The widespread adoption of cars over the last century has clearly benefited societies across the world as a whole. Today’s cars are nothing like the ones your great grandparents drove. Free market forces have meant they need to constantly evolve to remain competitive. In 2017, cars are generally more efficient, safer, and faster than ever before.

The Car Industry: How Governments are Trampling the ‘Invisible Hand’

The future of transportation, we are told, is electric.

Like the horse and carriage, the combustion engine will be relegated to the history books. And, perhaps, rolled out at local fairs as a novelty ride for the kiddies.

In the early 1900s, free market forces pushed the horse and carriage out of mainstream use. Consumers saw the advantages offered by automobiles, and they chose to buy them instead.

People acting in their own best interests would not have surprised Adam Smith. He coined the term the ‘invisible hand’ in 1776. You’re probably familiar with his theory. It states that when everyone pursues their own individual interests, this ultimately benefits society as a whole.

And the widespread adoption of cars over the last century has clearly benefited societies across the world as a whole.

Of course, today’s cars are nothing like the ones your great grandparents drove. Free market forces have meant they need to constantly evolve to remain competitive. In 2017, cars are generally more efficient, safer, and faster than ever before.

A small percentage are even powered by electricity. And, if nations stick to the Paris climate accord, that percentage could top 6% of the world’s total cars by 2030.

That’s an admirable goal. In fact, 100% electric is an admirable goal too. All companies need to do is create electric vehicles that are superior to their fossil fuel-powered cousins. The invisible hand will take care of the rest.

Unfortunately, that’s unlikely to happen. Governments in the UK and France have already outlined plans to ban petrol and diesel vehicles by 2040. Other national governments are likely to follow.

As you know, governments are rarely content to watch the ‘invisible hand’ play out. They’re filled with bureaucrats, after all, who know better than their constituents. And they’re not shy about legislating their beliefs into law.

This is the path governments are taking to ensure you’ll have an electric vehicle parked in your garage. Or, better yet, have an app that can summon a shared electric vehicle at the push of a button.

When governments push through measures the market is not ready for, it inevitably leads to bigger problems than they tried to solve.

If car makers are told they only have 23 years left to make petrol cars, their incentive for further innovations evaporates. The efficiency and performance improvements you’ve seen over the past 23 years will not be repeated. The invisible hand has been slapped back.

Sure, car companies will have to pour money into producing better electric vehicles. But they’ll no longer be competing with petrol cars. Their only competition? Other EVs.

And the fact that, even in 23 years, you’ll need to be forced to buy one should tell you something. Global governments, at least, expect electric vehicles to remain inferior.

Bernd Struben

Bernd Struben

Bernd Struben is the lead editor at The Australian Tribune. Bernd makes use of his extensive network to bring you the top stories you need to know about each day. Stories the mainstream may miss. Or bury somewhere you’re unlikely to ever read them. Bernd studied aerospace engineering and journalism at the University of Michigan, before graduating with a degree in economics. Over the past two decades he’s worked in media, management, and finance in the US, the Caribbean, Europe, and Australia. His other role, as the editor of the Port Phillip Insider, puts him in a unique position to read Australia’s most exclusive financial advice. Some of which he shares with readers of The Australian Tribune for free.
Comments: 9

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  1. If we are able to charge our cars and power our houses using solar panels and lithium batteries, I wonder what government will tax to offset the loss of revenue from fuel excise and GST…a tax on sunshine?

    1. Why not just tax personal Carbon Dioxide ‘pollution’…..that is…..the air (the ‘SPENT air’) you exhale every day. A fair tax for everyone, lol.
      Don’t or can’t pay your CO2 tax?….uh-oh…..
      ..the MAXIMUM PENALTY for CO2 tax evasion?….= obviously Goodbye!!

    2. Jeff
      “a tax on sunshine?”
      That is what Spain has done , aimed more at home solar but still applicable to EV’s

  2. In the early days of the automobile Governments passed laws such as requiring a person ringing a bell walking in front of the infernal contraption
    even in pictures in the 30’s and 40’s in New York , horse drawn vehicles were still in the majority.
    Not only was it the cost, but the major issue was availability and quality of fuel.
    A key issue with ICE vehicles is pollution and smog which are major health and resulting productivity GDP issues
    EV’s were actually amongst the first motor vehicles, but batteries were the issue that relegated them to limited applications.
    Prior to Tesla there were quite a few fantastic EV’s but they eventually failed – no charging infrastructure, Elon Musk at the beginning approached the major US manufacturers offering them a partnership in a National Charging Network, they laughed at him, he went ahead and built it anyway, but an exclusive network, which is why Tesla stole the march. GM produced some excellent EV’s, but no charging network, Americans are funny, if you can’t drive to California (even if you never do) in a car it is excluded from consideration, Tesla’s you always have been able to do so.
    The situation changed with the VW disaster, as a key aspect of the US compensation package the OBAMA Govt forced VW to build a Nationwide network of Superchargers known as Electrifying America. Now a real Market exists for all the Other EV builders such as Fisker ( has patents on improved batteries and magic EV’s from the past and planned) and the major Auto Manufacturers announced plans to build a range of vehicles, now they can be driven to California.

    AS GW unfolds and the costs of the consequences mount , they will be evidence of the absolute failure of the markets and “The invisible hand”

    Prudent investment must consider future value and part of that is being able to live a worthwhile healthy life and retain or build asset value

  3. Amazon has patented a device that is a wrist mounted device that measures and transmits the movements of the hand, for use in their warehouses as a KPI measure of the “productivity” of their Warehouse pickers and packers who are forced into a robot like role almost at the limits of human resilience on a minimal pay structure

  4. BUREAUCRATS ARE SOON TO BECOME AS OBSOLETE AS THE PETROL CAR, THANK GOD.
    THEY WILL BE REPLACED BY ROBOTS, AND HAVE TO ACTUALLY WORTK FOR A LIVING.
    NOW THERE IS SOMETHING TO LOOK FORWARD TO !