The idiotic Cash for Clunkers program ends today. Big media has been portraying it as a smashing success because it had burned through its money faster than expected and ended up with a budget triple what was originally planned, in that Bizarro World where confiscating and spending more taxpayer money than expected and doing it faster than expected is a good thing.
In reality, it is the perfect illustration of how government "works."
This is a program whose goal was to help the environment by replacing lower mileage vehicles with higher mileage vehicles.
What did it actually do? Rewarded drivers who had bought low mileage vehicles in the past, penalized drivers who had purchased high mileage vehicles in the past, paid many participants to buy SUVs such as Hummer H3's and Suburbans, encouraged participants to drive more in the future, and make it for the lower middle class and poor to buy cars.
How could it have done all of those things? Lets take them one at a time.
* Rewarded drivers who had bought low mileage vehicles in the past: the entire program is based on trading in older vehicles that get low gas mileage. By definition, the people who are eligible to take advantage of it are those whom the green movement would see as traitors to the planet, those who had been driving (or owned and had driven in the past) gas guzzlers.
* Penalized drivers who had bought high mileage vehicles in the past: the program is being financed by taxpayer money. In particular, taxpayers who do not take advantage of the program. A group which is disproportionately comprised of...people who had been driving (or owned and had driven in the past) high mileage vehicles. This group that greens would see as responsible stewards of the planet is hardest hit by this tax burden.
* Paid participants to buy SUVs: the rules of the program are that if you have a vehicle on the trade-in list you may buy a new vehicle as long as it gets one more MPG than the one you give up, as long as the new one gets 15 MPG combined. This definition allows for government payments toward the purchase of a number of SUVs and full size pickups, including the Hummer H3 and the Chevy Suburban.
* Encourages participants to drive more in the future: There is one immutable law of driving: the more it costs, the less people will drive, and vice versa. Thus when gas prices rise, people drive less, and when prices drop they drive more.
Similarly a driver with a gas guzzler will attempt to limit his miles, and anybody replacing one with a vehicle that gets better mileage will drive more, a lot more if the difference is significant. To be able to drive more is the primary motivation for getting a high mileage vehicle to start with; no need to worry so much about things like car pooling and unnecessary trips if it costs less to drive.
* Hurts the poor: Not surprising that a green program would hurt the poor, that's the inevitable result of trying to slow or stop economic growth, which is the ultimate goal of environmentalism in general. So it is with this one.
The "clunkers" that the government receives in trade via this program are to be destroyed, the idea being to get them off the road. The problem is that such older, low-cost vehicles are exactly the kind that are bought by people of limited means. These poor and lower middle class citizens will now be faced with a decreased supply of affordable used cars, and thus higher prices. The end result will be that the poor eventually be faced with the choice of getting poorer or not having a car.
This is not much different from other attempts at social engineering; it is well-documented that welfare has driven millions into poverty and made sure that millions more stayed there, and it is equally well-documented that raising the minimum wage hurts unskilled workers
, to name two prominent examples.
And that is the very essence of government programs. They seldom solve or even make dents in the problems they are intended to address, and they inevitably create new problems which lead to...more government programs, and the cycle continues. And we lose a little bit more of our freedom with each one.
UPDATE 8/24: Gene Mierzejewski
hits on another one I somehow missed: destroying the clunkers is pure destruction of wealth, given how many of them are still useful. As I note above, this is essentially the destruction of wealth of the poor.
UPDATE 8/24: And, of course, there is the distinct possibility that dealers will not get reimbursed at all
, raising the price of all cars for everybody and destroying jobs at car dealerships and their suppliers.
Labels: economics, politics, taxes