That isn't all. Those car buyers were either going to trade in their used cars soon or they weren't. If they were, Cash for Clunkers simply moved up the schedule. The stimulation of the auto industry occurred earlier. Big deal. But if buyers planned to keep their cars longer, the program imposed costs that are less visible. Without the government incentive to buy cars, consumers would have bought other things -- computers, washing machines, televisions. The manufacturers and sellers of those products didn't get to make those sales. Why should the auto industry get privileges at the expense of others?
Then there are the mechanics who would have serviced those used cars. They've lost business. Some will be laid off. Nor should we forget low-income people who depend on the used-car market for their transportation. The cheap cars they would have bought were destroyed.
What about the alleged environmental benefits? Assuming that cutting carbon emissions is worthwhile, was Cash for Clunkers helpful? It's hard to see why. People who traded in inefficient cars for efficient ones will likely drive more and therefore use more gasoline.
Even if carbon emissions are cut by a lot, economist Christopher Knittel says the program will cost more than $365 per ton of carbon saved.
Economist Bruce Yandle points out what a lousy deal that is: "The much celebrated Waxman-Markey cap-and-trade carbon-emission control legislation estimates the cost of reducing a ton of carbon to be $28 when done across U.S. industries. Yes, we are getting carbon-emission reductions by way of clunker reduction, but we are paying a pretty penny for it" (http://tinyurl.com/lnua3k).
Finally, there is something revolting about the government subsidizing the destruction of useful things. It reminds me of the New Deal policy of killing piglets and pouring milk down sewers to keep food prices from falling.
Leave it to politicians to think we can prosper by obliterating wealth.
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