Breaking: Cash for Clunkers was a dumb idea

[Hauldren Collider]

I don't even know where to start with gribbler's post. There's absolutely no way that Cash for Clunkers did anything other than destroy property. The environmental savings were an order of magnitude more expensive than carbon credits, which means that we could have increased the emissions reductions by AN ORDER OF MAGNITUDE just by spending that 3 billion on carbon credits.

And just because the example given is a Cadillac, that doesn't mean that ONLY CADILLACS went up in price. What the **** makes you think that?

And who the **** thinks government spending is more efficient EVER (for non-public goods)? What the ****ing hell?

[Kuciwalker]

So for $3 billion in rebates we got a reduction in carbon emissions worth $250 million ($20/$237 * $3 billion = ~$250 million) and 125,000 additional car sales.

No. Account for the intertemporal effect or your numbers are completely meaningless.

[Kuciwalker]

I don't even know where to start with gribbler's post. There's absolutely no way that Cash for Clunkers did anything other than destroy property.

Don't be an idiot.

[Hauldren Collider]

Alright, so it did two other things: Moved car sales from one month to another, and reduced carbon emissions in a preposterously inefficient way. Happy?

[Kuciwalker]

You are missing the point.

[giblets]

I don't even know where to start with gribbler's post. There's absolutely no way that Cash for Clunkers did anything other than destroy property. The environmental savings were an order of magnitude more expensive than carbon credits, which means that we could have increased the emissions reductions by AN ORDER OF MAGNITUDE just by spending that 3 billion on carbon credits.

Maybe spending on carbon credits would have been a better form of economic stimulus, although cash for clunkers had the advantage of being targeted to help an industry that was in especially bad shape.

And just because the example given is a Cadillac, that doesn't mean that ONLY CADILLACS went up in price. What the **** makes you think that?

Where did I say that only Cadillacs went up in price? I gave an example of how something that increases the average price of a used car does not necessarily hurt the poor.

And who the **** thinks government spending is more efficient EVER (for non-public goods)? What the ****ing hell?

You seem to have no idea what I'm talking about. Here's a hint:

http://en.wikipedia.org/wiki/Keynesian_economics

[Kuciwalker]

And who the **** thinks government spending is more efficient EVER (for non-public goods)?

Also, this.

[Hauldren Collider]

Keynsian economics does not consist of going around and smashing windows. Taking on debt is far different from actually destroying property.

This would have been Keynsian if there had not been the requirement to destroy the cars.


Kuci is right and I shouldn't have made the sweeping statement that it did nothing other than destroy property.

I'd like to point out that in general, only the AMERICAN car companies were in big trouble. Honda, Toyota, Subaru etc. are fine. These cars are actually built in the USA, even if ownership is overseas, which means the key difference between American cars and foreign cars is whether the company is unionized--and whether its workers consistently vote democratic.

[Kuciwalker]

The broken window issue is only half of the problem with Cash for Clunkers, and isn't insurmountable with a good design. The temporary nature of the benefit combined with the nature and schedule of car purchases are what really damn it.

[giblets]

No. Account for the intertemporal effect or your numbers are completely meaningless.

Could you elaborate? I'm guessing this is about the additional car sales?

[Kuciwalker]

Yes. Account for the car purchases that were not induced by the subsidy, but merely shifted in time.

[Hauldren Collider]

At any rate, the evidence is clear that the overall result of CfC was that it paid middle-class people to buy cars so that other, middle class unionized people could keep their jobs while making it harder for the poor to get cars at all, under the guise of a grossly inefficient greenhouse gas reduction.

edit: gah, so many crossposts. I cant even remember what post i'm responding to.

edit 2:

The broken window issue is only half of the problem with Cash for Clunkers, and isn't insurmountable with a good design. The temporary nature of the benefit combined with the nature and schedule of car purchases are what really damn it.

I don't see how it could be solvable--you're destroying property, plain and simple. Regardless, it was not surmounted, and so remains a flaw of the program.

[giblets]

Keynsian economics does not consist of going around and smashing windows. Taking on debt is far different from actually destroying property.

This would have been Keynsian if there had not been the requirement to destroy the cars.

According to Keynesian economics, government spending in a recession will cause a net increase in output, meaning resources are used more efficiently for production. If one accept Keynesian economics, then one needs to take this into account in order to determine whether there was a net loss in property. Of course it's still a bad policy if other Keynesian policies would have been much more effective.

[Hauldren Collider]

According to Keynesian economics, government spending in a recession will cause a net increase in output, meaning resources are used more efficiently. If one accept Keynesian economics, then one needs to take this into account in order to determine whether there was a net loss in property. Of course it's still a bad policy if other Keynesian policies would have been much more effective.

I am somewhat skeptical of many of the programs that have been labelled as Keynsian. Democrats (and republicans, though they call them "targeted tax cuts") like to spend on constituents, claiming that it is stimulating the economy. But this spending frequently becomes non-countercyclical and just a permanent subsidy, see for instance farm subsidies.

Furthermore there is a case of limited returns. At some point more government spending is not going to be more efficient. The debt and reliance on the government is going to outweigh the economic benefit of an additional dollar of spending.

Oh, also, one more thing. They are spending money, but they are doing it for useless things that do not provide value, or provide very little (blowin' up cars). This makes it incredibly inefficient at best, and worse than doing nothing at worst.

[Ogie Oglethorpe]

The broken window issue is only half of the problem with Cash for Clunkers, and isn't insurmountable with a good design. The temporary nature of the benefit combined with the nature and schedule of car purchases are what really damn it.

The temporary nature of the program is really the only Keynsian feature. Spending is supposed to be infused quickly and temporarily into the system in bad times using counter cyclical attempts at economic braking and stimulus as the cycle dictates.

The most prevalent critique of any of the Obama stimulus actoins are that they were not shovel ready (i.e. timely) or that they were nonstimulative (fiscal multipliers less than 1) despite assurance to the contrary.

Once can at least make the arguement in this case that the actions were timely. One can not however claim they were stimulative.