Cash for clunkers - Page 8

I neglected a smiley. My bad. I wasn't pissed, just sarcastic.

Besides, who brought up the environment anyway?

Other than direct cash subsidies to trucking and the steel industry what would have been a more effective way? Continued new car sales has good secondary effects on those markets.

Why was the destruction of "perfectly functional automobiles" a significant problem? There's no shortage of the top 10 vehicles listed for the used market. I checked carmax for a few. If I want a used ford explorer there are plenty.

There are many more cost and fuel effective alternatives on the used market. They are a class of vehicles that are not good for the country.

So rather than hand the automakers a direct subsidy we helped out americans better afford a new car which kept more americans working and with significant economic leverage on the money spent. If we destroyed some engines and the rest are parts or scrap metal to be used elsewhere BFD.

For a lousy $3B? We should have kept going with tighter restrictions and slammed the auto industry with significant CAFE standard hikes.

If the Chinese can't reign in domestic oil use and oil imports while we can, thats a significant economic and strategic advantage for us.

Umm...not when we're borrowing the money from China to fund this thing in the first place.

Something went seriously wrong somewhere in our educational system. \

Better to use Chinese money to fund a US competitive advantage (or limit a US competitive disadvantage) than to fund some other dumb assed thing.

Like nationalizing the auto and financial industries?

Yes, most of my fellow Republicans these days can't see the future beyond next week...

From a strategic standpoint, the more gas guzzlers we can get rid of by any means is a good thing. In 2009, we've save as much oil as ANWR would produce (in a year) in comparison to 2007.

Where does that leave us? With 25 years worth of untapped oil reserves safely under US soil. We might want to do some low rate production there anyway in the largest fields but conservation will have a far greater positive impact than any amount of drilling and cost far less.

$3B for $7.3B of economic impact in a recession year plus it gets gas guzzlers off the market? Awesome.

Do it more even if the economy recovers? Sure. To stimulate new car sales to offset the penalty of higher CAFE standards and the destruction of gas guzzlers to hasten the point of energy independence from middle east oil sources.

Today our oil imports are around 9.1M bbl/day and our domestic production is going to decline but if we can reduce imports by 25% that's the middle east's contribution to our oil usage.

We'll never see energy independence until we fully transistion from oil and that seems real unlikely. Not much else has the same energy density as oil.

The destruction of wealth is the destruction of wealth. That's a bad thing. Period. That's what happened here.





You appear to be trying the "I can win the argument by making shit up" gambit.

It amazes me that people are defending this Cash for Clunkers debacle. It's really quite scary.

Not a big fan of that. On the other hand the banks are paying back the loans. Threatening to tie loans to executive compensation seems to have been a good idea.

Plus money started moving again and there wasn't a feared melt down and liquidity increased. All in all, I think that's a success story for Bush/Obama.

Investing in GM with strings attached was better than simply letting it fail.

Nothing is "period" unless you're a fanatic, 5 years old or a puppy. There's been plenty of destruction of wealth the last few years. This one at least has tangible positives and it's not "wealth" as much as vehicles that never should have been built or purchased in the US. It's like buying out people in flood plains and moving them so you don't end up paying more when they get flooded again in the future. That's "destruction" of wealth to insure lower losses later.


Then find your own numbers to counter. These are based on the estimates of sale gains from NADA and I've lost the link like a dumbass. I'll google it back later but the bottom line is that more sales were recorded in 2009 than they otherwise would have been. Sure, they're largely stolen from 2010 but the economy needed a boost this summer and it got one.

If you jump off a cliff without a parachute you will die. PERIOD.
If you do not eat or drink anything, you will die. PERIOD.
If you stop breathing in and out, you will pass out. PERIOD.
There are plenty of "periods". And you don't have to be a fanatic, or 5, or even a puppy.


Who gave you the right to decide what should or should not have been built or purchased again?

Yes and, sadly, the Obama administration deliberately added to the destruction.







Thanks for your opinion.






You really need to invest some time reading a couple of economics books, it will do you a world of good. Though it will likely shatter some of your currently held fallacies.

Gee...I just stopped eating and drinking anything for 8 hours (aka sleeping) and I didn't die.
People have fallen great heights and survived and I guess you've never heard of cliff divers. I guess that was wrong too.
And I just held my breath for a minute. Nope, still here.

I guess your pendantic counter examples suck and have zero bearing on the criticism of such a broad and inaccurate statement as wealth destruction is always bad. Except perhaps when it isn't or keeps more losses from occurring.


The market. Notice the failure of the big 3 and the general ascendency of car companies that made cars that didn't suck? Also it's personal opinion, not an absolutism. I have every right to an opinion just like it is his right to the opinion that they are "wealth" as opposed to "junk cars Detroit was stupid to ever build and us to ever buy".

I think I can better support my opinion than his though given the state of the makers of the top 10 traded in clunkers and the state of the makers of the top 10 purchased vehicles.

And you need better arguments than bald assertion, hand waving and ad homs.

Wealth destruction exists. it is the nature of capitalism and consumerism.

You've never read about Keynesian counter arguments to the broken window fallacy in your economic books? I guess undergrad econ books don't cover that kind of thing and surface understanding of a subject (which is all I have on economics) sees absolutism where there is disagreement between economists and their schools of thought...Keynesanism vs Austrian.

Which is typical...ask 10 economics how to fix the economy and get 11 different answers.

Neither of the two schools are absolutely right or absolutely wrong.

Besides, American lifestyle is all about wealth destruction. Complaining about the destruction of some of those contributors of wealth destruction is simply opposition to against anything the democrats do and ironic at best and hypocrisy at worst.

I'm naturally disposed against Austrian economics simply because it lacks scientific rigor and reject mathematics and scientific observations even if I notionally agree with many of it's platitudes. If you look at austrian theorists of predictions of economic activity it is no more prescient of actual outcomes than those Keynesian theorists (as in both have been wrong about some major points).

Of course, given that the measures of economic performance is based on mathematical metrics (previously rejected by the austrian school of thought) the observational evidence is naturally flawed and we must depend on logical modeling of human behavior for economic theory.

Besides, I was never a big fan of Bastiat's predilection toward reducio ad absurdum arguments. It is an extremely weak logical position. I'm no Keynesian obviously but synthesis of economic theory based on observational input sits more comfortably. So the evolution of economic theory post-Keynesian seems more productive than the austrian position.

Oh, I have carried on a bit, haven't I? Perhaps your esteemed knowledge and expertise in this area can bring further light to this discussion. Would you care to expound upon your apparent unwavering belief and support in austrian economic theory?

Wealth destruction isn't inherent to capitalism or consumerism. Consumption and destruction are two obviously different concepts.

There were plenty of stimulus options that didn't involve destruction of wealth. The most obvious being a cash for clunkers program that didn't require destruction of traded in vehicles.

I'm not talking about cars like that. Kids and low income people don't buy $10,000 cars. I'm talking about cars under $5000...cars that would be perfectly useful and affordable but got destroyed.

Higher CAFE standards? You have to be kidding. CAFE standards have caused many problems and have solved few. The car requirements are what launched the SUV craze, as they didn't apply to light trucks.



Another quality post from you, I see. The owners decided they could get more than the trade-in value for their cars. Duh.

I think you're a little confused here. It's true that consumption does destroy wealth in a sense. But what we're talking about in this instance is the deliberate destruction of wealth not for the purpose of consumption, simply for the purpose of destruction. In other words these cars were not destroyed because people consumed them until they were no longer usable, they were just destroyed. A comparable example is where, instead of wearing some piece of clothing until it is fully worn or donating it to someone else who does the same, you simply burn the clothes long before the end of their useful life.

The purpose of production is consumption. But there has invaded economic thought the idea that the purpose of production is production and, in that model, destruction for the sake of destruction is fine because the goal is simply production. This is the root misunderstanding behind the idea that it is fine to destroy things "because it will create more jobs."

Two related concepts. The consumption of material is directly related to the destruction of that material. If consumerism and destruction were completely unrelated there would be no massive land fills now would there? Given that our economy is based on consumerism and that it requires that many objects, still useful, be replaced to fuel continued economic growth/sales and that many of these replaced objects, still usable, end up in land fills seems to indicate that the reality of consumer based capitalism is that wealth destruction...as defined by $fc opponents as destroying any still usable object...occurs as part of the process.

My reply is so what? I don't hear anybody railing about still useful objects ending up in our land fills so it begs the question as to why anyone really cares that fuel inefficient cars end up as parts on the secondary market sans engines and drive trains. I may have been more selective in which cars qualified but given the primary objective was to give the economy a kick it was fine as a short term program.

Also, one of the hallmarks of capitalist systems are booms and busts. Is your argument that busts do not destroy wealth? Or that busts have not been historically been a feature of every capitalist system to date? if you can show me an economic system, that isn't in abject stagnation, that doesn't suffer from busts lets do that.

Oh, and keeping the clunkers would have had a negative effect on trade in values which would have impacted new car sales due to larger number of used cars. With a scarcity of used cars the delta between new car and used car costs narrow and the equation shifts in favor of a new car purchase.

Yes, this impacts the car purchasing power of poor but stimulating new car sales is the objective of this program. TANSTAAFL. You have to weight the economic value of new car sales vs the availability of cheap used cars.

Want to bet that you could find still usable clothing at your local landfill?


Which is reducio ad absurtum.

In this case the objective was to stimulate new car sales during an economic recession through providing cash incentives to do so. The secondary objective was to reduce US fuel consumption at a point where oil prices were very high. So the rules were set to incentivize trading in high fuel consumption cars in favor of low fuel consumption cars.

Letting these cars end up back on the roads does not help meet the secondary objectives so the "destruction of wealth" was not capricious and had positive secondary effects as well as influence the sales of new cars positively (by decreasing the cost difference between used and new cars as noted previously).

Destruction for the sake of destruction is obviously bad. Arguing against that has very little to do with the cash for clunkers. You can disagree with the value of those secondary effects but frankly it's a bit short sighted not to seek lower dependence on foreign oil.

Even using the classic broken window fallacy example, the counter-example is the subsidization of destruction of perfectly good windows and replacing them with far more energy efficient windows. Not just because of job creation and production of new windows but for the reduction in the total cost of ownership in the house.

Amusingly, if you look at the big picture as Bastiat insists, the total cost of dependence on foreign oil and the unintended consequences of that dependence is likely of much higher importance to our continued way of life than the destruction of some F150s windows or the ability for Americans to drive/consume SUVs just because they want to.

No, not pause eating and breathing. Stop. Fully.

As far as the cliff, I guess you are free to take your chances.



Opinion noted.

What has the effect been on fuel consumption? How much did cash for clunkers reduce our dependency on foreign oil? I'm asking because I don't know. But even if there was a notable impact, fuel consumption had already been dropping for some time due to the poor economy. People were already making the switch to more fuel-efficient vehicles without government incentive. And all this program did was borrow from future sales - sales that would have happened anyway. Therefore, the $3 billion in tax money (borrowed from China) was a waste.


Cash for clunkers only borrowed from future sales. Using your broken window example, if the homeowner would have eventually replaced the window on his own anyway, what was the point in giving someone else's money to him to do it a little sooner? And money that was borrowed from someone else and will have to be paid back with interest, to boot. Will the savings in energy be enough to cover that interest?


It's amusing to you that people in a supposedly free society no longer get to drive/consume SUV's "just because they want to"?

Yes. So? Is your argument here that just because something does happen it is good?



Thanks.



That's highly debatable.



Actually it's far more short-sighted to be overly concerned with dependence on foreign oil.



And this is where the problem starts. Since subsidization typically comes in the form of government subsidization it comes as a result of force...the force of a the few (who are politically driven and motivated) rather than the choices of the many and, finally, all of that at the cost of liberty. This creates an essentially arbitrary distortion.



First, you probably need to read more Bastiat in the area of free trade. Second, an analysis of the what the so-called "cost of dependence on foreign oil and the unintended consequences of that dependence" are and what is the true cause of them. My bet is it has nothing to do with using foreign oil so much as it has to do with the U.S.'s militaristic approach toward oil. That problem (and the associated costs and unintended consequences) can be fixed without the fetishist obsession with foreign oil dependencies.

That's a lot of talking in circles just to deny that consumption and destruction are distinct concepts. Destruction of vehicles simply wasn't required. There were plenty of other options.

As for "I don't hear anybody railing about still useful objects ending up in our land fills". Are you serious? Are you really claiming that you are oblivious to the existence of such an opinion? Even with regard to the exact subject at hand, go a few pages back in this thread. You'll see that I indeed was railing against our throw-away culture.

On top of that, the government doesn't typically pay people to throw away (or destroy) property. When they do, as is the case with cash for clunkers, people call them out on the absurdity of the situation. What's next? Paying people to burn down their house?

Plenty of other stimulus options were available. Destruction of wealth (cars) is NOT a requirement for economic stimulus.

Distinct but related concepts. Is it so hard for anyone to agree on any sort of middle ground?

Exactly what point are you trying to make? That there's no linkage at all?


So despite that opinion you see zero linkage between consumption and destruction? Mkay. I'll take a look to see what you said but a link would have been helpful.


Yes, I agreed that the destruction of gas guzzlers was not required for economic stimulus but to reduce the number of gas guzzlers on the road. How, pray tell, does one meet that objective without actually removing gas guzzlers from the road?

But we haven't been arguing about the merits of removing gas guzzlers or the method that was employed.

It has been the bald assertion that the destruction of these vehicles was completely random and served no purpose what so ever. I guess that's one way to attempt to win political arguments. Completely disregard the opinions and objectives of anyone but your own. Doesn't seem to be very effective at anything but polarizing the issues.

You were claiming that:

That was the quote is I was taking issue with. Besides the pointless political accusations, consumption is what drives consumerism, not wealth destruction.

You seem to be saying that wealth destruction was necessary to drive the stimulus. This is false. Arguments about effectiveness aside, consumption is what drove the stimulus, not wealth destruction.

As for getting gas guzzlers off the road: I don't believe that cash for clunkers was productive at all in that regard. It wasn't environmentally positive and it didn't make us more self-sufficient. Manufacturing of replacements had an offsetting, negative environmental impact. And we borrowed money from foreigners so that we didn't have to buy oil from foreigners.

Don't get me wrong, our economy was in bad shape and government action was likely a good solution. I just feel that, for the above reasons, the wrong stimulus strategy was chosen.

So please, enough with accusing me of not wanting steel workers to have jobs, or claiming that my stance has something to do with political parties.

Who made that assertion?



I love irony.

Nope. I'm saying it's part of the system. Are you denying it?


No. The objective is clearly stated. You can call the goal highly debatable if you wish.


Really? Pray tell exactly where are we spending blood and treasure today?


Right. Because no form of any sort of governance ever required "force". Pray tell what utopia where no form of coercive governance exists? And they called hippies out of touch.

The choice of the many elected this particular administration enacting this policy. When we tire of it, the choice of the many will elect a difference administration. Find me a better form of governance in the history of mankind.


Since you're the expert perhaps you'd like to state it rather than allude to some higher knowledge?

Because otherwise it's just plain BS.


Well, it might have a little to do with the fact that oil money is funding our enemies that saw fit to blow up some of our citizens on our own soil. I have no objections to the US using its military to secure strategic needs for this country. It is not always the optimal choice but it is a viable one and the reason that militaries exist: To protect national interests.

However, if you lessen the need for foreign oil then you lessen the importance of oil to the US. It also means that we can gain important strategic advantages against potential adversaries...military or economic.

Also, 20% of our trade deficits are due to oil imports and we spend an enormous amount of money to import oil so it helps out on the borrowing aspect which is the other major threat to our position as dominant power.

I have long argued that the Chinese are close to the same position that the US was vs the UK during the Suez Crisis. The US ended the Suez crisis by threatening to trash the pound sterling. It also ended Britain as a world power.

But frankly, curtailing our borrowing from China is less tractable than the reduction of foreign oil dependence. Given that their dependence on foreign oil imports is on the rise, then if we were more insulated from the effects of the oil market we could use that as an economic counterpoint to what they could do to the dollar.

And we could also better avoid a military confrontation with a near peer (or by then outright peer) seeking to defend its own strategic needs. Outside of Taiwan, that's our most likely point of contention for the next few decades. It's not for kicks the Chinese is seeking naval basing in the middle east. The Chinese are sinking billions into Iran.

But yeah, oil is of no importance on the geopolitical and economic stage.

I have never said that. And my point is that wealth destruction is a by product of consumerism. It may not be a driver but why don't you outline a consumerism based economy that does not result in wealth destruction.


Every single one of those vehicles is now off the road. Hard to say it was completely unproductive toward that goal. You can argue that it's a small number of vehicles. But it's also a relatively small amount of money who's primary objective was something else.


You're asking a lot of $3B.


And over the long haul, we'll have borrowed less because the amount we pay every year will be less.


Sorry you're upset with the usual tactics of my fellow conservatives. I feel no great need to be overly polite to them in this forum or not to have the attitude of what's good for the goose is good for the gander. We've spent the last decade polarizing everything and calling everyone that disagrees un-american.

We didn't have to borrow the money at all. The sales would have happened anyway, just over a longer period of time.

Quality enough for you to take the time to quote it and respond to it.

So you are saying that Ford Explorers loose their value in 5 years below 4,500. So you agree they are crap.

Feel free to hold yourself to a higher standard.

Long-winded economic model comparisons aside, it is still quite baffling that more people aren't questioning the need to destroy perfectly good cars. It really is the same as paying people to bulldoze their homes. Hopefully, if it ever gets that ludicrous, people will finally pay attention and apply a bit of critical thinking. What I've seen with regard to cash for clunkers is pretty much no discussion of alternatives at all.

Much of the blame falls to politicians and people like Paulson. Remember when the shit hit the fan and a vague plan was hatched with little if no public discussion or oversight? Paulson basically said, give me the money and don't you mind what I do with it. Well I mind! And that goes for congress too. There should have been much more debate. We saw virtually no weighing of alternatives.

While it can reasonably be argued that cash for clunkers raised consumption and perhaps saved parts of the auto-industry, all other things equal, non-destructive stimulus would be preferable. I am convinced that we could have accomplished at least as much without the needless destruction of vehicles. We should never be borrowing money to pay people to destroy their cars.

The fact that they lose value doesn't make them crap. Quality is not always commensurate with price.

Please name a car for which this does not apply.

Old and inexpensive <> "crap".

Did not know "old and expensive" is a brand, is it made in Japan?

How does this answer address my question within the context of this thread?

How large is the expensive antique car market compared to the avg "go to work take kids to school" car market?


Please post before you take your meds.

The better question to ask is what is it that allows the Explorer to sell at an inflated initial price and who controls that. Then ask when the price reverts to the mean does it really reflect the quality of the vehicle or rather merely the real price apart from manipulation.

Both the Japanese and American vehicles will revert to their means. The reality is that most SUV's were marketed as upscale vehicles and priced accordingly. Their prices didn't really reflect this value and instead were possible via the continual intervention of the Fed and government into the credit markets.

So when the Explorer reverts to being a $4,500 that was initially priced at $38,000 and the Camry reverts to being a $4,500 vehicle that was initially priced at $22,000, it doesn't make one crap or the other good. Rather it means the credit market that was propping up the pricing disappeared when both vehicles reached a certain age and thus both reverted to the pricing associated with getting from point A to B rather than the pricing associated with, it is pretty, shiny, and they will give it to me if I sign a piece of paper.

This is no different than the housing market. The $400,000 house that is now worth $150,000 didn't suddenly become a "crap" house nor did the quality change in accordance with the price. Rather when the credit market and the bubble it was creating collapsed, the pricing reverted to what someone considers an appropriate cost for shelter.

The government has stopped letting markets price efficiently in so many different ways. Their fingers are in everything. It is only when they are removed that the picture starts to become somewhat clear. Clunkers sought to even distort the used vehicle market by not allowing the vehicles to even be parted out. Instead they had to be scrapped.

If you want to see the price of vehicles today, you must go to the age of vehicles where they are free of the possibility of being lent on. Until that point the government, banks and everyone else who has something to gain from manipulation rather than production, are distorting the process too much to allow the true value to be determined. The markets are not efficient in those circumstances.

So old and inexpensive isn't a brand but old is the only area where credit is removed from the equation and thus the market has a chance to work efficiently.

expensive <> inexpensive

These are Marxistic ideas. I do like some Marx here and there. I also like French cheese.


I believe in the market. The monetary value of an object (car) is a reflection of :
1) Popularity
2) cost to quality
3) Advertisement
4) Brand recognition and acceptance
5) Word of mouth
A car is not Real Estate. Otherwise you would be able to deduct your car loan interest.

Cash for Clunkers eliminated cars with no real market value.
Your socialist "oh, the poor people can't buy these cheap used/trashed cars" ideas are irrelevant in the US. This is a capitalist country.

That's completely false. The value of something is set when a buyer and seller agree on a price. The vehicles that qualified for $4C had to be registered and in working order. They could have been sold for some amount of money. So they did have value. If they were truly worthless then there would be no need to destroy them before disposal.

There truly is no defense for this ridiculous program. It was just a transfer of money from China to the US to car dealers and then the auto makers. More than likely it inflated prices on both the new and use car markets. Strapped a bunch of people with a car payment they maybe didn't need.


The only ones that defend this are those that are wiping their chin off in love with Obama.

License fees collected.
Licenses processed.
Cars readied for sale.
Sales contracts drafted.
Loans processed.
Manufacturer parking lot emptied.
Truck drivers driving.
Oil consumed.
Cokes from dealer vending machines purchased.
Phone calls made.
Advertising paid for.
Ads printed and televised.
Sales staff overtime paid.
Coffee at dealership consumed.
Electricity for flood lights paid for.
Cars destroyed.
Metal recycled.
Tires re sold.
And of course license plates stomped and painted.

All this done by people who got paid.

Is this a serious reply or just an attempt at trolling?