August 09, 2009

Why cash for clunkers is ridiculous

Is this government program supposed to help the environment or stimulate the economy?

It is hardly going to help the environment. First, it's promoting the production of new cars, meaning that the earth has to be mined for the materials and enormous amounts of energy have to be burned to produce the car. The amount of resources required to produce new equipment always has to weighed against the resources wasted by difference in efficiency of the old equipment.

Second, the requirement that the so-called "clunkers" be junked and recycled also works against achieving a higher average fuel efficiency of all cars that are on the road. The oldest cars on the road that are least fuel efficient and most polluting are going to be left on the road because the owners of those cars drive those cars precisely because they could not afford a new car even with a government subsidy. Those cars will stay on the road while the used cars their owners would be glad to trade up to -- which are more fuel efficient with cleaner emissions -- are getting junked under this stupid program. Furthermore, the used cars that are still much better for the environment will get more expensive and more out of reach for the owners of the oldest cars because the supply is being reduced.

This program is shaving off the cost of new cars for certain buyers, but how can it help the economy when consumers are being encouraged to take on more debt? I thought consumer debt was reaching a crisis level. And isn't the federal government running at a deficit? After the bailouts and the stimulus, the government is taking on even more debt. Good shot, Congress.

Originally posted as a Facebook note.