Comments on: Collateral Damage From Cash for Clunkers http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/ Mutual Funds, Investing, Retirement, Economy, Personal Finance Thu, 11 Mar 2010 23:36:49 +0000 http://wordpress.org/?v=2.3.1 By: Jared M. http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-4140 Jared M. Tue, 02 Feb 2010 16:03:21 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-4140 I actually found this on amazon.com and I was able to get it through my school's library. Note two things: 1) It's from 1993 2) It's called Cash for Clunkers back then, too 3) They were fully aware that this program would hurt the poor back then. Title: Cash for Clunkers program can hurt the poor. (environmental program) (Opinion: The Problems of Poverty) Author: Roger D. Colton Publication: State Legislatures (Magazine/Journal) Date: May 1, 1993 Publisher: National Conference of State Legislatures Volume: v19 Issue: n5 Page: p33(1) I actually ended up finding out that in another article in another journal, this time from the RAND Corporation that George H. W. Bush was FOR Cash for Clunkers. So much for differences between the parties. I actually found this on amazon.com and I was able to get it through my school’s library.

Note two things:

1) It’s from 1993
2) It’s called Cash for Clunkers back then, too
3) They were fully aware that this program would hurt the poor back then.

Title: Cash for Clunkers program can hurt the poor. (environmental program) (Opinion: The Problems of Poverty)
Author: Roger D. Colton
Publication: State Legislatures (Magazine/Journal)
Date: May 1, 1993
Publisher: National Conference of State Legislatures
Volume: v19 Issue: n5 Page: p33(1)

I actually ended up finding out that in another article in another journal, this time from the RAND Corporation that George H. W. Bush was FOR Cash for Clunkers. So much for differences between the parties.

]]> By: Stock market news | Must Reads August 19, 2009 - Contrarian Stock Market Investing News - Featuring Bargain Stocks http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3356 Stock market news | Must Reads August 19, 2009 - Contrarian Stock Market Investing News - Featuring Bargain Stocks Thu, 20 Aug 2009 22:30:22 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3356 [...] Collateral damage from cash for clunkers Fundmastery Blog [...] […] Collateral damage from cash for clunkers Fundmastery Blog […]

]]> By: Cars4Charities http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3355 Cars4Charities Thu, 20 Aug 2009 22:21:39 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3355 When cash for clunkers was first proposed, car donation asked that they be given the c4c cars and allowed to determine their best use. Cars in poor condition would be junked. Cars in good shape would be given to the poor or sold. Obviously, we weren't taken seriously. When cash for clunkers was first proposed, car donation asked that they be given the c4c cars and allowed to determine their best use. Cars in poor condition would be junked. Cars in good shape would be given to the poor or sold. Obviously, we weren’t taken seriously.

]]> By: DeeBee9 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3349 DeeBee9 Wed, 19 Aug 2009 18:53:23 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3349 The program was not really "well-intentioned", it was unfair, naive and cynical, like most government programs. It was naive because anyone who isn't ignorant of economics could have predicted most of the "unintended consequences" (better termed "discounted consequences"), unfair because it granted large sums to people who fit a very arbitrary profile (having an old car they wanted rid of and having enough money or credit to buy a new one -- many with even older cars were out of luck) and cynical because the intent was as a payoff to some favored groups, and its claimed environmental benefits are non-existent (more energy and polution will be created by the program than will be saved.) The program was not really “well-intentioned”, it was unfair, naive and cynical, like most government programs. It was naive because anyone who isn’t ignorant of economics could have predicted most of the “unintended consequences” (better termed “discounted consequences”), unfair because it granted large sums to people who fit a very arbitrary profile (having an old car they wanted rid of and having enough money or credit to buy a new one — many with even older cars were out of luck) and cynical because the intent was as a payoff to some favored groups, and its claimed environmental benefits are non-existent (more energy and polution will be created by the program than will be saved.)

]]> By: Bob http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3348 Bob Wed, 19 Aug 2009 18:42:01 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3348 As I understand Mr. Brouwer, he is saying that the buyer of a new car under cfc will not spend the money on something else. Most people who buy a new car will buy it on credit which means that the buyer will have to make payments for up to 5 years. For that 5 years, the car buyer will not be spending his money on many, many other things. Therefore, the negative effect on the economy is far reaching. As I understand Mr. Brouwer, he is saying that the buyer of a new car under cfc will not spend the money on something else. Most people who buy a new car will buy it on credit which means that the buyer will have to make payments for up to 5 years. For that 5 years, the car buyer will not be spending his money on many, many other things. Therefore, the negative effect on the economy is far reaching.

]]> By: Jon Do http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3346 Jon Do Wed, 19 Aug 2009 17:28:14 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3346 The payment books for all these new car loans will be arriving in the mail shortly before the Christmas season. I heard that the average car payment will be about $400 / mo. -- that money won't be available for Christmas spending. I also wonder how many of these cars will be on repo lots next Spring. The payment books for all these new car loans will be arriving in the mail shortly before the Christmas season. I heard that the average car payment will be about $400 / mo. — that money won’t be available for Christmas spending.

I also wonder how many of these cars will be on repo lots next Spring.

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3345 Kurt Brouwer Wed, 19 Aug 2009 17:26:48 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3345 Excellent comments, one and all. Cash for Clunkers is a perfect example of how good intentions go awry in the hothouse that is Congress. Cash for Clunkers probably has a negative overall effect on the environment, yet it was sold as a way to make things more 'green' and groovy. How destroying perfectly good cars and trucks is useful, is beyond me. Also, there clearly has been a substitution effect, so people on the program buy a new car or truck, but don't buy something else. I agree that we would be much better off to give or sell those cars to people who have really bad old cars. Going further, the government plans to put on about 1,000 staffers to process all the paperwork. Once a government bureaucracy is formed, it is very hard to end it so maybe soon we will see a Cash for Clunkers program for housing or computers or refrigerators. Don't laugh, stranger things have happened. The salutary effect of Cash for Clunkers has been that Americans could see in a very short period of time the downside of a typical 'well intentioned' government program. It's costly, ineffective and it introduces significant unintended consequences and collateral damage. Excellent comments, one and all. Cash for Clunkers is a perfect example of how good intentions go awry in the hothouse that is Congress.

Cash for Clunkers probably has a negative overall effect on the environment, yet it was sold as a way to make things more ‘green’ and groovy. How destroying perfectly good cars and trucks is useful, is beyond me.

Also, there clearly has been a substitution effect, so people on the program buy a new car or truck, but don’t buy something else.

I agree that we would be much better off to give or sell those cars to people who have really bad old cars.

Going further, the government plans to put on about 1,000 staffers to process all the paperwork. Once a government bureaucracy is formed, it is very hard to end it so maybe soon we will see a Cash for Clunkers program for housing or computers or refrigerators. Don’t laugh, stranger things have happened.

The salutary effect of Cash for Clunkers has been that Americans could see in a very short period of time the downside of a typical ‘well intentioned’ government program. It’s costly, ineffective and it introduces significant unintended consequences and collateral damage.

]]> By: Faha http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3344 Faha Wed, 19 Aug 2009 15:29:17 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3344 Good analysis. It is true that the money diverted to buying new cars will decrease spending on other consumer products. However, the money for this program currently does not come ultimately from the taxpayers. The U.S. government will simply borrow a few billion more from the Chinese Communist government or the Arab oil producing countries. Fortunately those countries have a poor understanding of lending money to a country that has no intention of ever bringing government spending under control ! Good analysis. It is true that the money diverted to buying new cars will decrease spending on other consumer products. However, the money for this program currently does not come ultimately from the taxpayers. The U.S. government will simply borrow a few billion more from the Chinese Communist government or the Arab oil producing countries. Fortunately those countries have a poor understanding of lending money to a country that has no intention of ever bringing government spending under control !

]]> By: paul http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3343 paul Wed, 19 Aug 2009 15:02:25 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3343 Great article. I'd like to see a breakdown of the number of cars accepted by the program against the actual $ spent. In other words, how much more then $3,500 to $4,500 per vehicle was spent. Admin fees, attorney's fees, cost of processing etc... That would give you a true cost analysis. Great article.
I’d like to see a breakdown of the number of cars accepted by the program against the actual $ spent. In other words, how much more then $3,500 to $4,500 per vehicle was spent. Admin fees, attorney’s fees, cost of processing etc…
That would give you a true cost analysis.

]]> By: Frontrunning: | Froogalizer.com http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3342 Frontrunning: | Froogalizer.com Wed, 19 Aug 2009 14:53:16 +0000 http://www.fundmasteryblog.com/2009/08/18/collateral-damage-from-cash-for-clunkers/#comment-3342 [...] Collateral damage from cash for clunkers (Fundmastery) [...] […] Collateral damage from cash for clunkers (Fundmastery) […]

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