Cash for Clunkers was an abysmal failure which distorted the used car market, driving up prices and harming, most of all, poor people.
But of course, you already knew that if you read this blog. And so writes Jason Kuznicki:
And the payback isn’t long in coming — today’s used car prices are soaring owing to reduced supply….
See how that works? You can’t get something for nothing. Cash for Clunkers turns out to have been a highly inefficient wealth-transfer program, that is, one that destroyed a bunch of wealth along the way. It gave wealth to those already relatively wealthy people who did the government’s bidding (that is, those who could afford to part with a used car and buy a new one). And now it’s taking wealth from those relatively poor people who need a used car today — in the form of higher prices.
Along the way, it destroyed hundreds of thousands of cars — that’s the real wealth these poor people don’t have access to anymore, because the scrapped cars aren’t a part of the economy.
In Rhode Island, as I posted before, the unintended consequences hurt everyone, not just the poor, because Rhode Island taxes vehicle ownership based on used car prices as of December 31. By artificially inflating the used car market last year, Cash for Clunkers increased everyone’s state taxes in Rhode Island this year. If prices are continuing to rise, as the article indicates, next year will bring an even larger tax bill.
How about a T-Shirt which says: “I didn’t buy a clunker, but I’m paying anyway”?
They never, ever learn. Have we?
Update: Ed Morrissey writes:
In other words, the White House spent $3 billion to make used cars more expensive for working-class families. Nice work.
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Related Posts:
Cash For Clunkers Rear Ends Rhode Islanders
Cash for Clunkers Driving Up Prices
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Comments
A vote for a Democrat is against everyone's best interest every time. They don't have a single person in their leadership qualified or experienced enough to run a lemonade stand.
THANK YOU DEBBIE STABACOW. 🙁
A couple of years ago, they did the same thing to the ammo business when they ordered the military to destroy their spent brass rather than sell it back to the ammo suppliers for credit. Caused prices to go up for everyone while contributed to an extended shortage of ammo for police and private gun owners who like to practice regularly.
There is a moral issue with Cash for Clunkers, too. The gov't encouraged people with perfectly good cars to buy up and get a new car and "rewarded" them for doing so but hurt people who were not able to afford a car. That is wrong. It is the opposite of making cars available for people who really need them. the joke is that it actually hurt the participants badly, too. They bought those cars on credit they can ill-afford (based on averages) and all of the "benefits" to the program were taxable. The car companies, allegedly, figured the rebate in and the buyers got less car for their money. And, thousands of perfectly good cars were destroyed, ruining BOTH the used car and the parts market. It is immoral.
Good comment, Spartan. That business about the parts market cannot be understated either. Boatloads of perfectly good parts were crushed that could have been used to keep cars on the road and costs down for people that can't afford new cars or new parts!
Like ANY government programme: Bundles of money spent to make things WORSE.
"I Didn't Buy A Clunker, But I'm Paying Anyway"
Too many people "bought the clunker" a year ago November.