Sunday, December 19, 2010
A Chink in the Clunkage
As it turns out, "Cash for Clunkers" probably wasn't the best way for the U.S. government to spend $4,000,000,000. a) It pushed the cost of used cars higher. b) It markedly reduced the number of cars donated to charity. c) It negatively effected the auto recycling industry (certain parts were destroyed in the process of disabling the engine, thereby creating a shortage of them). d) It provided only a short term surge of car sales. e) The environmental benefit was minimal, at best (yes, the newer cars were more fuel efficient, but, yes, so, too, were they probably driven more). And f) it was all done on borrowed money....To say that this is a good example of "The Law of Unintended Consequences" is probably accurate (the purity of the motivation for it, aside) here.