Stale Cafe, Fidelity Bond Foolishness, Oil Prices and 'Folk Economics'

Stale CAFEBy Paul Godek, Competition Policy AssociatesNot only does CAFE set minimum average fleet gas mileage standards for firms selling passenger vehicles in the United States, the standards apply separately to two sources of vehicles - domestically-produced and imported. The reason for that distinction lies in the political influence of organized labor. Imports of Japanese cars surged in the 1970s, and the low profits on domestic small cars were leading the Big Three automakers to displace domestic small cars with captive imports.Fidelity Bond FoolishnessBy James P. ClarkBecause fidelity bonds do not appear to be good investments for the banking industry as a whole, the banking agencies should not require financial institutions to buy them. Whether to buy fidelity bonds should be left up to bank management. Buying a fidelity bond may be a prudent investment in some cases, such as when an institution is thinly capitalized. But in light of their high cost, banks that buy fidelity coverage would probably be wise to opt for a high deductible.Oil Prices and 'Folk Economics'By Paul H. Rubin, Emory UniversityIf we are to make headway in explaining the benefits of free markets to those untutored in economics, we cannot begin with supply and demand. We must go beyond conventional economics and consider folk economics - human intuitions about economics that are rooted in our social evolution. We must explain that, contrary to those intuitions, wealth creation and free markets are beneficial to society because of the benefits of the wealth creation and efficient allocation that free markets encourage