This video from Friday’s Rachel Maddow show on MSNBC touts the economic benefits of the government’s soon-to-be-over (thankfully) “Cash for Clunkers” program.
Sound’s nice, doesn’t it? More auto-workers hired, a new “Clunker Bomb” business is thriving and the car dealers are getting a lot of business.
Never mind the fact that the auto-workers likely will be laid off once this false bubble is burst. Never mind the fact that the car dealers will once again have lots full of cars no one will buy. Never mind the fact that the “Clunker Bomb” business will soon go bankrupt without the need for disabling perfectly fine engines. Never mind that charities have lost a lot of vehicle donations. Never mind that low-income individuals and families have lost a lot of drivable cars they could have afforded. Never mind that these new cars will be driven probably a lot more than the clunkers, negating any positive fossil-fuel emission reduction. Never mind that the government had to spend money it didn’t have on staff to man this “clunker” of a program. And never mind that this was just more money coming from the government that increases the debt, meaning either higher taxes or higher inflation in the future.
Somehow, if it all makes us feel better, it’s a success! The economic lunacy of this program and the philosophy behind it make me appreciate the importance of economics even more. My studies in political science have made me more cynical of politicians and more appreciative of economists. Programs like this only serve to reinforce this.
(* Also, see this column from John Stossel, which demonstrates the problem with the logic — or lack thereof — behind economic “stimulus” programs like this one.)