Cash for Clunkers

The Cash for Clunkers program is yet another stupid, wasteful and costly initiative from the Obama administration. Don't get me wrong; some people will benefit from it. My own grandmother will likely trade in her ailing Oldsmobile Aurora for a new Ford Fusion with help from the government rebate, a swap that she both honestly needs and otherwise could not afford. However, the problems that go along with the initiative are so glaring and numerous that the idea of Congress injecting more money (another $2 billion) into it is laughable.

First of all, the administration's claims that Cash for Clunkers will benefit the environment are complete rubbish. Sure, we'll be burning slightly fewer fossil fuels and cutting down on air pollution. But how could anyone consider this an environmentally-conscious initiative when every single one of the cars traded in is crushed into a cube and placed in a landfill? Assuming that each trade-in receives the full $4,500 rebate, and allowing part of the fund to go toward destroying the trade-ins, the $1 billion fund should allow for over 200,000 trades. That's 200,000 crushed-up cars in landfills that weren't there last month. And if Congress injects the proposed $2 billion addition to that plan—which they likely will—we can increase that number to 600,000 cars.

(As a side note, Cash for Clunkers is also a waste of thousands of perfectly good vehicles which could have been donated to those in need. Especially with unemployment rates as high as they are, having reliable transportation is essential to gaining employment. Still, the Cash for Clunkers initiative requires that trade-ins be crushed. What's more—it requires that they be in drivable condition before they're destroyed.)

But the Cash for Clunkers program is perhaps most flagrantly stupid when it comes to the economics of the situation. What it essentially comes down to is that the government is encouraging consumers to take on more debt. During a recession. (Isn't irresponsible borrowing what got us into this mess in the first place?) Because only new cars qualify for the rebate, every consumer who takes advantage of Cash for Clunkers loses 10-20% percent of the car's value as soon as they drive it off the lot. And if they don't use cash, which most of them won't, they'll come away with more debt than they had before the trade.

Even more disturbing is that those who buy new cars under Cash for Clunkers are not entirely responsible for that debt. The value of the rebate becomes more debt for American taxpayers, because, like most of what Barack Obama has accomplished so far, Cash for Clunkers is paid for with taxpayer money which the government does not have (meaning "has yet to collect").

My next criticism is that Cash for Clunkers interferes in the free market. The program artificially inflates demand, meaning that once it ends, demand will shrink to even less than what it would naturally be during a recession. The current, increased demand for new cars also hurts the used car business, and the destruction of the trade-in vehicles takes business away from the auto repair industry. The government is not just manipulating the "invisible hand." They've basically chopped it off.

I realize this is a long post. There is a lot to criticize about Cash for Clunkers. In short, though, it basically amounts to yet another bailout of the auto industry, this time in the form of yet another government handout. (Interestingly, this auto industry bailout is actually benefitting foreign automakers the most, since four of the top five cars purchased under the program are Japanese.)

But I guess we could look on the bright side. At least this bailout will get some Americans the new car smell, rather than a hundred-million-dollar bonus for some Citigroup executive.

Injustice

The idea of justice is very important to me. It really bothers me to see something that is unjust or blatantly contrary to good morals or common sense taking place. I think injustice is becoming more and more common and accepted in society to the point where we sometimes don't even recognize it at all. I read an article in the Marietta Daily Journal today that highlights exactly what I am talking about and spurred me to write this note. The article was about how the City of Atlanta has demolished almost all of its housing projects in an effort to reduce crime and generally improve the areas around where they were built. (Some of the projects were so crime-ridden that the US Postal Service would not deliver mail to them without police escorts.) It said there are only a few projects left to dismantle and that residents of the demolished projects have been given vouchers with which to pay for private housing. It is a trend being repeated in major cities all across the country, and is generally considered a positive advancement in urban development. In their article, the MDJ interviewed some of the opponents of the movement, particularly a resident of one of the few remaining projects, Jeff Walker. Mr. Walker complained to the MDJ that he didn't want to leave. "I don't think it's fair," he said. "I didn't ask to be moved."

Well excuse me, Mr. Walker, but I don't think it's fair that I work and pay taxes so you can sit in your free house all day and do nothing. And I didn't ask to pay your rent for you as long as you decide not to be a productive member of society. Mr. Walker's statements made me sick and are a perfect example of the injustice that society (particularly the welfare state) has come to tolerate. Even worse is that the Journal presented his arguments as if they were legitimate and reasonable. The crucial fact that Mr. Walker forgets is that he didn't do anything to earn the housing he has enjoyed since he moved to the projects. What is unfair about the City of Atlanta asking him to leave a government-owned facility? Nothing. What is unfair is that Mr. Walker--who is not disabled--gets to live in an apartment for free while the rest of us hard-working taxpayers pay his rent. And his comment about not having asked to be moved? How ungratefully audacious! I find it very sad that we as a society have sunk not only to the level where we expect handouts, but to the level where we feel right in complaining when we get them. What this article says, in short, is that in America you can be both a beggar and a chooser. All you have to do is--nothing.