Friday, July 31, 2009

Unintended Consequences Part I --UPDATED


House plan seeks to pull car sales out of doldrums: "With auto sales in the doldrums, the House was considering a plan Tuesday to provide vouchers of up to $4,500 for consumers who turn in their gas-guzzling cars and trucks for more fuel-efficient vehicles." I see the cost of new vehicles "inexplicably" rising by about $4500 or so in the next 18 months, no doubt to cover the cost of proposed efficiency improvements... (On the other hand, this is far more than the estimated $1000 my old Explorer is probably worth on the open market.)

UPDATE: Nevermind, the program has run out of money after just one week. Consumers never actually got the money: the government promised the vouchers to the dealers in reimbursement. Lots and lots of unhappy dealers who might not get their government checks now may put these clunkers back out on the road to recoup their costs --including a significant number that probably weren't being run before the program was announced. And reports indicated that there was a lot of this sort of thing going around: Mommy wanted a new Lexus, so Daddy told Suzie to give back the old Suburban (which was still in his name), gave Suzie the keys to the old Lexus, and went and bought Mommy a new Lexus at a good discount. Doesn't anyone in the government think ahead or get second opinions anymore?

UPDATE II: oh goody, they're going to solve the problem by throwing more money at it!!! Now it has been pointed out that this is precisely the sort of stimulus spending that could, you know, actually help ordinary people. Still, I'm just not at all happy that no one is thinking about long-term here.

UPDATE III: there may be a $45,000 limit on the new car, but consumers are still lining up to buy imports: four of the top five cars purchased via "cash for clunkers" are foreign-made. Not just "foreign-branded, but made in Indiana" but foreign-made. Free trade is a wonderful thing, and protectionist measures are generally bad in the long run. Even so, attempts to justify this program as "good for America" are proving more and more specious --unless you work for a dealership.


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