In Cash for Clunkers, the government offered above-market prices for old cars — a good way to clean up the environment, we were told. Then the bureaucrats expressed surprise when so many clunkers came in during the first week that all the taxpayer dollars in the program had vanished.

Should we be surprised that so many people grabbed cash overpayments for their clunkers? Not really. We have tried similar programs in the past with similar bad results. The farm program, for example, is a parallel. Through “parity prices” we overpaid farmers to produce corn, wheat, cotton, and other crops. With such incentives in place, farmers flooded grain elevators and storage bins with their excess crops. Inspectors at the Department of Agriculture always expressed surprise at the annual deficits incurred after farmers overproduced when offered above market prices for their wheat and cotton. In 1948, the overproduction was so dramatic that the bureaucrats in the Department of Agriculture ordered surplus potatoes destroyed via public burnings.

The clunkers may ultimately share the same fate as the potatoes. In both cases, taxpayers overpaid for products that are almost worthless — and the federal officials were surprised at how much it cost.

– Burton Folsom Jr. is a professor of history at Hillsdale College in Michigan and author of New Deal or Raw Deal? (Simon & Schuster).