Friday, September 03, 2010

Cash for Clunkers hurt poor and unemployed drivers

One year later, Cash for Clunkers was still a dumb, economically harmful idea:
IN THE market for a used car? Good luck finding a bargain: The price of “pre-owned’’ vehicles has climbed considerably over the past year. ...

No great insight was needed to realize that Cash for Clunkers would work a hardship on people unable to afford a new car. “All this program did for them,’’ I wrote last August, “was guarantee that used cars will become more expensive. Poorer drivers will be penalized to subsidize new cars for wealthier drivers.’’ ...

When all is said and done, Cash for Clunkers was a deplorable exercise in budgetary wastefulness, asset destruction, environmental irrelevance, and economic idiocy.
The reason Cash for Clunkers pushed up used car prices is because it required that perfectly functional used cars be destroyed, thus decreasing the supply of used cars available to poorer drivers.


  1. Gee, cash for clunkers hurt the "poor and unemployed."

  2. Older cars are easy and cheap to fix . No computers, simple smog devices. Anything before 1985 is simple. Before 1980 is even better.
    Newer cars have 3 to 5 mini- computers in them. Each can cost $300 to $600, plus labor. NO driveway mechanic can fix these cars.
    When the last of the simple cars bite the dust, have no idea how a lower income person will afford a car.

  3. James, anon 1# here. In response to your question: Did you read the article?


    I was keying off your headline which gave me a powerful incentive not to read the article.

    But I did read the story subsequently and headline you used doesn't capture its point.

    The story is not about the "poor and unemployed" but about people shopping in the used car space for a variety of reasons.

    (my earlier point was sarcasm; if you are poor and unemployed, being 'clunkered' as well is probably the least of your issues)

    I have always felt that the cash for clunkers was as wrong headed as it comes.

  4. Cash For Clunkers could have been a good thing if it actually did what it said. It was meant to create an incentive to buy a new car with better gas mileage. It would boost the auto market, but at the same time have a decent impact on our oil use and the environment.

    However, they gave it to people that made minimal jumps in MPG. You could get 4k for going from a 17MPG vehicle to a 20MPG vehicle. THAT is a huge waste of money. It should have only been for cars that got 30MPG or better...but of course, that wouldn't have helped American car companies much, so no way it would happen.

    Cash For Clunkers was just a hidden bailout to American car manufacturers. Much like all these mortgage mod programs are hidden bailouts for the banks.

  5. Yeah, but it didn't affect Arlington.

  6. Flame Baiting TrollSeptember 06, 2010 11:22 PM


  7. This article has zero to do with the housing market. Your posting of a link to this republican shill makes me question your judgement and wonder whether the attention I've given to this blog was well spent.

  8. This comment has been removed by a blog administrator.

  9. Has anyone considered the environmental costs of manufacturing and bring a new car to market?

    My guess is that you'd have to log a heck of a lot of miles in a car that is 10 mpg more efficient than your old one in in order to offset the costs of constructing the new car versus keeping the old one on the road. Disposing of the old car has some environmental costs as well.

    Yes. A VERY thinly veiled subsidy to auto manufacturers.

  10. MRIS stats are out. N. VA prices are up 7.42% YOY, up 9% YOYOY (Aug 2008 bottom).

    Meanwhile, bubbleheads everywhere are crying, screaming at the top of their lungs, inconsolable, bargaining with their creator..."PLEASE GOD, NO MORE GAINS!!! MAKE IT STOP!!! MAKE IT STOP!!! WAAAAAAAHHHHH!!!

  11. Uh, the link you provided on the MRIS stats say prices are DOWN!

    2009 sold:$ 114,943,613
    2010 sold:$ 113,527,319
    change sold YOY: - 1.23%
    2009 average price:$ 537,120
    2010 average price: $ 523,167
    change price YOY: - 2.60%

    2010 sold: $799,261,015
    2009 sold: $830,665,928
    change sold YOY: - 3.78%

    Why would a "bubblehead" want this to stop again???

  12. James, wake up and get back to posting! We are in for another downward slide in home prices these next two quarters. And I for one like to talk about it.

  13. Why? The idiots posting MRIS, without even looking at it first, are disproving their own statements. I thought that was hilarious!

    I havent heard "Arlington" as a reply since mris figures came out...wonder where that dude went?

  14. This article was not about the cost of clunkers, it cited the cost of 3-year-old cars, which are not "clunkers". The reason for the increase in resale value for a 3-year-old automobile is that people are trying to avoid the cost of driving the car off the lot. These are people who would have bought a new car, not a clunker.

    Cash for Clunkers did nothing to effect the resale value of clunkers.

    That said, I still don't think CfC was a good idea. But let's keep it real here.