What do you get when you combine a naive environmentalist, a crooked crony capitalist banker, the American auto market and the power of the state? Answer: government subsidization of waste. Its current incarnation is the Cash For Clunkers joke.
Watching Americans rally around the perceived success of the Cash For Clunkers is better than what any situational comedy could ever be produced on American television. It is just astounding how stupid people can be. Some Canadians are duped about this too apparently.
If poor people need cars but can not afford the cars, the solution is simply to give them money and let them do as they will. There is no need to make things more complicated. Better yet, things can be even simpler: let consumers keep more of their own money by cutting their taxes.
The absurdity of Cash For Clunkers is beyond belief. The scheme is as intelligent as a caveman barter system yet less efficient. There is no need to take money away from people just to give it back to them again — unless, of course, the scheme is to foster somebody skimming off the top.
If you wish to think that fuel efficiency is the target of this nonsense, I suggest you learn something about the magic of markets: the fuel efficiency savings — assuming it actually exists — is already incorporated in the price of the new car. In other words, consumers of fuel efficient cars will be saving on future fuel costs anyway. The Cash For Clunkers is great for stupid people who can not use a calculator.
Here is the sad part of the story: such nonsense government schemes provide a false market signal to entrepreneurs:
“It’s also brought in a lot of other traffic, sort of like a signal that it’s safe to come back into the marketplace.”
AutoNation, the largest new-vehicle retailer in the U.S., has done “just under” 3,000 cash-for-clunkers sales, Jackson said.
“Any doubt that the CARS program would jump-start auto sales is completely erased,” said Greg Martin, a GM spokesman. Detroit-based GM left a U.S.-backed bankruptcy on July 10, 39 days after predecessor General Motors Corp. filed for Chapter 11.
How is it safe to come into the market place again? This consumer activity exists ONLY as long as the government is doling out money — something that can stop suddenly any instant.
Here is the laughable part of the story: naive socialists can not see how they are being used to line the pockets of crony capitalists.
UPDATE: (Friday, August 7th, 2009)
Reuters offers an analysis that belongs in the garbage heap — qualifying the program as “successful” but then says that sales are down So, Mr. Reuters, what qualifies as a success? Is the number of carbon atoms floating in the air? or the amount of money spent? maybe a sudden financial bubble? what?
Hundreds of auto dealers in the New York area have withdrawn from the government’s Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.