Tuesday, August 11, 2009

I was wrong for supporting "Cash for Clunkers".

A few weeks ago, I came out in support of the government's "Cash for Clunkers" program. I have to admit that I was wrong for doing so. From a macro perspective, it seemed like a great idea. New Car dealers are benefiting as well as auto manufactures. What could possibly be the downside to a seemingly successful program right? Here are a few negatives to the program. Not everybody can afford to buy a new car. What the government considers "junkers" is what other people call basic transportation. It comes down to economics. Normally when new car dealers take in older cars on a trade in order to sell new ones, they normally sell their trade in cars at the dealer auto auctions. Used Car dealers buy their inventory from the dealer auto auctions. Two of the provisions of the "Cash for Clunkers" program is that the parts can't be sold for scrap, and the cars must be destroyed.



This is how the government's program is actually "hurting" the working poor families who need cars for basic transportation. With trade ins being destroyed instead of normally being sold at the used car dealer auctions for used car dealers to buy, used car dealers have to pay a lot more for their inventory. In the end, the used car dealers are going to have to raise the cost of the used cars they sell dramatically. It comes down again to supply and demand. So the unseen victims are actually the "working class" folks who can't afford a new car but need "affordable" transportation. Since used cars are being destroyed by the request of the government, the parts for older model cars are going up in price as well, because the parts are now harder to find. It comes back to "supply and demand" yet again. So the victims in the "Cash for Clunkers" government program are Used Car Dealer Auctions, Used Car dealers, Auto Part Recyclers, and moderate to low income used car buyers. This is why ideas shouldn't be allowed to pass just because politicians "meant well". A supposedly good idea by the government really wasn't that good an idea after all. I fell into the same trap originally that the government does on a daily basis. I saw the possible short term benefit of a government program without understanding what the long term negative impact would be. Things should get back to normal once the program ends in September.

5 Comments:

Blogger God Of Bacon said...

Voters are always welcome to stop voting for the best actor. America's problems are caused by registered voters.

3:41 PM  
Blogger Beyond The Political Spectrum said...

Incredible! There is apparently no pleasing dogmatic conservatives. We are not going to get out of this economic crisis without spending money, bottom line. True, those wrecked cars could have been sold to individuals who don't have cars, but no idea is going to be perfect, no matter WHICH point along the political spectrum they derive!

11:33 PM  
Blogger conservative brother said...

God Of Bacon " Voters are always welcome to stop voting for the best actor. America's problems are caused by registered voters."

I so do agree with that bacon!!Obama did a good job passing himself off as something he clearly is not. Ignorant, uninformed, clueless registered voters are the most dangerous force to a free nation.

11:41 PM  
Blogger conservative brother said...

Beyond The Political Spectrum "Incredible! There is apparently no pleasing dogmatic conservatives. We are not going to get out of this economic crisis without spending money, bottom line. True, those wrecked cars could have been sold to individuals who don't have cars, but no idea is going to be perfect, no matter WHICH point along the political spectrum they derive!"

Let me see if I got this right Spectrum. Hurting the Dealer Auction Industry, Used Car Dealers, and the Auto Parts Recyclers is necessary to get us out of this recession? You talk about no idea being perfect, how about the government cutting taxes and allowing people to spend their own money as they see fit?To me that makes wicked sense. Also my tried and proven idea doesn't hurt other industries in the process.

11:46 PM  
Anonymous Cars4Charities said...

You are absolutely correct, cash for clunkers is hurting the poor. It is also hurting charity car donation as these are the cars that charities would either give to the poor or sell and use the proceeds to fund their mission.

1:39 PM  

Post a Comment

<< Home