A country can't prosper destroying perfectly good used cars.
To evaluate the long-term effects of the cash for clunkers program, consider the real-world example of Jerry and Janny. They have two children and are expecting a third. The couple owns a Ford Expedition with 144,000 miles that gets 14 miles to the gallon (mpg). They've been interested in getting a replacement and are taking advantage of the cash for clunkers program to subsidize it.
Thus the government handout is merely accelerating Jerry and Janny's plans to purchase a new car. But this small acceleration in new car spending won't last. Compare it to the energy levels of a college student who drinks caffeinated beverages all night cramming for an exam. The immediate stimulus is followed by the inevitable slump.
Neither is the cash for clunkers initiative truly green. The Ford Expedition still has value as a used vehicle. It may not be shiny new, but it could continue to serve Jerry and Janny or another family for several more years. Instead, the regulations require it to be completely stripped and destroyed within 180 days. To measure the true carbon offset from this program, you would need to compare the increased gas efficiency of a new vehicle against the energy it takes to scrap old cars and build new ones.
Jerry and Janny's car is usually full of kids. So the small hybrid vehicles that Obama touts when praising this program are too small for them. They are deciding between the GMC Acadia and the Saturn Outlook, which both average 19 mpg. They could probably help the environment more by just inflating their tires.
As a result of this misguided program, the price for used cars will increase both unnecessarily and artificially. Many cars worth less than the offered bailout will be traded in to be scrapped. Charities will receive fewer automobiles as donations. And people who are struggling financially won't be able to find a clunker that costs less than $4,500. The program seems to encourage new car ownership at the expense of the used car market. The rationale behind it is neither economically nor environmentally sound.
When considering the entire carbon footprint of this program, you will find that continuing to drive your current used car for as long as possible is one of the most green-friendly things you can do.
Friday, August 28, 2009
Cash for Clunkers: The economy and the environment suffer
From Marotta:
Cash for clunkers: expensive, stupid, wasteful and bad for the environment.
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5 comments:
This is such a bad deal its amazing. People who took advantage of this program went from:
1)Likely a paid off car to now a car loan with interest
2)Higher insurance on a new vehicle
3)Higher cost for plates on a new vehicle
4)As soon as you drive that car off the lot it is now a used car and not worth the price you paid even figuring in the $4,500 discount.
5)Less room so you can't car pool
6)And someone in need can't get a good deal on your used car to get to work, or get their kid to school.
And all this to gain approximately 5 miles per gallon.
By the way, is the tax figured on the original price or the discounted price?
I completely agree with you. Before cash for clunkers became law, car donation charities asked that they be given the c4c cars. Those in good shape would be repaired and either sold or given to needy families. Those in bad shape would be junked. Had we been taken seriously, many of the negatives of c4c would have been avoided.
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