Travis, Are you shitting me? Bribery and extortion are as American as momma and apple pie and Cardinals baseball. What EXACTLY is your problem with the program?
On Jul 24, 5:47 pm, Travis <[email protected]> wrote: > *See Also...* > *The Second Coming of Keynes <http://mises.org/story/3583> by Lilburne* > *"Gentle Nock at Our Door" <http://mises.org/story/3575> by Frank Chodorov* > Green Baptists Preach Salvation by Breaking Car Windows > > *Mises Daily* by Tyler A. > Watts<http://mises.org/articles.aspx?AuthorId=1120>| Posted on > 7/22/2009 > > Who could possibly claim that buying up drivable used cars at prices far in > excess of their market value, for the express purpose of destroying them, > will be beneficial for the economy or the planet? You guessed it: a > combination of economy-saving politicians and earth-saving green activists > are peddling the wonders of a new government program popularly known as > "Cash for Clunkers." The Consumer Assistance Recycle and Save Act of 2009 > has the two ostensible goals of jump-starting the stalled automobile > industry and combating global warming (or climate change, or whatever > they're calling it these days) by replacing old, gas-guzzling smog machines > with new, more fuel-efficient, cleaner cars. > > Here's the gist of how CARS <http://www.cars.gov/> (Car Allowance Rebate > System) is supposed to work: owners of older vehicles can bring them to a > dealership where they will be offered a refund of up to $4500 — supplied > entirely by the government — towards the purchase of a new vehicle. The main > catch is that the new vehicle must have a certain miles-per-gallon rating > higher than the old vehicle, and the dealer must certifiably crush (yes, > destroy) the old vehicle so that it can never pollute again. > > Of course, there are many conditions and rules attached to the program, > designed to prevent someone like me from buying a beat-up 1960s truck from > the neighbor's farm for 100 bucks and installing a fuel pump, spark plugs, > or whatever else necessary to get it running for an extra 50 or so, then > driving it into town for a cool $4500 rebate on a brand new Dodge diesel. > Chiefly, the clunker can't average more than 18 miles per gallon or be more > than 25 years old (darn), and the person trading it in must show proof of > registration and insurance for at least one year (double darn). The bribe — > er, refund — then varies based on the improvement achieved in miles per > gallon rating. For a complete rundown of the Byzantine rules, regulations, > and restrictions, see the official website's > FAQ<http://www.cars.gov/index.php/faq> > . > > Now, if "Cash for Clunkers" immediately brings to mind the broken-window > fallacy <http://mises.org/resources/2735>, good on ya: you have a solid > grasp of one of the most important lessons of economics. How could it > possibly help overall material prosperity to overpay for used cars and then > pay even more for people to destroy them, all the while also paying > bureaucrats to ensure it is all done properly? The answer, of course, is it > won't. There will be fewer "clunkers" available (with the really cheap ones > disappearing first); there will be distortions in the used car and used car > parts markets — it will be more difficult and more expensive to source used > parts for the junker *you* want to work on — and there will be a whole new > bureaucracy to manage the program, and so on. > > To highlight just one instance of the outrageous economic distortion this > silly program is sure to bring, consider the fact that most of the clunkers > that qualify for the program are driven by relatively poor folks, people who > are not very likely to be in a position to buy a new car even with the help > of government refunds. I would venture to guess that these people rely on > clunkers to a much greater extent than upper-middle-class suburbanites who > can afford more reliable cars and who might own a clunker here or there as a > spare, seldom-driven car. Yet these upper-income folks are far more likely > to cash in on the artificial government refund value of clunkers, thus > withholding their vehicles from the used car market and raising their > prices. In the limit, clunker prices will climb as high as the potential > refund value minus registration, insurance, and miscellaneous transaction > costs, thus making basic transportation more expensive for the poorest > elements of society. > > As much as the cash-for-clunkers absurdity smacks of the broken-window > fallacy, I see its deeper economic relevance as an example of rent-seeking > behavior along the lines of the "Bootleggers and Baptists" model.[image: > Download PDF] > <http://www.cato.org/pubs/regulation/regv22n3/bootleggers.pdf>It's > no secret that the harsh reality of market forces has upset the auto > industry. Yet many in that industry, especially new car dealers, are turning > to politics for a quick and easy fix instead of gritting their teeth or > throwing in the towel. Under the all-too-common rhetoric of stimulus, > they're pleading to the politicians: "Please, concoct a scheme to bribe > people into buying new car. Oh, and make sure you extract the bribe funds > from someone else!" > <http://www.mises.org/store/Economics-in-One-Lesson-P33.aspx> > > Yet even in politics, naked bribery and extortion are frowned upon. What's > needed is a cover story. Enter the ubiquitous green lobby with their own > plea: "Please, concoct a scheme to bribe people to 'go green' and replace > those nasty polluters with earth-friendly eco-wagons." All you need now is > an entrepreneurial politician[1] > <http://mises.org/story/3568/preview#note1>to package the deal, > auto-industry and green-activist lobbyists to promote > it, and even (gasp) > economists<http://www.nytimes.com/2008/07/27/business/27view.html>, > and smash! Another pane of economic — and moral — sense is shattered in the > name of green stimulus. > <http://www.mises.org/store/Economics-in-One-Lesson-P33.aspx> > To cast this in terms Bastiat might use, it's as if the glazier hired a > street urchin to hurl bricks through shop windows by night, in the midst of > a social crusade against the dangers of toxic, low-tech glass. The greed of > those elements of the auto industry that endorse this plan, combined with > the self-righteous conceit of the greens, makes for a politically potent > combination. Disappointed car makers and greens alike, not satisfied with > the economizing actions of individuals operating under free choice, are > attempting to force the rest of us to re-economize along their preferred > margins. This is green tyranny at its worst: waste, distortion, and > violating liberty in the name of "saving the planet." > > [VIEW THIS ARTICLE ONLINE] <http://mises.org/story/3568/> > > _______________________________ > > Tyler Watts studies economics at George Mason University. Send him > mail<[email protected]>. > See his article archives <http://mises.org/articles.aspx?AuthorId=1120>. > Comment on the blog <http://blog.mises.org/>. > Notes > > [1] <http://mises.org/story/3568/preview#ref1> The original versions of the > House and Senate bills were primarily sponsored by Representative Sutton > (Ohio) and Senator Stabenow (Michigan). See "'Cash for Clunkers' Bill Drives > Some Senators > Mad,"<http://www.foxnews.com/politics/2009/06/11/cash-clunkers-drives-senat...>FOXNews.com, > June 11, 2009. > > Mises.org <http://mises.org/> | About the > Institute<http://mises.org/about.aspx> > | Mises Daily <http://mises.org/articles.aspx> | Mises > Blog<http://blog.mises.org/blog/> > | Literature <http://mises.org/literature.aspx> | > Media<http://mises.org/media.aspx> > | Events <http://mises.org/events.aspx> | > Store<http://www.mises.org/store/> > | Community <http://mises.org/Community/> --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
