Reason Writers Around Town: Shikha Dalmia on the Sci-Fi Thinking Behind the Cash-for-Clunkers

In her latest Forbes column, Shikha Dalmia is sorry to add to the loud kvetching over the Cash-for-Clunkers program, but feels she can't stay quiet given the program's high lunacy-to-spending quotient, especially when it comes to its alleged environmental benefits.

Writes Damlia:

"The program's basic idea involves paying owners of fuel-inefficient clunkers worth less than $4,500 a voucher up to the value of their vehicle toward a new, more fuel-efficient car on the hope that this will stimulate the moribund auto sector and slash carbon dioxide emissions. If you disregard the poor taxpayers financing it, everyone is a winner under this scheme.

But that's only in the fantasy land on Capitol Hill……"

Whole thing here.

Comments

[Lord Jubjub]

It occurs to me that someone trading in a 10-15+ year old clunker in normal times is not likely to be buying new. They would trade in for a newer used car. With the incentive to buy new, the used-car lots should be not emptying as fast.

As far as emissions go, I would imagine that a lot of the old clunkers (as opposed to newer ones) would be spewing out far more than excess carbon dioxide. Many states have run clunker programs NOT to reduce CO2, but to reduces NOx and other particulate pollution.

[stuartl]

What's more, when drivers switch to more fuel-efficient cars, they don't pocket the fuel savings, they actually drive more, producing no net reduction in emissions.

While I agree with the bulk of the article, is there data that backs up this claim, especially the "no net" part? I've found that my family seems to drive pretty much the same amount, no matter what the cost. We still gotta get to work, take the kids to soccer, visit grandma once a week, go grocery shopping, etc.

[Cool Cal]

It also occurs to me that (also based on quite a bit of anecdotal evidence) most people who are taking advantage of this voucher are putting it towards a loan for a lease - the used car market for low mileage cars will drastically increase in price due to this program, past the point where a flush trade could be made. So essentially we entered a recession fueled in part by excessive borrowing, and one response is to start a program that subsidizes new car loans with tax dollars, while simultaneously shrinking the supply of cheap cash-purchase used vehicles, thus putting more pressure on the less wealthy to take out a loan on a future new or used vehicle.

[Pro Libertate]

I'd support this environmental subsidy if the end result were flying cars.

[SugarFree]

I'd support this environmental subsidy if the end result were flying cars.

You and Paul Krugman. Ha Ha! Guilt by association. hurr hurr

[Paul]

We still gotta get to work, take the kids to soccer, visit grandma once a week, go grocery shopping, etc.

Individually, it's hard to pinpoint. But there is data which shows that if the price of gas goes up, the number of aggregate miles Americans drive goes down. See recent events as your guide.

[ClubMedSux]

...Shikha Dalmia is sorry to add to the loud kvetching over the Cash-for-Clunkers program, but feels she can't stay quiet given the program's high lunacy-to-spending quotient...

Technically, isn't it a relatively LOW lunacy-to-spending quotient? If it were high on lunacy and low on spending it would have a high lunacy-to-spending quotient, and if it were low on lunacy and high on spending it would have a very low lunacy-to-spending quotient. As it is, I would say it's high on both lunacy and spending, which would put its lunacy-to-spending quotient right around 1.0. Somebody wanna check my math?

[Customer]

"In effect, we are paying customers to do something most would do anyway."

Unprincipled "Cool"!

[jimwhenry]

Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)

Henry
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