@MontereyJack,
First of all, I disagree with your assumption that all efforts by engineers to improve gas mileage and efficiencies of engines are all entirely due to government standards. Such an assumption is based upon the assumption that there would have been no efforts along those lines without government standards imposed, and I do not think you have any evidence except your own biased opinion of what would have happened without government standards. You are assuming the free market would have had no effect at all upon the demands of the public in regard to gas mileage, but you have no evidence of that at all. In fact, I may surprise you by saying yes, government mpg standards may have had an effect, and if we admit the overall efficiencies were marginally improved, what about the possibility that if they had not been improved very marginally, the gasoline price rise may have been much more severe than it was, and then the overall free market effect of price may have affected consumer demand in terms of fuel efficiencies to the point of bringing about a more certain and forceful consumer demand change to the auto manufacturers, which in the long run I think is a more efficient driver of technological change than government mandates. I have just as much evidence for my "what if" scenario as you have for your "what if." After all, we do know that consumer demand in other industries is very very effective. One industry is the agricultural industry, where the equipment to plant, grow, and harvest crops has evolved very significantly, to be more efficient in many different ways, due to manufacturer innovation and consumer demand.
One point about your argument is interesting, MJ, that being that all of the innovation was due to government mandates. I don't agree with that, as I have stated, however, I would like to point out that such a scenario is actually very unhealthy to the overall advancement of technological improvements, because focusing too much effort into very narrow avenues of improvements may hinder what could be more productive research and improvement of technology in other avenues of improvement. In other words, some of the best discoveries may be ignored or overlooked because of an over-emphasis into very limited areas of technology, as artificially mandated by a government regulation. This very well could be one of the unintended consequences that often happens with artificially injected forces into the free market.
Now, in regard to the average family income, the term "average" has a far different meaning than the term "median." For example, you can have a few families making a couple million a year thrown into the mix of families making 30K per year, you can average them together to come up with a "median" income, which might be 60K per year, but it by no means indicates the average family in that group makes 60K. Also, I would also point out that some of the vehicles you are using for comparison do not consist of a whole lot, for example a Ford Focus is a very basic box on wheels, not to be compared with a mid-sized vehicle designed for a family of 4 or 5, which would cost considerably more, so when family income is cited as a basis for buying a vehicle, then perhaps you need to use family sized vehicles for comparison, not a commuter or third or fourth type cars for families. Aside from the above points, I would otherwise agree that the rise in cost of automobiles could have been worse than what they have been. However, I believe that the cost of vehicles would be considerably less without all the government mandates and union cost influences upon the industry.
Using 'cyclops' and 'logic' in the same sentence is rather funny.