Most Americans inherently believe in the power of free markets.  It is ingrained in us along with our sense of individualism.  Even those who believe in "big government" are not necessarily in favor of elected officials telling citizens how to live their lives. 

Yet with the growing awareness of how individual choices affect society as a whole, more and more legislation has been coming out that limits individual choice for the benefit of the larger public.  Indoor smoking and trans-fat bans are just two examples.  These bans met fierce opposition from many corners, particularly restaurants, since their businesses would be most affected.  But the smoking ban, at least, has been a success for patrons, and there has yet to be a flood of restaurants going out of business because of it.

The automobile industry has long been the object of government-imposed rules.  From environmental to safety issues, cars are reasonable targets for regulation.  But as James Surowiecki notes in a recent New Yorker:

"In the auto industry, there’s one thing you can always count on: If a new…rule is proposed, executives will prophesy disaster." 

While this is due, in part, to the obstinancy of American auto manufacturers, it is also due to the mixed signals sent by Americans.  SUVs and trucks are big sellers, even with the recent drop-off in sales.  Yet when polled, three-quarters of Americans support increased fuel-efficiency, and this includes those who own the gas-guzzling, carbon-emitting trucks and such. 

Why the disconnect?  Surowiecki argues that individuals desire to protect themselves (believing big cars to be safer than small), and to be more powerful (using horsepower, for example), so they buy big cars.  Without appropriate incentive to buy environmentally-friendly cars, they have no individual reason to change their purchasing decision. 

But as a group, these individual decisions lead to an overall outcome that most people do not want: 

"…automakers have listened to car buyers, and put their energy into making vehicles bigger and faster, rather than more efficient. In calling for a law requiring better gas mileage in our cars, then, voters are really saying that they’re unhappy with the collective result of the choices they make as buyers. Sometimes, they know, we need to save ourselves from ourselves."

So what is the next step?  The Senate recently increased corporate average fuel economy (CAFE) standards in their energy bill, but the House did not.  When the two are reconciled we will see if it is included.  And even if CAFE standards are increased, will it be enough to truly make a difference?  And finally, will U.S. consumers finally send a big enough signal to the Big Three (Ford (F), General Motors (GM), Chrysler (DAI)) that they are ready for a change?  Only time will tell.