Last week I talked a bit about the waste of money that we named “Cash for Clunkers”.
In short, what I said was that car purchases are elastic. People can pull forward or push out the purchase of a new car by several months. In this case it turns out to be 7:
The government’s “cash for clunkers” program boosted auto sales by 360,000 during the two months it was in place. In the seven months that followed, sales were down by 360,000 compared with what they would have been without the program…
Basically, 7 months after cash for clunkers ended, the same amount of cars wound up being sold.
Wanna know the unintended consequence?
Guess what else the Cash for Clunkers program did?
Well, what do you think happens to the price of a thing when you remove a whole bunch of things from the supply of things?
The price of the thing goes up.
IN THE market for a used car? Good luck finding a bargain: The price of “pre-owned’’ vehicles has climbed considerably over the past year. According to Edmunds.com, a website for car buyers, a three-year-old automobile today will set you back, on average, close to $20,000 — a spike of more than 10 percent since last summer. For some popular models, the increase has been much steeper. In July, a used Cadillac Escalade was going for around $35,000, or nearly 36 percent over last July’s price.
President Obama, in an attempt to help the “little guy” by giving him free money to buy something he was going to buy anyway created a situation that absolutely KILLED the “little guy”:
No great insight was needed to realize that Cash for Clunkers would work a hardship on people unable to afford a new car. “All this program did for them,’’ I wrote last August, “was guarantee that used cars will become more expensive. Poorer drivers will be penalized to subsidize new cars for wealthier drivers.’’ Alec Gutierrez, a senior analyst for Kelley Blue Book, predicted that used-car prices would surge by up to 10 percent. “It’s going to drive prices up on some of the most affordable vehicles we have on the road,’’ he told USA Today. In short, Washington spent nearly $3 billion to raise the price of mobility for drivers on a budget.
Oh yeah, and the “Green” aspect of this whole thing? This plan to remove the most fuel inefficient cars from the road?
the reduction of carbon dioxide attributable to the program cost no less than $237 per ton. In contrast, carbon emissions credits cost about $20 per ton in international markets.
Obama overpaid for carbon by a factor of 12.