by the Night Writer
If you were to apply the same thinking to “stimulate” the housing market that the administration is using in the “Cash for Clunkers” program you’d have the government giving you a discount on a high-density urban condo in exchange for your suburban rambler — and then burning down the rambler. (I know, I know…don’t give them any ideas!)
What would that do the housing stock, both the availability and cost of older homes that people could buy and on the rental market?
There are similar inefficiencies and hidden costs in the car version of this boondoggle. Aside from the fact that this government giveaway has all the lasting effect of revving the economic engine by squirting alcohol into the carburetor (or trying to heat your house by burning dollar bills in the fireplace), the program destroys the traded-in cars, taking perfectly good and serviceable vehicles out of circulation. The kind of cars that, say, young seminary students and others of modest means can afford. It also takes “after-after” market parts out of the economy as well.
Whenever you lower the supply of something you drive up the cost of what is available, meaning that people who need cheap and affordable autos in order to get to work or the next ACORN rally are either shut out or pay a “tax” in the form of higher prices for what they buy. Yet, somehow, only the wealthy are going to have to pay more in this latest edition of voodoo economics.
Hope and (short) Change, I guess.
Additionally, if you were to carry the “Riches for Ramblers” analogy further you might surmise that people would be trading in their ramblers for condos in Tokyo or Osaka. Looking at the list of the top 10 cars purchased so far in the CfC program we see the following:
- Ford Focus
- Toyota Corolla
- Honda Civic
- Toyota Prius
- Toyota Camry
- Ford Escape
- Hyundai Elantra
- Dodge Caliber
- Honda Fit
- Chevy Cobalt
Nice to see Ford (the only U.S. automaker that didn’t take bail-out money) number one and with two cars in the top 10, while Japanese cars (and one Korean model) dominate the list save for a lone representative each for Government Motors and Chiseler, I mean, Chrysler.
