Changing the regulatory debate from More-vs-Less to Good-vs-Bad

Jan 302010


In the fall of 1964 the movie version of Nikita Khrushchev calls General Kuraev to ask (according to the English subtitles) “Then why your colleague killed himself?”

The answer: “If you mean Colonel Glushko, he had some troubles with his family life.”

This conversation took place because Khrushchev had been tipped off about vague things going on behind his back. Glushko had learned about them in greater detail, but he was killed by Khrushchev’s enemies before he could report to those who needed to be warned. To Khrushchev, the murder is described as a suicide due to family troubles. Yeah, right.

Here’s another one: “Congressman Blow is resigning so he can spend more time with his family.” Translation: Congressman Blow got caught and is leaving before the voters throw him out.

Another: “Wally is leaving the company to pursue other business opportunities.” Translation: Wally would be getting fired if he didn’t.

Yet another: “The management of the company is being re-organized. Joe will be in charge of special projects.” Translation: Joe will be leaving the company soon, but is being given time to polish his resume and look for other work.

I think we can also add the following one to the list. “Toyota is recalling cars due to sticking accelerator pedals.” Translation: Toyota has enemies in high places in the current regulatory regime.

Can anyone recall when carmakers weren’t doing recalls or getting sued over sticky accelerator pedals? For some strange reason, after decades of improvements to car safety, after advances in materials and production techniques, cars somehow continue to be made with sticky accelerator pedals and linkages. Curious, isn’t it, that there is no lasting solution for a simple mechanical problem?

Maybe Toyota’s quality really is slipping, but the latest news would be a little more credible if it wasn’t something as trite as sticky accelerator pedals. It’s almost as if the media/government are winking at us as they say it. And now, instead of simply fixing the problem, Toyota is going into public apology mode reminiscent of the Soviet show trials of the 1930s.

Respected automotive reporter Paul Ingrassia says Audi was accused in the mid 1980s of having a similar problem. “But the issue, fed by media hysteria, turned out to be bogus.” But Ingrassia says this time the problem “appears to be the real thing.” I’m glad he said “appears to be.”

Maybe Toyota really has a problem. We simply have no way of knowing at this point. One thing we do know, though, is that a successful Toyota is a threat to its government-run competitors at General Motors. When the chief regulator also has a political and financial interest in promoting one of Toyota’s competitors, it’s best to reserve judgment.

We need to replace our old Toyota Corolla soon. We used to buy Fords, but never had so few repair problems as we’ve had with our Corolla. It sounds like Ford is on a comeback, which is good, but we don’t want a new car. We want a pre-2009 model, so as to get one before Toyota started making the cars larger and with lower gas mileage. We’ve put it off because the stupid cash-for-clunkers program took most of them out of the used car lots. But maybe it will soon be a good time to buy. With all of the current media hysteria, maybe there will be some good deals.

Dec 192009

Remember how people said the financial crisis meant we needed more regulation? Recently there have been reports like this one in the WSJ.

There also has been in-fighting among different bank regulators, with each debating the health of giant financial institutions, say people familiar with the matter.

Sounds like banks and other businesses had better spend less time trying to figure out what their customers want, and more time trying to figure out what regulators want.