“This is the one stimulus program that seems to be working better than just about any other program,” said Ray LaHood, Secretary of Transportation, in August.
Well if that’s the case, than every government program should be thrown out.
The Wall Street Journal explains what a disaster “Clunkers” truly was, calling it one of Washington’s “all-time dumb ideas”.
Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.
Of the two things the program was supposed to achieve (boost car sales and help the environment) it did neither:
“According to Hudson Institute economist Irwin Stelzer, at best ‘the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day’s gasoline use.’ Burton Abrams and George Parsons of the University of Delaware added up the total benefits from reduced gas consumption, environmental improvements and the benefit to car buyers and companies, minus the overall cost of cash for clunkers, and found a net cost of roughly $2,000 per vehicle. Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.”
The broken window fallacy teaches that you cannot create wealth by destroying productive assets, and yet that is exactly what bureaucrats had in mind.
The Journal sums it up, “In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices.
The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.