"Between panic and glee has been the tone of reporting about a nifty new $11,000 Chinese electric car that is supposedly going to "hit Detroit like a wrecking ball," in the words of a New York Times headline.
The car is a plug-in hybrid by China's BYD. While it may be a fine car, the alarums strategically leave out an important point. A cheap and desirable Chinese electric vehicle would be a threat to Detroit only because, under our easily satirized fuel mileage rules, the U.S. requires its automakers to sell electric vehicles they wouldn't otherwise make, which customers don't want, and which can't command a profit.
In all likelihood, companies like Ford, GM and Chrysler-parent Stellantis, whose specialty is conventional vehicles, would otherwise continue to focus on conventional vehicles, because demand for them remains strong. For reasons I'll get to, it's not clear a supercheap EV would even matter that much to Tesla, given America's taste in cars.
But the moment is interesting for another reason. What logic predicts, the data have been starting to show. Green energy use is rising, and fossil-fuel use is rising even faster. Energy intensity, or the amount of energy consumed per unit of global gross domestic product, was falling at a rate of almost 2% a year for two decades. Now it's falling at barely 1%.
Though it's early days, this is exactly what you would expect if green-energy subsidies mainly subsidize more energy consumption overall rather than emissions reductions. It turns out, despite the intuitions used to sell climate pork to the public, energy demand is not capped. Fossil fuels don't stop being useful just because green energy is subsidized. If you want to curb emissions, you have to impose a carbon tax.
OK, I've long satisfied myself that this is well understood by wonks, by John Kerry, even by Paul Krugman when he isn't pretending otherwise. The New York Times itself belatedly woke up last week to what it calls the "green energy paradox," though it lapsed back into unreality by concluding that energy use, rather than ineffectual climate policy, therefore is the enemy.
For the time being, the discovery of the truth is likely to lead to a perverse doubling down on green subsidies. In fact, the most interesting thing to observe will be how long and restlessly government tries to persist in a policy it knows is self-defeating.
It's a good time to remember what the late evolutionist John Tooby, who died in November, taught us about "coalitional instincts."
His most important insight was that "stupid" or "weird" ideas are actually more powerful in rallying coalitional solidarity than truthful ones, because truthful ones can be recognized by any rational person.
"The more biased away from neutral truth," he wrote, "the better the communication functions to affirm coalitional identity."
"Coalition-mindedness," he added, "makes everyone, including scientists, far stupider in coalitional collectivities than as individuals."
I submit you can't understand elite beliefs and behavior in our increasingly conformity-enforcing society without the concept of coalitional instincts. You might also start to see the utility of a Donald Trump-like figure to act as wrecking ball when elite beliefs become dysfunctional and self-defeating.
Getting back to the $11,000 Chinese EV, if Americans wanted cheap transportation, they'd buy mopeds and 50cc scooters the way people in other countries do. Americans want a lot more from their vehicles, they tell us with their pocketbooks: roominess, luxury, technological refinement, amenities. This turns out to be especially true of the EVs they buy, which tend to be large, powerful and luxurious, and therefore notoriously climate-unfriendly.
So the threat of the supercheap Chinese plug-in vehicle is exaggerated. Besides, in a further perversity, our climate-warrior government already has a 25% tariff to protect Americans from affordable and attractive Chinese EVs and is contemplating greater restrictions on national-security grounds.
The real menace to Detroit is the obvious one. It has nothing to do with China and everything to do with a U.S. government requirement that U.S. companies build money-losing cars that Americans don't want and that politicians lack the will to make them buy.
And climate change? I can't say, because science can't say, whether a doubling of atmospheric carbon would lead to warming of 2 degrees or 4 degrees Celsius as the "consensus" models suggest, or 1 degree or 6 degrees as other, equally reputable models suggest. But without coordination, most governments adopted payroll taxes in the last century though these penalize socially useful work. It's far from implausible that governments would eventually adopt carbon taxes, which are better economically." [1]
By the way, BYD just introduced a luxury sports car. Do Americans want it?
1. EV Madness and the Chinese Menace. Jenkins, Holman W; Jr. Wall Street Journal, Eastern edition; New York, N.Y.. 02 Mar 2024: A.13.
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