Every entrepreneur that’s in the business of making something new or better would love to get government subsidies to help them “reach economies of scale”, or “pay for the social benefit of being green”, or some such thing. Of course they would. Government intervention can reduce the risk of innovation, and can even force customers to buy your product whether they like it or not. Such subsidies are fundamentally unjust, however, because in effect, taxpayers end up paying for the research and carrying the risk, without being able to share in the entrepreneur’s profits should he succeed. I’d also like to do business on those terms. After all, the only cost of such a subsidy is a pledged vote. It would put a floor below my losses, and boost my potential profits, all at some other sucker’s expense. Nice. And that sucker can’t even argue, because tax is the sole remaining debt for which people still get thrown in prison.

This Cato Institute paper from 2005 explains the problem neatly:

The current debate about U.S. oil policy is equally enlightened. It is dominated by a special-interest lobby whose primary interest is to enrich automakers and alternative-fuel producers, and by journalists whose enthusiasm for the green agenda has clouded their understanding of basic economics.

My question is, when a private organisation raises a prize purse, and the contenders look like this, who needs government subsidies anyway?

(Click on any of the images for the relevant Popular Mechanics page.)

I haven’t looked into the economics of each car, because that’s not my problem. The Tesla Roadster, for one, has already proven perfectly competitive and very, very desirable. All that’s required is an investor with his own money to stake on the notion that a market might exist. Governments are not only singularly unsuited to determine the latter, but have no right to gamble taxpayer money on it.

So welcome back to the glory days of the industrial revolution, when ingenuity, risk and free market capitalism built the modern world. And thanks to the X-Prize Foundation for demonstrating that the economics of human action and progress is alive and kicking.

PS: Prescient typo, perhaps, on www.tesla.com? “The associated domain name has been reserved by a GANDI’s customer and parked as unsued.”

Another knighted saint-in-the-making is spouting sanctimonious rubbish. This time it’s the former CEO of Shell.

“If the world is to end the threat from climate change, we need to produce more with less energy,” says Mark Moody Stuart in a column on the BBC website. He’s both entirely wrong, and perfectly right. Climate will continue changing and present threats, whether we produce more with less energy or not. But producing more with less energy is worth doing for its own sake. Sounds like profit to me. Okay, so far we agree.

“To address the climate challenge we need to reduce the carbon content of our energy by at least half,” he continues. But Sir Mark, that’s exactly what we’ve been doing anyway! I’m surprised you didn’t know this!

From a chapter on decarbonisation by Nebojsa Nakicenovic, in a United Nations University textbook chapter on the subject, I’ve copied this chart (note that the Y-axis doesn’t start at the origin):

And that’s where Moody Stuart goes off the rails. Claiming that he’s a great believer in consumer choice and markets, he proceeds to demand government regulation. In fact, quoted in a follow-up article, he’s quite explicit. He wants inefficient cars banned outright, and wants “very tough” efficiency standards imposed on other sectors too.

“Nobody needs a car that does 10-15mpg,” he says. So much for consumer choice.

The idea of government regulation of commerce and trade is, of course, as old as the hills. It’s usually made either by people who don’t understand commerce and trade, or by people who have a vested interest in government protection from competition.

You can bet your bottom dollar if a company or businessman lobbies for regulation, they stand to gain from it, somehow. Usually, CEOs gab about how governments should enforce their personal ideals of social or environmental consciousness only after they’ve retired. When they don’t, it’s because they have a vested business interest in regulation. They may, for example, have cornered a niche in social or environmental consciousness. Or they might feel their own company stands more to gain (or less to lose) from regulations than their competitors.

Take this Moody Stuart fellow, for example. What might his interests be? Creating a fluffy, green image for Shell? Perhaps. I know this is a huge issue for Shell (as I’m sure it is for other oil companies). Oil companies spend millions upon millions to do and say all the right things. It’s good marketing and good corporate politics. But he’s no longer CEO of Shell, and I can’t remember him being so adamant about fuel efficiency and “very tough” standards when he was actually in charge — even though it has been an issue, one way or another, since the 1970s.

But what other motives might he have? Well, let’s see. Now that he’s retired from Shell, he is a director at Accenture and a member of the Global Reporting Initiative. Now he’s suddenly demanding regulations. Guess who gets to “help” companies meet these regulations, at top-dollar hourly rates? Bingo, you guessed it: the GRI and Accenture.

I’m pretty sure there’s a benefit to Anglo-American of such regulations too. After all, Moody-Stuart is also chairman of Anglo, and he wouldn’t be demanding laws that would hurt Anglo. Perhaps it’s just that he wants other industries to be as heavily regulated as mining, to level the playing field for competition to attract capital. Or he wants to build a green and fluffy image at Anglo too. It could simply be something as crude as increasing the market (by government fiat) for profitable mining by-products to go into these fancier cars.

Just because the retired CEO of an oil company said more govenrment regulation is a good idea doesn’t mean it actually is a good idea.

Some retired CEOs waffle far too much. Perhaps they should be put out of our misery upon retirement. “Here, sir, your golden handshake, and your golden handgun. Thank you, and farewell.”

Imagine. That would profit Anglo American too.

The taxi industry is one of the most engaging examples of the self-reliance and entrepreneurial spirit of South Africans. It proved that despite a government that at first actively repressed economic activity, and since liberation consisted of paternalistic central planners who failed to deliver services such as public transport, South Africans were able to create a thriving industry that for all its faults supplied an essential need with remarkable efficiency and at a price that caters for the poor who need the service most.

On occasion, however, it could do with smarter marketing, which doesn’t highlight the industry’s failures instead of its successes. Witness, for example, this photograph, taken on Saturday 2 February 2008 at 15:00, at 100km/h on the N1 North near the Malibongwe Road offramp in Johannesburg. One hopes that the occupants got a substantial discount.

The Indian Tata group has unveiled the Nano, an aptly-named new car that will sell for just R17 500 (Rp100 000, or $2 550), not counting taxes and import duties. MyBroadband carries the AFP story — presumably because the Indian Tata conglomerate is heavily invested in South Africa, including in its telecoms sector — and has a picture, reproduced alongside.

Horrid, innit? But hey, it’s transport. And cheap transport at that. For the price, you’ll be hard-pressed to find a ten-year-old wreck in South Africa.

One would think that such a bold competitive move, bringing prices down and promising to improve the quality of life, employment opportunities and business prospects of millions of people who previously couldn’t afford the luxury of a motor vehicle, would be hailed as tremendous news. You’d think it would be held up as a symbol that free enterprise can yield success not only in the rich west, but also in the emerging markets of the south and east.

No. Rajendra Pachauri, chairman of the IPCC, which jointly won last year’s Nobel Peace Prize, is “having nightmares” about the prospect of a low-cost car for the masses. Despite the fact that the car has a tiny engine, meets emissions standards, has a claimed fuel efficiency number well ahead of even the smug hybrids of the rich, he is among the critics who reckon it can only contribute to noise and air pollution, and therefore it’s a bad thing. Better to keep cars expensive, so only the rich get to pollute the planet.

There, with one simple phrase, Pachauri betrays the nightmarish aim of the environmentalists. The sanctimonious elite seek to bar progress, and their anti-prosperity goals are aimed not only at the extravagant rich, but also at the ambitious poor, who are still climbing the ladder of rising prosperity and quality of life purchased by rising production and economic development. Can’t have the natives driving cars, now can we?

What people like Pachauri fail to realise is that prosperous people have the means and motive to do something about pollution and environmental quality. By keeping the poor pinned underfoot, all the self-proclaimed “socially conscious” set do is ensure that the poor will have higher priorities than being nice to the planet for the sake of the rich. All they will do is make sure the poor won’t have the means to protect themselves against the natural changes and disasters that are an inevitable part of living on this active planet of ours.

If the madder branches of the Cult of Gaia resemble suicide sects, the remainder appears to be into human sacrifice.

Comparative and competitive advertising is, generally speaking, prohibited in South Africa, by laws on the use of trade marks, unlawful competition, and by the Advertising Standards Authority code. Even parody is, in itself, no defence. Yet some of the best, most clever, and most memorable advertising is often comparative.

The classic case in South Africa, from the early 1990s (if memory serves) is the response by BMW to an advertisement by Mercedes-Benz. The latter was shown on the famous Chapman’s Peak route along the Cape Town coast, whence it left the road and plunged down the cliff. The driver survived, attesting to the safety standards of Mercedes. BMW responded with an advert showing its car along the same route, negotiating it safely. The payoff line was, “Beats the bends”. It was pulled after only a short run, but after many years remains both a well-remembered advertisement and a well-known media catchphrase.

The impact of competitive advertising on price, in particular, would be substantially beneficial to consumers. I’m often mystified by price advertising, since I often don’t have a point of reference that determines whether a price is good or bad. At best, I have a vague idea about which shops are more or less expensive.

I’ll grant that if competitive or comparative advertising is permitted, recourse should be both swift and punitive should the advertiser make demonstrably false claims about their competitor.

All rational arguments aside, however, the sequence below — not new, but made after the 2006 Car of the Year award — makes as eloquent a case as any for competitive advertising.

Yeah, Californians are suing each other over exhaust emissions now. They’re nuts over there. Must be something in the air.

This BBC report says a judge ruled against the state in a case brought by California’s former attorney-general, Bill Lockyer against six car makers. The case claimed that the car makers had created a “public nuisance” by making “millions of vehicles that collectively emit massive quantities of carbon dioxide”. Presumably they intended to be a less ambiguous, since I’m sure your average Californian would have considered the failure to make millions of vehicles for them an even greater public nuisance.

The court ruled that there is no law about what level of emissions constitutes a “public nuisance”, and laws are for elected legislators to write. Kudos to the judge for recognising this important principle. The losing side — the state government, that is — told the BBC that:

…the state brought the action on behalf of the people of California because national authorities had failed to act over setting emission targets.

“We do think that because the federal government has failed to act, this is a judicial obligation to jump in where those entities had failed to act.”

So why doesn’t the Californian government not sue itself to force itself to pass the required legislation? And if it was the federal government’s fault (of course it’s Bush’s fault!), why does the state government sue a bunch of innocent citizens who were only trying to solve the nuisance of having to walk everywhere in the brain-addling Californian sun?

If you’ve ever bought replacement ink for inkjet printers, you’ll recognise what a magnificent idea this is. Granted, you need to, ehm, hack the printer just a little, as GM demonstrates with this very cool trade show advert for Jeep: