A Clunker of a Program

What a great idea! Spend three billion dollars of borrowed money to get people to destroy perfectly good cars and go in hock for a new one now instead of in a year or two. (I say “perfectly good” because the cars had to be running and been registered and insured during the past twelve months.) This is stupid on so many levels one hardly knows where to begin.

The program was modeled after one in Germany. Now a study in that country has concluded that most of those purchases were simply moved forward from 2010. It is reasonable to conclude the same was true here.

So there was little, if any, net gain for the intended beneficiaries, the United Auto Workers and the government owned auto companies, GM & Chrysler, neither of which had a single model among the top ten purchased by the clunker sellers anyway. No doubt car dealers got a badly needed shot in the arm, but at the expense of future sales.

Also at the expense of other businesses. Money spent on a new car is money that can’t be spent on something else. So this is just the Obama Administration choosing winners and losers in the previously free market.

The cars that were destroyed will not be available for low income buyers needing a car to get to work or families wanting an inexpensive car for their teenagers. With fewer vehicles available, these people, many of whom are already financially pressed, will have to pay a higher price.

As for the environmental payoff, out of a U.S. fleet of 260 million vehicles, we replaced about a half million, or one out of every 520, with vehicles that are not emission-free, but merely lower-emitting than the cars destroyed. Aaaah, doesn’t the air smell cleaner?

This was either a cynical political ploy of wasting taxpayer money to reward favored constituents or another example of the economic ignorance of the people who want to take over more of our economy, or both.