“Cash for Clunkers”—another basic economic lesson for Congress and the President OR How you and I are buying cars for other people!
Everybody loves the “Cash for Clunkers” federal program. Well, not quite. Everybody loves the “Cash for Clunkers” federal program, who BENEFITS from the “Cash for Clunkers” federal program. Doesn’t everyone benefit? Of course NOT!
Supply and Demand Equilibrium is changed by federal interference:
The federal government has decided that customers/consumers should buy more, new automobiles. To do so, the government has decided to increase demand for new automobiles. To increase this demand, the federal government is offering free money—free money in the form of turning in a specifically qualified automobile, buying a specifically qualified new automobile, and in return receiving credit for $3,500 or $4,500 depending upon the specifically qualified new automobile. Got that?
Of course, since there are rules and regulations involved, not all of the allocated money will be going to buy specifically qualified new automobiles. Some of the money must pay for the government bureaucracy that regulates the program and insures (?) that the rules and regulations are followed.
Out of all of the possible consumer choices in the marketplace, why did the federal government decide that specifically qualified new automobiles should be purchased by select consumers? Could it be because the federal government is now the majority owner of what was the largest U.S. automobile company in the nation? Could it be that the federal government is a part owner of the third largest U.S. automobile company in the nation? Could it be that the union—the United Automobile Workers Union (UAW)—that represents the workers of the three major U.S. automobile companies in the nation also is a major supporter of and contributor to the Democratic Party which is the controlling party in both the legislative and executive branches of the federal government?
Whatever the reason, in part, the federal government is using our money to induce select consumers to buy automobiles from our newly acquired automobile companies. The left hand (the federal government) is giving money to customers so that the customers can give that money to our right hand (the federal government) with a bureaucracy (the federal government) in the middle! The customer is happy! The bureaucracy is happy! The right hand (The government owned automobile company.) is happy! Should the left hand (The rest of us who pay taxes who received no free money—which is MOST of us!) be happy? I’m NOT; what about you?
However, that is not all of the changes (We were promised change you know!) brought about by this interference by the federal government of the supply and demand equilibrium. At any particular time, each consumer has only so much purchasing power. Define that power as X. If the consumer decides to purchase a new automobile, he uses a portion of that purchasing power. When he uses part of X to purchase a new automobile, he losses the ability to purchase other consumer products. Therefore, because he purchased a new automobile, he may not purchase a washer and dryer, or take a vacation, or build a swimming pool in his yard, or thousands upon thousands of other choices that he could have made. Therefore, although the automobile industry may benefit by all these new purchases of new automobiles, thousands upon thousands of other industries will suffer because X has been used to buy automobiles rather than other consumer products.
But wait! The consumer can increase his purchasing power. And, in part, we have increased his purchasing power by giving him free money. Thus, you and I, through our taxes and/or an increased national debt, have temporarily increased his purchasing power by $3,500 or $4,500. We have helped to buy his new car! Aren’t you excited for him? You don’t get a new car but he does and we through the government’s altruism have helped to make it possible. Do you think he will give you a ride in his new car? Do you think he will send you a thank you note? Does it really matter that you earn $35,000 a year while he earns $80,000 a year? You helped him buy a new car! (The promised CHANGE that you can believe in—if you get the new car!)
The new automobile purchaser can also increase X by going into debt—borrowing money either from himself (taking money from savings) or from a lender. Most consumers do not pay cash for a new car even if he is given a “free” (to him) $3,500 or $4,500. If he is buying a new $30,000 car, even with a “free” $4,500, he still owes $25,500 plus taxes, license, delivery charges and all the other add-ons. Most people are going to borrow that money.
So, we begin the cycle all over again of increasing consumer debt. Therefore, this program will probably increase not only the national debt but also consumer debt—one of the very major problems that has been plaguing our economy for so long. Consumers living beyond there means and when financially difficult times occur they sink under the weight of it. Have we learned nothing! Obviously, NOT! You can NOT spend yourself out of debt! And the federal government is a co-conspirator in this debt accumulation. But, the instant gratification is there so the federal government is happy! We were promised change! Do you still believe in it!
However, that’s not all. One of the requirements of the program is that the turned in “clunker” must not get more than 18 miles to the gallon. After all, we want to stop “Al Gore’s Global Warming!” Thus, like all of the other recent programs—bailout of banks, loans to automobile companies so they won’t go bankrupt, (Oops! They did anyway but we tried and we now own part of two automobile companies.) and “stimulus” money to spend us out of recession—we are rewarding poor economic choices!
Those who originally purchased automobiles that get over 18 miles per gallon (a better economic choice) don’t qualify. Your reward is to reward those who purchased low mileage automobiles. That seems logical to me! It’s always good to reward poor choices. It MUST be! The federal government does it all the time!
But wait! That’s still not all. The “clunkers” must be destroyed to keep them off the road—too much “noxious” gases. Thus, the supply of low cost automobiles which by necessity poor individuals must purchase if they are making good economic choices is being drastically decreased. What happens when the supply of a product (inexpensive automobiles) is decreased and demand is not changed? The price of that product goes up. Less inexpensive cars to choose from means higher prices for the remaining cars. So poor people are going to pay MORE for automobile transportation! What is the government to do? I can’t wait until the federal government begins giving new cars to poor people for free so that they have transportation to get to jobs they don’t yet have!
But wait! There’s still even more. The engine is to be destroyed by using a caustic chemical. Don’t want these gas guzzlers to get back into circulation by mistake. But then, what happens to the engines that have been destroyed by chemical means? Do they go to landfills to pollute them? Are they tossed into the ocean? Are they shot into space? Does Barack Hussein Obama wave his magic wand to make them and the caustic chemical disappear? Where are the environmentalists when they are needed?
And finally, according to the Peoria Journal Star on August 5, 2009, page A2, “Environmental experts say the program—conceived primarily to stimulate the economy (HA! HA! HA!—my addition) and jumpstart the auto industry—is not an effective way to attack climate change.
‘As a carbon dioxide policy, this is a terribly wasteful thing to do,’ said Henry Jacob, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. ‘The amount of carbon you are saving per federal expenditure is very, very small.’”
What! The federal government did NOT do a cost-benefit analysis before this program was initiated? Surprise! Surprise! Surprise! I have a friend who likes to say, “Follow the money!” That’s easy! The money goes directly to those who made poor economic decisions originally and to the UAW. It comes out of our pockets and out of the pockets of the poor through higher cost for inexpensive transportation. However, every winner loves this program! Every loser, which is most of us, SHOULD NOT! FOLLOW the MONEY!
This is what the Bible says about our climate: “Then Noah built an altar to the Lord and, taking some of all the clean animals and clean birds, he sacrificed burnt offerings on it. The Lord smelled the pleasing aroma and said in his heart: ‘Never again will I curse the ground because of man, even though every inclination of his heart is evil from childhood. And never again will I destroy all living creatures, as I have done.
As long as the earth endures, seedtime and harvest, cold and heat, summer and winter, day and night will never cease.’” Genesis 8: 20-22 (NIV)
As I’ve said before, no human can accurately predict what the weather is going to be like 50 years from today. We have difficulty predicting with 100% accuracy what the weather is going to be like seven days from now. This I do know. If GOD wants global warming as predicted by the “Al Gore gang” to occur, there is NOTHING man can do to stop it. If GOD doesn’t want global warming to occur, it won’t, no matter what man does. Of course, God could always let man proceed as they choose without HIS hand in it either way. I don’t know what will occur 50 years from now and NEITHER DOES any other human on this planet!
This I also know. If I were living a life of SIN, I’d be more concerned about what GOD will do today and tomorrow or what will happen to me after my death (none of us has a guarantee that we will live another fifty years) than what is going to occur in another 50 years!!!
Everybody loves the “Cash for Clunkers” federal program. Well, not quite. Everybody loves the “Cash for Clunkers” federal program, who BENEFITS from the “Cash for Clunkers” federal program. Doesn’t everyone benefit? Of course NOT!
Supply and Demand Equilibrium is changed by federal interference:
The federal government has decided that customers/consumers should buy more, new automobiles. To do so, the government has decided to increase demand for new automobiles. To increase this demand, the federal government is offering free money—free money in the form of turning in a specifically qualified automobile, buying a specifically qualified new automobile, and in return receiving credit for $3,500 or $4,500 depending upon the specifically qualified new automobile. Got that?
Of course, since there are rules and regulations involved, not all of the allocated money will be going to buy specifically qualified new automobiles. Some of the money must pay for the government bureaucracy that regulates the program and insures (?) that the rules and regulations are followed.
Out of all of the possible consumer choices in the marketplace, why did the federal government decide that specifically qualified new automobiles should be purchased by select consumers? Could it be because the federal government is now the majority owner of what was the largest U.S. automobile company in the nation? Could it be that the federal government is a part owner of the third largest U.S. automobile company in the nation? Could it be that the union—the United Automobile Workers Union (UAW)—that represents the workers of the three major U.S. automobile companies in the nation also is a major supporter of and contributor to the Democratic Party which is the controlling party in both the legislative and executive branches of the federal government?
Whatever the reason, in part, the federal government is using our money to induce select consumers to buy automobiles from our newly acquired automobile companies. The left hand (the federal government) is giving money to customers so that the customers can give that money to our right hand (the federal government) with a bureaucracy (the federal government) in the middle! The customer is happy! The bureaucracy is happy! The right hand (The government owned automobile company.) is happy! Should the left hand (The rest of us who pay taxes who received no free money—which is MOST of us!) be happy? I’m NOT; what about you?
However, that is not all of the changes (We were promised change you know!) brought about by this interference by the federal government of the supply and demand equilibrium. At any particular time, each consumer has only so much purchasing power. Define that power as X. If the consumer decides to purchase a new automobile, he uses a portion of that purchasing power. When he uses part of X to purchase a new automobile, he losses the ability to purchase other consumer products. Therefore, because he purchased a new automobile, he may not purchase a washer and dryer, or take a vacation, or build a swimming pool in his yard, or thousands upon thousands of other choices that he could have made. Therefore, although the automobile industry may benefit by all these new purchases of new automobiles, thousands upon thousands of other industries will suffer because X has been used to buy automobiles rather than other consumer products.
But wait! The consumer can increase his purchasing power. And, in part, we have increased his purchasing power by giving him free money. Thus, you and I, through our taxes and/or an increased national debt, have temporarily increased his purchasing power by $3,500 or $4,500. We have helped to buy his new car! Aren’t you excited for him? You don’t get a new car but he does and we through the government’s altruism have helped to make it possible. Do you think he will give you a ride in his new car? Do you think he will send you a thank you note? Does it really matter that you earn $35,000 a year while he earns $80,000 a year? You helped him buy a new car! (The promised CHANGE that you can believe in—if you get the new car!)
The new automobile purchaser can also increase X by going into debt—borrowing money either from himself (taking money from savings) or from a lender. Most consumers do not pay cash for a new car even if he is given a “free” (to him) $3,500 or $4,500. If he is buying a new $30,000 car, even with a “free” $4,500, he still owes $25,500 plus taxes, license, delivery charges and all the other add-ons. Most people are going to borrow that money.
So, we begin the cycle all over again of increasing consumer debt. Therefore, this program will probably increase not only the national debt but also consumer debt—one of the very major problems that has been plaguing our economy for so long. Consumers living beyond there means and when financially difficult times occur they sink under the weight of it. Have we learned nothing! Obviously, NOT! You can NOT spend yourself out of debt! And the federal government is a co-conspirator in this debt accumulation. But, the instant gratification is there so the federal government is happy! We were promised change! Do you still believe in it!
However, that’s not all. One of the requirements of the program is that the turned in “clunker” must not get more than 18 miles to the gallon. After all, we want to stop “Al Gore’s Global Warming!” Thus, like all of the other recent programs—bailout of banks, loans to automobile companies so they won’t go bankrupt, (Oops! They did anyway but we tried and we now own part of two automobile companies.) and “stimulus” money to spend us out of recession—we are rewarding poor economic choices!
Those who originally purchased automobiles that get over 18 miles per gallon (a better economic choice) don’t qualify. Your reward is to reward those who purchased low mileage automobiles. That seems logical to me! It’s always good to reward poor choices. It MUST be! The federal government does it all the time!
But wait! That’s still not all. The “clunkers” must be destroyed to keep them off the road—too much “noxious” gases. Thus, the supply of low cost automobiles which by necessity poor individuals must purchase if they are making good economic choices is being drastically decreased. What happens when the supply of a product (inexpensive automobiles) is decreased and demand is not changed? The price of that product goes up. Less inexpensive cars to choose from means higher prices for the remaining cars. So poor people are going to pay MORE for automobile transportation! What is the government to do? I can’t wait until the federal government begins giving new cars to poor people for free so that they have transportation to get to jobs they don’t yet have!
But wait! There’s still even more. The engine is to be destroyed by using a caustic chemical. Don’t want these gas guzzlers to get back into circulation by mistake. But then, what happens to the engines that have been destroyed by chemical means? Do they go to landfills to pollute them? Are they tossed into the ocean? Are they shot into space? Does Barack Hussein Obama wave his magic wand to make them and the caustic chemical disappear? Where are the environmentalists when they are needed?
And finally, according to the Peoria Journal Star on August 5, 2009, page A2, “Environmental experts say the program—conceived primarily to stimulate the economy (HA! HA! HA!—my addition) and jumpstart the auto industry—is not an effective way to attack climate change.
‘As a carbon dioxide policy, this is a terribly wasteful thing to do,’ said Henry Jacob, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. ‘The amount of carbon you are saving per federal expenditure is very, very small.’”
What! The federal government did NOT do a cost-benefit analysis before this program was initiated? Surprise! Surprise! Surprise! I have a friend who likes to say, “Follow the money!” That’s easy! The money goes directly to those who made poor economic decisions originally and to the UAW. It comes out of our pockets and out of the pockets of the poor through higher cost for inexpensive transportation. However, every winner loves this program! Every loser, which is most of us, SHOULD NOT! FOLLOW the MONEY!
This is what the Bible says about our climate: “Then Noah built an altar to the Lord and, taking some of all the clean animals and clean birds, he sacrificed burnt offerings on it. The Lord smelled the pleasing aroma and said in his heart: ‘Never again will I curse the ground because of man, even though every inclination of his heart is evil from childhood. And never again will I destroy all living creatures, as I have done.
As long as the earth endures, seedtime and harvest, cold and heat, summer and winter, day and night will never cease.’” Genesis 8: 20-22 (NIV)
As I’ve said before, no human can accurately predict what the weather is going to be like 50 years from today. We have difficulty predicting with 100% accuracy what the weather is going to be like seven days from now. This I do know. If GOD wants global warming as predicted by the “Al Gore gang” to occur, there is NOTHING man can do to stop it. If GOD doesn’t want global warming to occur, it won’t, no matter what man does. Of course, God could always let man proceed as they choose without HIS hand in it either way. I don’t know what will occur 50 years from now and NEITHER DOES any other human on this planet!
This I also know. If I were living a life of SIN, I’d be more concerned about what GOD will do today and tomorrow or what will happen to me after my death (none of us has a guarantee that we will live another fifty years) than what is going to occur in another 50 years!!!
posted by Christian Gunslinger at 4:30 AM
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