A clunker of a program
The appalling Cash for Clunkers program is finally over. If you are a US citizen, it’s time to call your representatives and senators and tell them never again to permit anything like that.
What’s not to like about Cash for Clunkers?
• It rewarded bad behavior (having previously purchased an inefficient vehicle that became uneconomical to operate when fuel prices climbed and a recession hit).
• It punished good behavior (forcing people who have made the wise choice to buy a fuel-efficient car or to rely on public transportation or bicycles to subsidize those who engaged in bad behavior).
• The minimal fuel-economy improvements required to qualify were pathetic.
• It trained people to wait for a government subsidy before making purchases.
• Prematurely destroying 625,000 vehicles is not an environmentally friendly action, no matter how much gas they guzzled (see “Carbon for Clunkers“).
• It simply accelerated, slightly, purchases people would have made anyway.
• It created a temporary economic bubble (according to the Washington Post, “An estimate issued Monday by the White House Council of Economic Advisers said the program is projected to boost US third-quarter gross domestic product by 0.3 to 0.4 percentage points and create 42,000 jobs by the end of 2009″) that is not sustainable.
Writing in Slate, Daniel Gross is positive about the program, estimating that “about 250,000 extra cars [those which consumers would not have purchased this calendar year absent the subsidy] were purchased (40 percent of 625,000). And if each cost $29,000, those sales generated about $7.3 billion in revenue in the space of a few weeks. That’s a pretty good return on $2.6 billion in government spending.” He says the program worked better as a stimulus that tax rebates would because consumers don’t spend their rebates fast enough. Well, the government could fix that by issuing coupons that must be exchanged for merchandise or services within a set time—let’s say three months. People would make sure to redeem the coupons—on cars, refrigerators, renovations, vacations, cell phones, netbooks, or whatever they want, not on what the government wants.
In related posts, I comment on criticism of electric vehicles, and Jennifer Kempe comments on “Going the distance at 100 mpg” during Boston Greenfest.
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