The Dark Side of "Cash for Clunkers" | INFJ Forum

The Dark Side of "Cash for Clunkers"

TheLastMohican

TheLastMohican

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May 8, 2008
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I generally disapprove of the government meddling in the markets, especially to benefit certain industries and companies at the detriment of others, but the theory of the recent "Cash for Clunkers" program still didn't sound like such a bad idea. If needlessly large and inefficient cars could be traded for those of merely necessary sizes in large numbers, we could conserve on gas and other resources, and spur car companies to put more effort into their fuel efficiency programs, saving us money in the long run.

But much is being sacrificed for those still uncertain benefits. In order to allow for greater participation, the program requires the gas mileage a new car to exceed that of the old car by only 2 miles. Well, that sort of defeats the purpose, doesn't it? Clearly this scale of a program is not quite feasible yet. As a result, the so-called "clunkers" are often rather new cars.
Which brings us to the greatest travesty of the program. Since the idea is to get these cars off the road, they must not be available for resale. But instead of donating them to schools, or dismantling them and putting the parts to good use, they are destroying them. I could go on about how little sense it makes to flush wealth down the drain like this, but more compelling are the details of how it is done:

Before the car is scrapped, the engine must be "seized." To accomplish this destruction of an often perfectly good piece of machinery, the oil is drained out and replaced with a sodium silicate solution, which hardens into a glass-like substance. The engine is then revved until dead.
Normally this does not take long at all, but some cars are hardier than others. Watch this Volvo engine heroically endure the punishment for 4 minutes before catching on fire:

[YOUTUBE]waj2KrKYTZo[/YOUTUBE]


Okay, frankly I find this painful to watch. These are not bad cars. Someday they could be collectors items. Yet here they are, being systematically destroyed because the government demands solid proof that they can never again be driven before it will shell out the money to the dealership. For goodness' sake, these engines could even be used outside of the cars, if not just kept around for parts and repairs. This wanton destruction is terribly short-sighted, and reminiscent of monks burning ancient manuscripts to make room on the shelf.
 
TheLastMohican said:
This wanton destruction is terribly short-sighted, and reminiscent of monks burning ancient manuscripts to make room on the shelf.
Click to expand...

I will forgive you for saying this, so long as you never mention such violence again.
 
Yeah, I've definitely thought about that, and it's a dilemma for me: Do I want to see my car trashed and the parts ruined (I tend to anthropomorphize certain things, and I would actually cry (I know I would) if I had to watch my car getting destroyed. I have over 175,000 miles on my car and apart from (what I think) is the alternator, it works just fine as an automobile.

Mind you, it needs a major overhaul...but still.

It would be better to use the cars for spare parts, to make the older models more fuel efficient.

There are definite positives and negatives to this plan. Positives: It stimulates the economy, saves the auto makers from having to declare instant bankruptcy, the owner gets a sweet new car that they couldn't afford before, and we (potentially) help air quality [depending on how badly the car was running before].

Negatives: Selling your car for parts can almost garner the same amount, if the car is in working order. Any used car dealership/parts distributor will now have an unexpected, significant dip in profits, and - as you said - perfectly good cars are being destroyed.

Another thing to consider? The program only goes back so far. If you have a 1970s car or earlier, the program might not apply to you. And to be honest, those are the cars that REALLY need to be off the road because they're terribly inefficient gas guzzlers.

But that's the problem, isn't it? Does the program have more positives than negatives? Right now, the effects are positive and the nation feels better about the program. The negatives, however, need to be approached as well.
 
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Cash for Clunkers, AKA the broken window fallacy.

Why don't we just break windows? Someone will be hired to fix it, and that stimulates the economy, right?

It's sad how little people understand the economy. In eighth grade my history teacher tried to explain why the government can't print an infinite amount of money (the reason is inflation, btw). Nobody seemed to get it.
 
Your eighth grade history class went on to become industry leaders didn't they...
 
We just graduated high school, give it 20 years or so and we'll see.
 
But it's obvious why they can't print more money...

The dollar is tied to a standard value, gold. The value of the amount of gold that they have stored in their vault is equal to the maximum amount of money they can print. For instance, if they had 100 Tonnes of Gold stored in their vault, at todays prices is $3,533,106,136,665.60 AUD (3.533 Billion Australian Dollars). If they had 100T of Gold, they can have in circulation, 3.533 Billion AUD at any one time. To print more money than that is to offer more than you can guarantee, as each dollar is a guarantee for a certain amount of gold.

Except, they've taken away the gold standard and replaced it with a "whatever the fuck we agree upon at any moment of any day handshake amongst the boys", at that value, the price of the dollar is whatever the fuck they choose it to be, and then why the hell can't they print as much money as they want?
 
Government:

If you think our problems are bad, wait till you see our solutions!

(Motivational poster that came to mind when I read the op).

In all seriousness, efficiency and critical thinking need to be brought to government programs. I'm not saing the Cash for Clunkers is a bad idea, but it could have been thought out of better. Destroying a resource is not the best way to deal with the old cars; I would have recycled them or had them scrapped for parts/materials. The benefits of the program don't seem to be outweighing the downsides.
 
Another thing that really irks me about this program is how they presented it and withdrew it so quickly. The dealers are fronting the money for this program at the time of the trade in, and now they are left wondering if they will ever see the money they fronted the government. I'll bet that most will but someone is bound to be screwed over by this.
 
Shai Gar said:
Except, they've taken away the gold standard and replaced it with a "whatever the fuck we agree upon at any moment of any day handshake amongst the boys", at that value, the price of the dollar is whatever the fuck they choose it to be, and then why the hell can't they print as much money as they want?
Click to expand...

I mean, technically they can, but not without ruining the economy.
 
Update on the topic and op:

http://news.yahoo.com/s/ap/20090804/ap_on_go_pr_wh/us_cash_for_clunkers_transparency

WASHINGTON – The Obama administration is refusing to quickly release government records on its "cash-for-clunkers" rebate program that would substantiate — or undercut — White House claims of the program's success, even as the president presses the Senate for a quick vote for $2 billion to boost car sales.
The Transportation Department said it will provide the data as soon as possible but did not specify a time frame or promise release of the data before the Senate votes whether to spend $2 billion more on the program.
Transportation Secretary Ray LaHood said Sunday the government would release electronic records about the program, and President Barack Obama has pledged greater transparency for his administration. But the Transportation Department, which has collected details on about 157,000 rebate requests, won't release sales data that dealers provided showing how much U.S. car manufacturers are benefiting from the $1 billion initially pumped into the program.
The Associated Press has sought release of the data since last week. Rae Tyson, spokesman for the National Highway Traffic Safety Administration, said the agency will provide the data requested as soon as possible.
DOT officials already have received electronic details from car dealers of each trade-in transaction. The agency receives regular analyses of the sales data, producing helpful talking points for LaHood, White House spokesman Robert Gibbs and other officials to use when urging more funding.
LaHood said in an interview Sunday he would make the electronic records available. "I can't think of any reason why we wouldn't do it," he said.
LaHood, the program's chief salesman, has pitched the rebates as good for America, good for car buyers, good for the environment, good for the economy. But it's difficult to determine whether the administration is overselling the claim without seeing what's being sold, what's being traded in and where the cars are being sold.
LaHood, for example, promotes the fact that the Ford Focus so far is at the top of the list of new cars purchased under the program. But the limited information released so far shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai.
LaHood has called the popular rebates to car buyers "the lifeline that will bring back the automobile industry in America." He and other advocates are citing program data to promote passage of another $2 billion for the incentives -- claiming dealers sold cars that are 61 percent more fuel efficient than trade-ins.
LaHood also said this week that even if buyers aren't choosing cars made by U.S. automobile manufacturers, many of the Honda, Toyota and Hyundai cars sold were made in those companies' American plants.
But there's no way to verify his claims without access to DOT's data.
Senate GOP leader Mitch McConnell of Kentucky has argued against quick approval of $2 billion for the program because little is known about the first round of $3,500 and $4,500 rebates.
"We don't have the results of the first $1 billion," McConnell spokesman Don Stewart said. "You don't have them. We don't have them. DOT doesn't have all of it. We'd hate to make a mistake on something like that."
 
Well, I can understand why they won't release data right now - it's still too early. It's only been a week. And honestly, when you're dealing with a billion dollars and with how fast this thing got popular, you have to go back and look at what you're doing.

I don't think the US government expected this thing to be as popular as it was.
 
I wish that they will eventually release the data. This administration has promised transparency, and I hope that they intend to honor that promise. It might be best to suspend any judgment and watch how the entire thing plays out a bit more.
 
If you think of all the energy that goes into making a car simply destroying it is a waste of energy in the end. We are supposed to be saving energy. Used parts keeps cars running longer and saves energy in the end. This program is blowing it in my opinion...
 
efromm said:
If you think of all the energy that goes into making a car simply destroying it is a waste of energy in the end. We are supposed to be saving energy. Used parts keeps cars running longer and saves energy in the end. This program is blowing it in my opinion...
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Well, it works as long as people take care of their cars. But I tell you what, I've seen a lot more clunkers spewing oil smoke than I've seen well-maintained older vehicles. It'd be nice if people with older cars received incentives or discounts for maintaining their cars instead of having to consistently pay for failed inspections.

Heck, if I received coupons for free oil changes every year and free fluid changes I'd've maintained my car a little better. But as it is, I can't afford it. I can barely afford my own health care - heck, my dog comes before my own health care. So sadly, my car is way, way down the line.
 
It's not you arbygil. It's all the others that have to drive suvs. They are all over the west. People drive them everywhere and mostly alone. They are responsible for a large segment of fuel consumption. And then there are also the pick up truck drivers that use the same amount of fuel just to drive a truck. The little guy I think could not even afford a new car even with the rebate. I know I could not. As a matter of fact I have never owned a brand new car. Never could afford it.
 
efromm said:
It's not you arbygil. It's all the others that have to drive suvs. They are all over the west. People drive them everywhere and mostly alone. They are responsible for a large segment of fuel consumption. And then there are also the pick up truck drivers that use the same amount of fuel just to drive a truck. The little guy I think could not even afford a new car even with the rebate. I know I could not. As a matter of fact I have never owned a brand new car. Never could afford it.
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*Nod* and that also makes a difference too - you're right, efromm. Maybe this program was the start, and they can build/adjust it for future use. There's no doubt people rushed to get new cars and pumped money into the economy. But it could've been nice to have 2007/2008 cars (and even a few earlier models) included. I would love a good used car that wouldn't fall apart on me. I bought my tiny Mazda pickup twelve years ago new, when I got my first job, and I used my father's insurance money for a partial down payment. Now? I probably couldn't afford a new car unless I saved up for the down payment. I prefer new though; I prefer the guarantees. But maybe that's because I remember being stranded all night by the side of the road in my Mom's old car...

*Shivers from the bad, bad memory*
 
I don't understand why they are wasting good cars. This isn't going to do squat unless people permanently reduce consumption, which doesn't seem to be the plan. Its like a gigantic government sponsored version of telling everyone not to buy gas for a day.
 
Also- my 8th grade history teacher didn't teach us anything about economics. All I remember from that class was leaving to the computer lab to do "research" when I finished my work before everyone else and also having people throw things at me (not just me, everyone in the class had stuff thrown at them) as well as other stupid stuff like being sexually harassed. I suppose learning nothing in 8th grade history went along well with learning that the earth goes around the sun in science and learning how to watch people play on the computer in English. I can't say the rest of the curriculum was much better, except for math where the teacher actually did a good job.

It would probably be better that someone from laofmoonster's 8th grade class ran industry if the alternative is someone from my class.
 
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