The cash for clunkers program has a number of problems, even its supporters admit that. For a start cash for clunkers is going to cost a great deal more than originally planned, the budget has already risen from $1 billion to $3 billion only a week after cash for clunkers started. There's also some confusion about precisely which cars are covered but fortunately Edmunds has published the cash for clunkers car list so that particular problem has been solved.
But there's a much larger problem which really needs addressing: which is that cash for clunkers is an extremely silly program altogether. It's committing one of the great economic fallacies, that of the Broken Window. This was best pointed out over 150 years ago by the French economist, Frederic Bastiat. If a window is broken everyone can see the economic activity that goes into its replacement: a new window is purchased, so that the man who makes windows has more money, which he can spend on wine, so the innkeeper has more money, which he spends on shoes so the cobbler has more money and so on, around the economy it goes.
A fuller and more accurate description is here but the fallacy is that no one is looking at what would have happened if the window hadn't been broken. The man who had to buy a new window would have used his money anyway, to do something else: perhaps to buy wine so that the innkeeper had more money which he would have used to buy shoes and so on. What we've actually seen with the destruction of the window is a decrease in wealth, not an increase.
And so it is with cash for clunkers. We're taking hundreds of thousands of perfectly good used cars and destroying them. That is not an increase in wealth, it's the destruction of it. If we accepted this logic then we should all burn our houses down once a year so that we all get fabulously rich by building a new house each year.
That's the problem with cash for clunkers: not that it's not being run very well, or that it's more expensive than when first thought of, but that the entire idea is simply economic stupidity in the first place. But then that's government for you....
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news.yahoo.com/s/ap/20090804/ap_on_go_pr_wh/us_cash_for_clunkers_transparency
"The Obama administration is refusing to quickly release government records on its "cash-for-clunkers" rebate program that would substantiate — or undercut — White House claims of the program's success, even as the president presses the Senate for a quick vote for $2 billion to boost car sales.
The Transportation Department said it will provide the data as soon as possible but did not specify a time frame or promise release of the data before the Senate votes whether to spend $2 billion more on the program."
They want to TRIPLE the funding but will not let anyone see where the FIRST BILLION went?
From the most transparent administration in history? Ahh, it was just more lies.
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