Topic: Economic Policy
"Cash for Clunkers": Success Redefined? “Cash for Clunkers” is being called a great success. Politicians are scrambling to fund an expansion of this program. Let's do a little math and see if we can agree.by EJ Moosa
(libertarian)
Wednesday, August 5, 2009
"Cash for Clunkers" is being called a great success. Politicians are scrambling to fund an expansion of this program. Let's do a little math and see if we can agree.
The reports have been rolling in and we have heard repeatedly that showrooms were filled with people looking for new cars because of the "Cash for Clunkers" program. The Senate is working hard to fund this program for a whole month. They desperately need to tie themselves to a successful, popular program.
My non-scientific drive by of the dealerships near my home last weekend left me a bit suspicious. I saw no unusual activity. They did not even look busy. I saw few customers walking around the lots.
To most folks that would seem like a large number. Showrooms must be standing room only, right? Consider this:
There are 3,140 counties and parishes in the United States. If this program has been going for 14 days, then that works out to an amazing 3.57 cars per county per day. Wow. Can you feel how much cleaner the air is? Have you seen all the "License Applied For" tags on your daily commute?
Perhaps some counties have no dealerships at all. Certainly a possibility. But right down the street from where I live there are at least 8. There are at least 15 in the county that I can think of off the top of my head.
Suffice it to say I am having a difficult time buying the hype on what a grand and successful program this is. Frankly, this is BS.
We have lost touch with reality in this country when it comes to numbers, impacts, and outcomes. We need more people to start doing a little math before we call something a success. We have a large country, people.
What seems like a large number at first is generally not so large when you break it down by county, something most of us can relate to. Would you even notice the new cars in your county?
Were "Cash for Clunkers" to be really successful as it has been described to us, perhaps 30 cars per county per day would be a starting point to describe success. But we cannot afford such a plan can we? That would be 10 times what we have spent so far.
Sorry, I am not buying it. This seems more like an attempt to create panic buying before your model is gone. Three and 1/2 cars per day per county and there is no more inventory? I know salesmen that used to sell that many cars per day.
That's my opinion. So do the math, and then tell me yours.
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The views expressed in this
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Posted By: Jahfre Fire Eater
Date: 2009-08-05 18:27:01
Hi EJ,
Success is relative. As with most government programs, the success of the "cash for clunkers" program is not measured in how well the consequences of the program align with the stated goals of its advocates. Nor is it measured by any economic impacts the consequences might cause. Instead, just like the example of the public library in George Dance's recent article about Booze and books, the success is measured by participation or usage, not by any measure of the value provides or harm it does to our economy.
The trick is to define the program specifically so that it has a known demand so the usage is high. Media spin and politics will make sure the right people hear the program was successful and beneficial. I heard a bit on NPR just today about the downstream benefits that recycling all these old cars has. Ridiculous of course, but the perception amongst the voters is far more important than the actual results and consequences.
Certainly there will be follow-on programs, cash for major appliances, cash for tools, etc. Each program will target a specific demand niche right down the line. I'm holding out for the "Cash for Lumpy Sofas" program. I've owned 4 different homes over the past 30 years but until very recently I had never purchased a new piece of furniture. I've made due with hand-me down old used stuff until a few months ago me and the Mrs. got new leather recliners. I'd love to get a check for the rest of the old junk around here so I could buy some IKEA and a new toaster.
Our generation will be hated for long into the future for our blind consumption and greed but Bernanke, Greenspan, Bush and Obama will be eternal villains; as will all the academic and media sycophants of Keynes. Every one of the coming parade of programs, incentives and bail outs is a nail in the coffin of this tremendously bad idea: Socialism and the economic models that temporarily enable it.
Posted By: No Name Supplied
Date: 2009-08-17 10:58:25
Hello,
Your recent coverage of Cash for Clunkers legislation on your blog was spot on. Many people will not qualify for the government program so I thought you might be interested in more info on vehicle donation alternatives to the Cash for Clunkers program. You could help charities a lot by adding a link to our informational page on Cash for Clunkers versus charitable car donation - http://www.donatecarusa.com/cashforclunkers.
Charity Assistance Team Donate Car USA and for more than 400 charities Charityprogrm@donatecarusa.com Toll-Free (888)-317-7279
They way you rate the numbers, it does sound like a flop. Dealerships should be able to sell a half dozen cars daily without this incentive. Makes you wonder how their sales staffs make a living. Overall, though, if you consider the average price of a car at $25,000, they did sell about 4 billion in autos in that two week period. Too bad Congress was too stupid to write the bill in a way to help American manufacturing. It should have been a $4500 to $5500 rebate on "American" made autos and up to a $2500 rebate on foreign brands. Who exactly does Congress work for?
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