Now apparently some environmentalists aren't so sure about this whole "Cash for Clunkers" business. Fox News (who else?) reports on some of the potential screw-ups:"Disposing of old products, a step required by most incentive and rebate programs, also has environmental costs," Gwen Ottinger, a researcher at the Chemical Heritage Foundation's Center for Contemporary History and Policy in Philadelphia, wrote in an opinion article published in The Washington Post on Tuesday.
"It takes energy to shred and recycle metals; plastic components often cannot be recycled and end up as landfill cover; and the engine fluids, refrigerants and other chemicals essential to operating products end up as hazardous wastes," she wrote.
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"Cash for clunkers is a historic mistake for America because it misapplies billions of taxpayer dollars to subsidize more fuel inefficient cars that are bad for our dependence on foreign oil and bad for the environment," said Edwin Black, author of "The Plan: How to Save America When the Oil Stops -- or the Day Before."
Black told FOXNews.com that lawmakers had the right idea to get more fuel efficient vehicles on the road but executed it poorly. He said it's too early to say how many vehicles purchased get 18 to 20 mpg rather than 30 to 35 mpg.
So basically a lot of cars are just getting scrapped--and when I mean scrapped, I mean, "the government is advising car dealers to replace a trade-in's engine oil with a lethal sodium silicate solution and run the engine to ruin it before giving to selling the car to a scrap dealer."
Meanwhile, we don't even know for sure if people are actually buying more efficient cars. So this doesn't make good environmental sense or economic sense. We're basically just trying to push a failing U.S. automobile industry (using tax money) and wasting a whole lot of usable materials.
If you were hoping to buy a new car one of these days, well then, good for you. Here, I'll help you pay for it. Right around when I get my next paycheck--those taxes they withhold should do the trick.
I guess it just gets to me a little to see things go to waste. Anyone who knows me knows I always eat everything on my plate, I drive a car that gets at least 35 miles a gallon, and I pretty much never spend anything that wasn't already in my budget.So why shouldn't I complain when the government is wasting tons of resources, and spending tons of money that will ultimately come from the American people? Does anyone even care how much $2,000,000,000 is anymore?
No, we do not need to just do something to help our economy and the environment. If we're going to do something, let's put some careful thought into what we're doing and not shove a ton of legislation through in a matter of months.
*sigh* The problem is that so many people who are in panic mode will take what they can get, and trust the government even with poor planning. In the long run, of course, this is absolutely a terrible attitude. But politics is always based on the short-term. Maybe that makes politics inherently flawed; I don't know.
Oh, well, what are you gonna do, blog about it?
The last line was brilliant and witty. Love it!
ReplyDeleteYour post makes crystal clear sense to me. I guess the government's common sense is clouded by all the C02 in our atmosphere. ;-)
I think the only way this made sense was to do it in a hurry. The theory may be wrong, but this is demand-side economics.
ReplyDeleteBTW, I was wrong about vehicle sales last night. We bottomed, assuming we have, at an annual rate of about 9 million cars and trucks, just above the bottom of the 1982 recession, also about the same level as the bottom of the 74-75 recession. In 1971 the rate dropped briefly to 7.5 million. Of course, we have about 100 million more people in the country now.
The way I see it, if the only way something makes sense is to do it in a hurry, then it doesn't make sense at all. Government is just not that efficient at being a business, nor will it ever be, because it wasn't designed to be in the first place.
ReplyDeleteI'm no brilliant economist, but my impression of demand-side economics when I took undergraduate macroeconomics was that it doesn't really work as a long-term help, and thus I don't see how it's very useful at all, except for politicians to score points with their constituents.
Are there no sensible actions that are also time-sensitive? I am trying to understand what you mean what "government being a business" has to do with this. Do you believe that the government has no role in mitigating economic cycles?
ReplyDeleteStrike "what you mean" from the second sentence. Sorry.
ReplyDeleteI'm skeptical of short-term government attempts to mitigate economic cycles. Again, I'm no expert, but what I do know is that sometimes government intervention can create false starts in the economy, rather than actually solve any structural economic problems. Personally I think this cash for clunkers business is such a false start with respect to the auto industry. In the long run, GM (for instance) is still going to fail because of basic structural issues that will never be addressed if they keep getting subsidized by the government. That's why it's important to realize that the government isn't a business. They're perfectly willing, for political reasons, to keep carrying dead weight, which a business would be quick to shed.
ReplyDeleteAren't economic cycles short term by definition? Not trying to be snarky, just trying to see what you are getting at with the qualification. Is there a long-term intervention that you are in favor of?
ReplyDeleteI'm not an expert either, but I think that typically, the bigger worry than false starts with using government spending to counteract recession is that it takes too long to get into the system. The stimulus passed in feb is only now starting to hit the economy and its effects will not peak until 2010. Since most recessions are pretty short, such spending tends to be pro rather than counter cyclical, throwing cash into the economy just as inflation becomes an issue. The beauty of the clunker way of delivering fiscal stimulus, if you are going to, is that it is quick. It doesn't involve putting out requests for bids and all the stuff that makes building bridges take so long.
I agree with you that GM is probably doomed. But this program is, unlike the GM bailout, largely neutral with respect to the car company it benefits. I say largely because, I think the MPG requirements were so low because had they made people get a seriously efficient car for their gov't check, the American companies wouldn't have much qualifying product. In any case clunkers is a separate issue from the gov't getting into the car business as an owner, which is indeed fraught with problems.
I suppose this could create a false start for the auto industry as a whole. However, current sales levels, even with the clunkers program, are so far below historical norms that I don't think this is that big of an issue - assuming that the program is now over.
So I guess to be more accurate, I should say I'm skeptical of any attempts by the government to mitigate economic cycles. That's not to say I don't think government should be involved in wise economic policies. Good long-term policies do have an effect on long-term growth. An economy needs the right kind of structures in place in order to thrive.
ReplyDeleteI'm worried about government spending causing a boom in inflation once the economy comes out of recession, but obviously not because of the clunkers program. I just think the clunkers program is a bad idea for reasons cited in the article I referenced.
Perhaps the worst thing is that it won't even create a false start, or do much of anything, really. If the goal was really to get more efficient cars on the road, fine, but it didn't really do that (the standards were low enough). If the goal was to give the economy a boost, I doubt it was successful. If the goal was to burn up $2 billion in taxpayers' money, and trash a bunch of old cars, then I suppose it was radically successful.
So the federal reserve is out too?
ReplyDeleteWhat the Fed does is fundamentally different from a government spending approach. That much I remember from macroeconomics. Setting interest rates and making loans to banks is, or at least has been so far, a good source of structure for the economy. I don't oppose the Fed in principle, and I can't say I understand what they do well enough to critique this or that decision.
ReplyDeleteI do blog about other topics, you know.
I agree. It seems to be mostly immune from both the efforts of politicians to mess with it and the long lags between causes and effects that make stimulus spending so clumsy and dangerous. I just asked because I have heard of people lately wanting to disband the Fed and when you said "any attempts to mitigate economic cycles" that's what I thought you were saying.
ReplyDeleteWith that, I'll call it a thread.