a preview for api tomorrow

Classroom activities on regulation

• ❑ It is 1964. The six members of the European Economic Community (dominated by France and W. Germany) are drafting the first Common Agricultural Policy. Since they are all relatively rich and can't imagine that Poland will want a piece of the CAP subsidy for another 40 years, they can afford give in to demands from important national constituencies, like chicken farmers in Germany who say that cheap Tyson frozen chicken from America is putting them out of business. The "panel of trade experts in Geneva" that would eventually become the WTO rule in favor of the United States and say, "put across-the-board tariffs on some stuff that will mostly hurt West Germany." Choose three items to tax up to 25%, remembering that you can take this opportunity to throw a bone to another non-chicken ag constituency: potato starch, sauerkraut, lederhosen, light trucks, expensive brandy. Hint: Volkswagen makes something called the Kombi van. Hint 2: The Brandy is probably French; you don't care about Italy; and you can't tell Benelux apart from each other (neither can they).
• ❑ You are 1973 EPA Deputy Assistant Administrator for Vehicular Pollution Eric Stork. "We [have] to find a way to keep the [1970] Clean Air Act from being blamed for putting American Motor Company out of business," you say. Although Congress made explicit targets for cars' fuel efficiency (1985 CAFE 27.5), it added vaguely that the EPA "shall, by rule, prescribe average fuel economy standards for automobiles which are not passenger automobiles." AMC makes the Jeep Wagoneer. Find a way to allow Detroit to meet the Clean Air Act targets and still make large, inefficient vehicles. Hint: Your light truck tax from #1 is still in effect, and Detroit automakers all seem to think that it would be fair to exempt light trucks, say, up to 6,000 lbs Gross Vehicle Weight and set their target at 20.7. After all, they only make and sell a few vehicles are in this category (Wagoneer, Blazer, and Bronco).
• ❑ You are Jimmy Carter. The American economy hits more recession in 1979. The clever Japanese have figured out that they can ship light trucks to the US in two parts, and bolt them together on the docks because "auto parts" are not subject to the chicken tax. Appease the Big Three and the UAW with one Customs Service ruling.
• ❑ You work for the EPA under Reagan. Mention that the standards for emissions and efficiency haven't been changed since 1973. Ha! You thought I was serious! You were gonna do it!
• ❑ You are NHTSA. Pesky safety advocates and their allies, personal-injury lawyers, have begun to notice that SUV drivers are far more likely to die in rollovers than car drivers because SUVs have a high center of gravity. A 1980 segment on "60 Minutes" shows that a Jeep can flip over even on a dry, open road if the drivers swerves abruptly, as if avoiding a child or a tricycle. You "look at the difficulties of coming up with rollover evaluations" and of "repeatability" of a test. Then do nothing.
• ❑ You are a congressional committee under pressure in 1984 to close tax loopholes (deduct full purchase price for depreciation over just three years) that encourage realtors, sales representatives, and consultants to buy the largest, gaudiest, most expensive new Cadillacs and Lincolns they can get their gauche little hands on. Pretend to close the loophole. Hint: Farmers still want to be able to deduct their light trucks up to 6,000lbs GVW, and you always do what farmers tell you. Detroit agrees, especially since Japanese light trucks are still subject to the chicken tax.
• ❑ An AMC ad shows a Jeep careening off tall sand dunes and then driving off into forests. NHTSA says that the Jeep is in fact highly unstable and prone to roll over. Devise a rule that will cost pennies per vehicle, make the Jeep seem more adventurous and attractive to young buyers, and not do anything about its instability. (You can pretend to be either NHTSA or AMC here. It doesn't really matter.)
• ❑ You are Ford. You want to roll out the 12mpg Expedition, but it will totally kill your light-truck CAFE. One of your lawyers points out that in a previous bit of pork for corn farmers, vehicles that can run on "E85" (85% ethanol, which is available at few gas stations, alongside regular fuel so consumers have ample opportunity to pass it up) can be said to get "superb gas mileage." By adding a small sensor that will allow the engine to adjust automatically, you can count a 27mpg Ford Ranger as getting 44mpg. Determine exactly how few of these in a given year you must produce in order to meet 20.7mpg with the introduction of the Excursion. If you exceed 20.7 CAFE Chrysler and GM, played by other members of the class, will laugh at you. Make sure to inform consumers of this unique capability in a footnote to the Appendix of the owner's manual.