Politics & Policy

The Billion-Dollar Car Crash

‘Oh Lord, won’t you buy me a Mercedez Benz,” Janis Joplin once warbled. The Lord, presumably, has other things on His mind, but Uncle Sam is happy to pitch in for a new Benz under the incontestably harebrained “Cash for Clunkers” program, which already has run through its first billion dollars and which the solons in Washington may dump more billions into.

Cash for Clunkers was sold as a greenish stimulus for the suffering car-sales business. If your old car is sufficiently thirsty for gasoline, and the new one is sufficiently thrifty, the federal bursary will dispense to you either $3,500 or $4,500 under the program. Which is to say, one set of Americans will be taxed to the tune of several thousand dollars to subsidize the new-car purchases of another set of Americans, on the condition the cars purchased are the sort of cars that the Obama administration and its congressional allies prefer that Americans purchase. The credit is good for cars up to $45,000, meaning that an entry-level Benz qualifies for a federal handout, but the Porsche Cayman is just out of the reach of would-be automotive welfare queens. Your old car goes out to Monster Joe’s Truck and Tow to get mashed — it is not to be resold, though some of it may be recycled.

There are many kinds of stupidity involved in Cash for Clunkers, but let us address the two big ones: environmental stupidity and economic stupidity.

First the environmental issue. Driving cars consumes energy, it is true, and producing that energy leads to pollution, as energy production always does. Cash for Clunkers subsidizes the switch from relatively fuel-inefficient cars to relatively fuel-efficient ones, but driving is not the only energy-consuming activity related to automobiles. Producing new cars takes a lot of energy, too. Manufacturing a new Toyota Prius, to take one example dear to the hearts of Obama-voting conspicuous green consumers from Seattle to Madison, uses the equivalent of burning about 1,000 gallons of gasoline. If Washington really wanted to encourage energy savings, it would subsidize the purchase of fuel-efficient used cars — as Wired magazine pointed out in a 2008 article (“Go Green: Buy a Used Car, It’s Better Than a Hybrid”), a 1994 Geo Metro gets mileage as good as the Prius’s without incurring the 13 million BTUs of energy necessary to build a new one. So it is far from clear that Cash for Clunkers will produce net environmental benefits.

More obvious, and more galling, is the economic stupidity. If we could stimulate the economy by destroying consumer goods and replacing them with more expensive greenwashed alternatives, then we should all go burn down our houses and have Washington subsidize new ones with solar panels on the roofs and maybe little wind turbines out back. But neither an individual, nor a family, nor a nation is able to build wealth through the wanton destruction of assets, even if some of those assets are 1994 Chevy Blazers with 140,000 miles on the odometer. Frederic Bastiat, in his famous essay, “What Is Seen and What Is Not Seen,”  takes the case of a broken window: 

Suppose that it will cost six francs to repair the damage. . . . The glazier will come, do his job, receive six francs, congratulate himself, and bless in his heart the careless child. That is what is seen. . . . It is not seen that, since our citizen has spent six francs for one thing, he will not be able to spend them for another. It is not seen that if he had not had a windowpane to replace, he would have replaced, for example, his worn-out shoes or added another book to his library. . . . The window having been broken, the glass industry gets six francs’ worth of encouragement; that is what is seen. If the window had not been broken, the shoe industry (or some other) would have received six francs’ worth of encouragement; that is what is not seen.

What we have in Cash for Clunkers is a billion dollars’ worth of newly broken windows.

The House already has approved $2 billion more for this witless exercise, and Obama’s secretary of transportation, Ray LaHood, is pressing the Senate to bless this buffoonery before the August recess. Oh, Lord, Washington — give us less Janis Joplin, more Frederic Bastiat, and no more Cash for Clunkers.

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