Cash for clunkers: "economic malarkey"

Clunkers in Practice - One of Washington's all-time dumb ideas


The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard. As the journalist Henry Hazlitt wrote in his classic, "Economics in One Lesson," you can't raise living standards by breaking windows so some people can get jobs repairing them.

In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices. The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.

Comment: Good article!

1 comment:

  1. I get my news once again!
    Not sure if I mentioned it on your blog or not, but there will be a residual effect in the coming years. If you think about it, a number of those cars would have been sold privately in the next few years to those people who cannot afford to buy a new or newer car. But now, there will be a shortage of those clunkers in the years ahead, which will in turn raise car prices.


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