There are ideal governments that some ideologues think will be born if they only dream about them hard enough; and there are actual governments, where politicians and bureaucrats respond to their ordinary incentives. Not every consumer wants to buy a luxury car at the cost of foregoing more of other things. We should also expect poor consumers, ceteris paribus, to buy more bottom-of-the-line Kias and Hyundais.
For idealistic lovers of government power, it might (and should) be puzzling why the government of New York City and of other municipal governments in America are suing the manufacturer of these cars because they are more often stolen (“New York Sues Hyundai and Kia over ‘Explosion’ of Car Thefts,” Financial Times, June 7, 2023). The move from New York City comes after “a $200mn consumer class action settlement last month,” which means that all members of the class will get a tiny amount of money on top of having benefited from a low purchase price.
Thieves are attracted to these inexpensive cars’ less efficient anti-theft features (which, the company says, still comply with federal regulations). The victimized owners may end up paying more in insurance, but it’s their own business and risk—just as it is for those who prefer not to buy a more solid, safer, and more expensive Mercedes.
A car with more features and gadgets is more expensive. Don’t government economists know that simple fact? Wouldn’t one think that do-gooder governments should spend their energy fighting car thieves rather than penalising poor or thrifty crime victims and their suppliers? If only the federal government were as thrifty as buyers of inexpensive Kias and Hyundais!
It is far from the only instance of make-believe Robin Hood governments actually hurting the poor and denying them the freedom to make their own choices. It seems difficult for governments to accept that there exist poorer individuals who pay for exactly what they want given their circumstances.
Any political theory incapable of explaining these realities is useless, if not mere propaganda.
READER COMMENTS
Peter Gerdes
Jun 8 2023 at 11:32am
It’s not crazy to think there are positive externalities associated with anti-theft systems that could justify government mandates. There are presumably fixed costs associated with car thievery and resale meaning that it’s plausible that the harder it is to steal your car the less likely your neighbor’s car gets stolen.
As such the real outrage here is the lack of fair warning. If New York had that belief it needed to pass a regulation that imposes higher fees on the owners of these cars.
It reveals that what’s going on is just a politician acting like people who file bogus slip-n-fall lawsuits looking for a payout. Yes, it’s antisocial behavior but it’s also what the incentives favor for decentralized government.
Pierre Lemieux
Jun 8 2023 at 12:14pm
Peter: Consider the following. If one sees this sort of problems in terms of externalities, one must also consider the positive externalities to those whose (sometimes more expensive) cars will not be stolen because car thieves prefer those with less anti-theft protection. If you have a choice between stealing a (pre-2022) Kia and an Escort, you choose the former. Similarly, those who park in the street would transmit a positive “externality” to those who have a garage. Numerous problems of externality arguments were surveyed in my Regulation article “The Threat of Externalities.”
Jon Murphy
Jun 8 2023 at 1:06pm
I don’t see the mechanism by which this would occur. Rather, I’d expect the opposite: if your neighbor’s car is more expensive to steal, then your car has become less expensive (relatively) to steal. To extend Pierre’s point, we may actually have a 3rd Law of Demand problem arise: if the Kia and the Bentley are equally difficult to steal, then the Bentley will be more likely to be stolen.
Craig
Jun 8 2023 at 1:30pm
“if the Kia and the Bentley are equally difficult to steal, then the Bentley will be more likely to be stolen.”
Could be, Professor, and I’m no auto thief, but I am led to believe that basically they want the ‘Honda Accord’ because apparently its not about the value of the car but the ability to fence the parts. The volume of Bentley cars isn’t very high.
Jon Murphy
Jun 8 2023 at 2:54pm
Ok, then choose something more comparable. The point remains.
Pierre Lemieux
Jun 8 2023 at 4:21pm
Craig: Your fencing point (are you sure you never were a car thief?) is interesting and illustrates something important in economic analysis. To do economic analysis, one needs economic theory: demand and supply, utility and cost, including opportunity cost, etc. But one also needs some knowledge of relevant facts that can can change how these analytical tools can be applied. The car thief is not just trying to minimize his gross costs (except if you include all opportunity costs in “gross costs”) nor to maximize his gross benefits: he is trying to maximize his net benefits. So even if a Bentley is worth so much that the higher cost of stealing it might be worth incurring, we need to have an idea of how the benefits will flow to the thief. Except perhaps if the thief is just after a quick joy ride, a Bentley must be very difficult, that is, very costly to sell (exporting is probably required, with all the attached costs), so there is a good reason to think that fencing the parts is the only component of the benefits, and even then, one wonders who would buy the parts. Thus, just from the demand side, we would expect that thefts of Bentleys would be relatively (relatively to the number of Bentleys) lower than the thefts of Kias.
David Seltzer
Jun 8 2023 at 5:22pm
“To do economic analysis, one needs economic theory: demand and supply, utility and cost, including opportunity cost, etc.” Costs can be cast in terms of assumed risk. The risks incurred in stealing the Bentley are higher than a Hyundai or Kia. Owners of Bentleys may live in well protected gated communities with private security people. As Jose Pablo points out,” the clearance rate for motor vehicle theft is 12%.” Expected success rate of 88% is not a bad incentive for thieves to engage in the practice of dispossessing owners from their Hyundai’s and Kia’s
Craig
Jun 8 2023 at 5:44pm
“The car thief is not just trying to minimize his gross costs (except if you include all opportunity costs in “gross costs”) nor to maximize his gross benefits: he is trying to maximize his net benefits. ”
Indeed, with respect to the costs a major cost is the contingent cost of getting caught. If I were to give you the choice between driving a stolen white Toyota Camry or a stolen hot color Bentley in South FL, which would you prefer? Of course you’re going to change the license plates, but a white Camry isn’t going to attract as much attention of course.
I am led to believe that they look for cars that are widely sold, also looking for cars that are a bit older, ie cars that will actually need the stolen parts. https://www.iii.org/fact-statistic/facts-statistics-auto-theft
At the moment the crime of the moment are people going around and simply cutting out the catalytic converter. They apparently can do the deed in 30 seconds or less and tend to prefer vehicles that are higher off the ground since they can more easily get under them.
“one wonders who would buy the parts”
Shoplifting/theft and online resale to bona fide purchasers in good faith is a pretty big problem right now. I also think there are more than a few auto mechanics/auto body shops that are less than scrupulous.
I have also read that cars can be exported in their entirety .
Pierre Lemieux
Jun 8 2023 at 9:18pm
Craig: There was apparently a very profitable business of exporting stolen luxury cars to Eastern Europe. I suspect that the EU’s anti-corruption drive has much reduced this traffic.
About the link you give, it would be interesting to have a time series of the rate of car thefts (number of thefts over over the number of cars). Other things being equal, the rate of theft must have decreased given the more and more sophisticated anti-theft gadgets. Don’t car insurance companies take in consideration those security gadgets before quoting a price? On the data you linked to, we see such a decrease in the rate of car thefts in San Jose between 2013 and 2015, admittedly a tiny sample. I would also be suspicious on data that take 2020 as a basis of comparison for today.
Craig
Jun 8 2023 at 11:17pm
” Don’t car insurance companies take in consideration those security gadgets before quoting a price?”
They must. I have a 2013 Kia Soul registered in the middle of nowhere in TN where they haven’t had a car theft in 40 some odd years and the comprehensive with a $1000 deductible is $32 for 6 months, the Sedona is $33 [I also just noticed I am paying $11 and $15 respectively for auto rental reimbursement which I need like I need a hole in my head]. Meanwhile in FL, I have a 2022 Jeep Wrangler and I note with the convertible slide top which makes entry somewhat easier and the comprehensive in South FL, an epicenter of hurricanes and auto theft and the premium is $33. Of course as cars get older their value goes down so that dampens the impact on the comprehensive premium. My 2004 Chrysler Sebring, registered in FL, I don’t even have comprehensive at all.
Richard Fulmer
Jun 11 2023 at 6:05pm
One of the things about statistics that seems to baffle politicians is that half of any set of people or objects will always be below average in any given characteristic.
Regardless of how much auto companies improve their anti-theft devices, some cars will always be easier to steal than others.
David Seltzer
Jun 8 2023 at 11:46am
Pierre: “Any political theory incapable of explaining these realities is useless, if not mere propaganda.” Yes. I suspect the the government tormentors know that. If individuals are self-interested and respond to incentives, they act the same in political arenas as in competitive free markets. The perverse irony: in order to protect the consumer from theft, father gov will attack the “uncaring” automaker at the expense of the consumer.
Craig
Jun 8 2023 at 12:41pm
Part of the analysis is many Americans don’t live in high crime areas. One time I lost a smart key and it cost $300+ to replace the key, meanwhile I lost a key to a 2013 Kia Soul and the dumb key cost me less than $5 to replace. Other chip keys cost in the neighborhood of $60+ and I have no fear whatsoever of having my car stolen. Kias also offer a unique lug nut key so that cars can’t be jacked up and have their wheels removed and propped up on cement blocks. Seems so 1970 something to me, but apparently it does happen. Nevertheless I actually purposefully took that lug nut off and put on a regular one because honestly I am more fearful of misplacing that special lug nut than I am of having my wheels stolen.
I do pay the price to have an apple air tag in my vehicles. If they were to get stolen, they’ll get found.
For me at least I actually find some of these anti-theft features to be a disutility. I’d even be willing to pay a small amount NOT to have them. Give me my dumb key because here’s the thing, I’ve lost my keys before, I’ve never had a car stolen.
Monte
Jun 8 2023 at 1:16pm
Yet again, the true victims (Hyundai and Kia) are being portrayed as the bad guys. Only in America can we see the family of a car thief who died in a crash file a lawsuit against an automaker for failing to recall vehicles that are being targeted for theft.
@ Peter Gerdes,
Sympathy for the devil. Passing a regulation that imposes higher fees on the owners of these cars amounts to nothing more than legalized extortion. Any outrage should be directed at the major cities (St. Louis, Missouri, Cleveland, Ohio; San Diego, California; Milwaukee, Wisconsin; Columbus, Ohio; Baltimore and Seattle) who brought this class-action lawsuit, all of which are governed by liberal deomocrats, btw.
Monte
Jun 8 2023 at 1:18pm
Family of Stolen Kia Crash Victim to File Lawsuit Against Automaker
Craig
Jun 8 2023 at 1:36pm
Of course this scenario is a bit different from the state asserting a cause of action directly against the manufacturer. Here this is a product liability action where the person actually responsible for the crash, presumably the auto thief, is likely judgment proof, so naturally why not bring a cause of action against the deep-pocketed manufacturer? Of course under that general theory an owner of the vehicle could also be held liable for ‘negligent ownership’ — For me? The concept that I could be held vicariously liable for the actions of somebody who has committed a felony against me disturbs me, but it IS one of the reasons I carry an umbrella policy because in this country? You really never know.
Monte
Jun 8 2023 at 2:47pm
The legal theories you describe are all perversions of the law, which is what led Shakespeare to pen the famous line, “The first thing we do is kill all the lawyers.”
Jose Pablo
Jun 8 2023 at 5:08pm
Another reason that could have compeled Shakespeare to provide that advice: lawyers are overrepresented in politics
https://onlinelibrary.wiley.com/doi/abs/10.1111/lsq.12265
since we also know that the worst get on top …
Pierre Lemieux
Jun 8 2023 at 9:04pm
Yet… I hypothesize that, on this topic (the positive or negative contribution of lawyers to the rule of law), we would have to make a distinction between, on the one hand, the 19th century and, on the other hand, the 20th (as well as, in general, what came before the 19th). If we consider the crucial concept of the contract, the common lawyer seemed to be an artisan of liberty in the 19th century; see the defense of the common law by Hayek in my reviews of the first and second volumes of Law, Legislation, and Liberty. Similarly, it seems to me that classical French lawyers were generally, in the 19th century, defenders of individual liberty and the rule of law. In most of the 20th century, lawyers have had as their only legal philosophy that the “positivist” claim that law is whatever the state says is law. It is true that the slicing of history into centuries is often misleading: in certain limited fields, the legal protection of individual liberty has continued to progress in the 20th century.
Monte
Jun 8 2023 at 11:51pm
Jose Pablo,
Which isn’t to say there aren’t good lawyers turned statesmen who honorably discharge the duties of their political office. It’s just that we, the voters, could stand to be more discerning of character, separating the wheat from the chaff.
Pierre,
Valid point. My quoting Shakespeare was little tongue-in-cheek, but again, many a true word is spoken in jest.
In your first review of Hayek’s Law, Legislation, and Liberty, you wrote:
Ergo “the positivist claim that the law is whatever the state says is law.” Here, the blame can now be shifted from lawyers to the corruption of our judiciary in the 21st century. Many state and local judges have repeatedly escaped accountability for judicial misconduct that has victimized thousands, yet they remain on the bench. Judicial activism is a plague. Our courts should exist to exercise the judgement of the law, not the will of men. Politics, it seems, has become more an art of subterfuge than compromise in the dispensation of justice.
Hear, hear! Hayek convincingly argues that there is consistent and significant evidence that common law is more stable and less vulnerable to corruption than civil law.
vince
Jun 8 2023 at 1:40pm
Hyundai and Kia should sue New York for enabling so much crime. NY is implicitly an accomplice, and it’s damaging the car manufacturers’ brand value. Hyundai and Kia owners should join the manufacturers in a class action against the state.
Craig
Jun 8 2023 at 1:44pm
Indeed, the City of Yesterday. You win the internet today, Vince.
steve
Jun 8 2023 at 11:37pm
NYC has been singled out as it often is for ideological purposes but the increase in these cars being stolen is happening nationwide. These cars are uniquely easy to steal. Instructions are on Tik-Tok and so easy a caveman teenager could do it.
https://www.caranddriver.com/news/a41477937/hyundai-security-kit-easy-to-steal-models/
Steve
Jose Pablo
Jun 8 2023 at 5:02pm
Wouldn’t one think that do-gooder governments should spend their energy fighting car thieves
Well, I don’t know, but sure they do a terrible job fighting this crime. This is a fact: the clerance rate for motor vehicle theft is 12%
https://www.statista.com/statistics/194213/crime-clearance-rate-by-type-in-the-us/
I guess suing carmakers is just easier … and, of course, politically more rewarding
steve
Jun 8 2023 at 11:10pm
Mitsubishi and Nissan sell 2 of the 3 cheapest cars on the market right now. If the theory is that cheaper cars are being stolen why arent they being stolen? It looks like it is because they have immobilizers like well over 95% of other cars sold in the US and like Kia/Hyundai cars sold in the rest of the world. It looks like some kids on Tik-Tok broadcast how uniquely easy it is to steal their cars, only needing a USB cable. AFAICT all of the cities who sued, it was not just NYC, didnt do so until they had a lot of crashes with kids joyriding these cars.
If one car company uniquely makes cars they sell only in the US, the ones they sell in other countries dont have this issue, and other car companies dont have this problem, and it is costing cities millions of dollars in damages from the car crashes, what would be the libertarian solution? The taxpayers pick up the costs so that the car company can have higher profits?
Steve
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