Wednesday, August 26, 2009

Government Failure: Wasted Cash for Wasted "Clunkers"

This article in the magazine The Economist explains how the current administration's beloved "Cash for Clunkers" or CARS program (now gone, RIP) was nothing more than a perfect example of government failure.

The article makes lots of good points against the program, but there is more. It also redistributed resources and jobs away from not-so-rich folks (for example, repair shop workers and owners that would have fixed those scrapped vehicles along the years) towards the coffers of very large companies. It made cars less accessible to poor people. It confiscated taxpayers' money and used it to destroy productive capital in the form of useful vehicles, an example of the broken window fallacy. The program indirectly imposed a tax on people that have chosen to buy high-mileage cars or to use public transportation to subsidize people that have chosen to buy gas-guzzlers. It was a totally inept and unfair program, and yet, despite ample public criticism by lots of people that know it better, nothing stopped our elected officials from happily proceeding with it.

The absurdity of this program can be better understood this way: had the government set up a voluntary contribution fund to buy and destroy working vehicles, and had you wished to make a donation to a cause, would you have ever contributed to this fund? I for sure would have never contributed even one penny to it. I can easily think of an unending number of alternative uses for my money that would have made infinitely more sense than this.

By the way, now that our elected officials got ourselves deep into policy foolhardy mode, maybe we should ask the government to assume the role of circus impresario and start promoting demolition derbies across the country.

Anyway, let the video below serve a postmortem homage to all working automobiles and trucks that were victimized by economic insanity (HT Division of Labour).

1 comment:

ENNYMAN said...

There were many voices raised against this piece of legislation, especially street rodders who see it diminishing usable parts for future projects and auto repair shops... The automakers, if they had their way, would make all car buyers come back to the trough for ALL their repairs, maintenance, even oil changes if they could.
There is much more that could be said on this, but as you point out, once a piece of legislation gets traction in the imaginations of congress, there's little we can do to stop it. It gets a life of its own. I am sure they are all patting themselves on the back for its "success."