The latest government give-a-way is the Cash for Clunker Appliance program recently announced by the Obama Administration. The freebie comes in the form of a 20% rebate on select energy efficient appliances. There promises to be a rush for the government gratuity which means get in line right away if you wish to get some of the 300 million dollars available. Following on the heels of the Automobile Cash for Clunkers Program, one might begin to wonder why the Feds insist on stimulating the economy by subsidizing consumption.
The official answer claims personal consumption is necessary to restart America’s stalled economic engine. The logic states that once people begin consuming again, then jobs and renewed prosperity will automatically follow. This reasoning might work if the USA was still a prominent manufacturer of automobiles and appliances. Unfortunately, the USA has fallen behind other countries in the production of autos and appliances. For instance, the USA has dropped to third place in the production of autos, behind first place Japan and second place China. The picture is far more dismal for the production of appliances. Ironically, our country is perpetuating our present crisis with their unsound agenda.
Because of our diminishing manufacturing capability, the greater effect of consumption incentive programs winds up stimulating the economies of foreign countries that generate the majority of products Americans use. As a result, the Clunkers boondoggle increases our National Debt, enlarges our Trade Deficit and amplifies our personal debt while utterly failing to increase employment opportunities in the US. It either represents economic policy gone wild or a carefully executed scheme of those who embrace the nebulous cause of globalism.
If the Clunkers programs applied to American made products only, then increased employment would follow. Subsequently, people would have more money for legitimate consumption and the stage would be set for increased prosperity. As it stands, anticipate there will be still another stimulus with more government sponsored hand-outs. And one day, when government’s flawed policies renders the dollar worthless, we will all learn that there is no free ride. Hopefully, Americans will then understand they must produce in order to consume.