If You Subsidize Stupid, You Get More of It

If you subsidize stupidity and inefficiency, you get more of it.

This is Economics 101, but it's new information to politicians on both sides of the aisle who are toying around with the idea of giving Detroit a $50 billion "loan" in order to encourage them to make more fuel-efficient cars.

At first blush, the idea might seem to have merit until you realize Ford, General Motors and Chrysler are already making and selling these car in Europe.

But wait. It get better. It turns out that these same companies used to make more fuel-efficient cars in this country.

In 1992, American car buyers had the choice of 33 new car models that had a combined city and highway EPA rating of at least 30 miles per gallon.

For the current model year, there are just 12.

In 1992, a two-wheel-drive Ford Explorer had better fuel efficiency -- 17 mpg -- than the same model in 2008, which gets 16.

General Motors currently doesn't have ANY cars that top 30 mpg combined.

The good news, is that General Motors intends to change that by introducing the "Cruze."

And when will this car arrive? Not until 2011!

And how many miles per gallon will it get? Just 45 mpg on the highway -- about 13 mpg LESS than a fuel-efficient Geo Metro made 14 years ago.

And what will General Motors spend to achieve this "progress"?

Over $500 million.

Unbelievable.

Welcome to Detroit today.

And let's be clear: the problem is not with American workers; it's with American management.

That is the stupid we are subsidizing.
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