Monday, August 10, 2009

Debunking Cash for Clunkers

At first I didn't see this issue worth discussing, but then the government appropriated another $2 billion. First off, the idea of destroying useful products as means to make a nation wealthier is pure nonsense. It didn't work for agriculture in the 1930's and it won't work now. It's also not much of an improvement for the environment. BusinessWeek estimates that there is only a "reduction of only 0.04%" of gallons used (not counting an expected increase in miles driven due to better gas mileage or even fun new car). It's also not accounting for the energy used to junk the old cars and make the new ones.

Forget about the dangers of increased driving and increased consumer debt, what frustrates me most is that there is a simpler, more efficient solution. Even though I commute 1 hour and 1/2 a day to work, I support increasing the gas tax a way to improve emissions, traffic and safety. It is more efficient (demand for gas is fairly inelastic), more equitable, and it's simpler (compared to a 4 month program that ran out of money in a week).

This programs exists not because politicians are irrational, but because voters are. As a teacher, I think voter education is the solution. Too bad my AP Econ class got cut in the slimming budget.


  1. Well said. I also think it's lunacy when Congress approves $1B that's supposed to take 6 months, and then throws another $2B at it when the money is gone in a week. It's that age-old congressional wisdom that if something is burning through cash, it must be working. Plus it's just fiscally irresponsible.

    I'm not sure I would blame voters, though - it wasn't our idea and we didn't vote on it - they did. And can you blame us for trading in our cars for a $4K credit? The government sure made this one easy for us.

  2. I definitely wouldn't blame people for taking advantage of the credit. If my wife and I had the cash to pay the rest we probably would have done it. I don't like it because it's bad for America, if some good can come out of it for you I say go for it.

    But I do partially blame people who voted for the politicians who voted in favor. Or maybe I should blame the ones who put them back office?


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.