... see you next year! And in years past I had to replace a functioning rear taillight assembly because of condensation and a faulty dashlight indicator – both at significant cost and neither of which degraded public safety.

Virginia has in place a personal vehicle safety program ostensibly overseen by the State Police (gotta give it that authoritarian air) that cannot be shown to enhance public safety and is administered by the same people that apply the fix to any deficiency. By contrast, neighboring Maryland only requires that a physical inspection take place upon transfer of ownership – a reasonable consumer protection.

At the macro level, forced consumption favors incumbent producers over newcomers and consumers. Columnist Jim Pethokoukis notes, "Competitive capitalism good, crony capitalism bad. One rewards innovation, the other manipulation ... So obvious policies might be to remove barriers to startups, less government help for incumbents, and more anti-trust actions." The Economist offers that such policies:
...would aim to unleash a burst of competition to shake up the comfortable incumbents of America Inc. It would involve a serious effort to remove the red tape and occupational-licensing schemes that strangle small businesses and deter new entrants ... It would revisit the entire issue of corporate lobbying, which has become a key mechanism by which incumbent firms protect themselves.
A government program that requires the purchase a good or service in return for a nonexistent public benefit is illiberal and anti-consumer, favoring incumbent providers. Further, a program that weighs heavier on the poor (who likely own older vehicles) than it does on the wealthy (who likely own new vehicles) is inequitable.

Two-thirds of states see no need to impose the burden of personal vehicle safety inspections on its citizens; Virginia should end its. And the Federal government should adopt policies that are pro-market and pro-consumer rather than pro-business. A democratic economy and its people deserve to be served – not served up.