I’m wondering if Cash for Clunkers will be remembered as a turning point for the American people. We already spent roughly $100 billion of taxpayer money on the obsolete technology of 3500 lb. cars made by uncompetitive companies, happily ignorant of the fact that the world will be driving cars more like the Tata Nano (March 27 post; March 23 post). Could we really have spent enough money to fund 5000 Googles on GM and Chrysler? Yes, but the sum is so vast that human minds can’t contemplate the scale of the spending.
Cash for Clunkers has the following elements of spectacle:
- Americans destroying perfectly functional cars
- Americans whose skills are uncompetitive in the global marketplace driving around in fancy new cars
Somewhere in China and India they must be having a good laugh.
The deeper issues are more troubling. Cash for Clunkers only makes sense if we believe that our #1 problem is that we don’t drive sufficiently fancy cars.
Will the program save energy? Let’s leave aside the obvious waste of destroying a working car here, building a new one in Korea, and shipping it across the Pacific. Consider that a person who has a car worth $4500 has a limited budget for gasoline. If you give him a car that uses half as much gas per mile driven, he may simply drive twice as many miles. One of America’s acknowledged #1 problems is urban traffic congestion. We’ve come up with a program to make it a lot worse. A guy who would have carpooled to save on gas, ridden the bus, bicycled, or found a way to avoid the trip is now clogging the highways in his new Toyota.
Will the program help less fortunate Americans? Consider a guy who has been foreclosed out of his unaffordable mortgage. He has a cheap apartment and a paid-for car that isn’t pretty but gets him to work. If he loses his job he can move in with his mom and not worry about debt. After Cash for Clunkers, the same guy has a new car that cost 10X as much as a Tata Nano and a consequently crushing car loan obligation through 2014.
What else could we have done with the money? 37 percent of Americans don’t have broadband Internet at home (source). If we spent the Cash for Clunkers money on Let’s Try to Catch up with Korea (95 percent of households with broadband, typically much faster than ours (one source)) a lot of Americans might not have needed to make so many trips in their cars because (1) they could work from home, (2) they could shop from home, (3) they could get information from home, (4) they could find out, from home, that some place they were planning to go was in fact closed.