THE "CASH FOR CLUNKERS" MYTH
8/31/2009
Many in the media hailed the "cash-for-clunkers" program as a great success. But a closer examination from a free market perspective reveals that, like most other government programs, this was an unmitigated disaster.
"Cash-for-clunkers" was just a redistribution of our tax dollars. The free money that was offered encouraged people to buy cars when many could not afford them, thus increasing personal debt. The new car payments will leave people with less money over time to buy necessities that could have stimulated the economy through free market means.
Under this program, the "clunker" is to be destroyed. This leaves less used cars for dealerships to sell. Less sales mean less revenue, and less revenue means less jobs. In addition, the destruction of these vehicles deprives the market of affordable cars that could have been bought by people with limited means such as college students.
Car dealers must wait for the government to reimburse them for the discounts they offered. These government payments are typically late and/or erroneous; the inefficiency of this program was evident by the fact that funding ran out after only two weeks. Yet government officials spun the shortfall as a good sign; only economic dunces would see such a rapid bankruptcy of a program as a good sign.
Another shortcoming was that most people traded in their "clunkers" for vehicles not manufactured by Chrysler or General Motors, two companies that desperately needed sales. This showed that people have little faith in these bankrupt companies that were co-opted by the Obama administration.
Nothing is for free, and when the government offers a giveaway, there is always a tradeoff. The government can only give things away with tax dollars (thus causing tax increases), borrowed dollars (thus increasing our national debt), or printed dollars (thus causing inflation). Any way we end up paying the price.
WalterCoffey.com
AMERICAN HISTORY UNCUT
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