Economics

Clunker Legislation

The economic illiteracy behind Cash for Clunkers

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The economic illiterates in Washington are so impressed with the "success" of Cash for Clunkers that they're readying Cash for Clunker Appliances. The ludicrous "stimulus" bill gave $300 million to the Department of Energy to provide rebates for 10 types of appliances that have been rated energy efficient.

Before government extends Cash for Clunkers to more products, it might be a good idea to examine the original. The fact that Washington and the buyers who took advantage of Cash for Clunkers are gaga is hardly evidence that it was in the public interest.

It wasn't. As usual, the program has been judged only by its first and most visible consequences, violating Henry Hazlitt's teaching in his classic, Economics in One Lesson:

"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

If you only look at the immediate effects, Cash for Clunkers appears pretty good. People traded in gas-guzzlers for more fuel-efficient new cars. The program cut carbon emissions slightly and gave the auto industry a boost.

"Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life, and consumers bought fuel-efficient cars that will save them money and improve the environment," Transportation Secretary Ray LaHood bragged. "American consumers and workers were the clear winners thanks to the Cash for Clunkers program."

But wait. Shouldn't that be some consumers and some workers? And only in the short run?

Let's start at the beginning. The government paid car owners to trade in their old cars, which will be destroyed. But the government is running a deficit. So it doesn't have $3 billion to hand out. It must borrow the money, which reduces the amount of money for other investments. Moreover, the government must raise taxes in the future to pay back the principal and interest—or the Federal Reserve will monetize the debt through inflation. Either way, we pay.

That isn't all. Those car buyers were either going to trade in their used cars soon or they weren't. If they were, Cash for Clunkers simply moved up the schedule. The stimulation of the auto industry occurred earlier. Big deal. But if buyers planned to keep their cars longer, the program imposed costs that are less visible. Without the government incentive to buy cars, consumers would have bought other things—computers, washing machines, televisions. The manufacturers and sellers of those products didn't get to make those sales. Why should the auto industry get privileges at the expense of others?

Then there are the mechanics who would have serviced those used cars. They've lost business. Some will be laid off. Nor should we forget low-income people who depend on the used-car market for their transportation. The cheap cars they would have bought were destroyed.

What about the alleged environmental benefits? Assuming that cutting carbon emissions is worthwhile, was Cash for Clunkers helpful? It's hard to see why. People who traded in inefficient cars for efficient ones will likely drive more and therefore use more gasoline.

Even if carbon emissions are cut by a lot, economist Christopher Knittel says the program will cost more than $365 per ton of carbon saved.

Economist Bruce Yandle points out what a lousy deal that is: "The much celebrated Waxman-Markey cap-and-trade carbon-emission control legislation estimates the cost of reducing a ton of carbon to be $28 when done across U.S. industries. Yes, we are getting carbon-emission reductions by way of clunker reduction, but we are paying a pretty penny for it."

Finally, there is something revolting about the government subsidizing the destruction of useful things. It reminds me of the New Deal policy of killing piglets and pouring milk down sewers to keep food prices from falling.

Leave it to politicians to think we can prosper by obliterating wealth.

John Stossel is co-anchor of ABC News' 20/20 and the author of Myth, Lies, and Downright Stupidity. He has a blog at http://blogs.abcnews.com/johnstossel.

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  1. John Stossel is a racist.

  2. Racist!

    On a serious note though… I thought we were done talking about C4C. No rational thought got through, and California already does this stupid appliances version of it.

    Hooray for breaking windows!

  3. I know you guys saying “racist!” are joking but I’ve heard liberals saying it seriously, whining about how people naysaying C4C are just trying to bring down “a great president and a great program”. I think a lot of the support for the program is cult worship.

  4. “Finally, there is something revolting about the government subsidizing the destruction of useful things. It reminds me of the New Deal policy of killing piglets and pouring milk down sewers to keep food prices from falling.

    Leave it to politicians to think we can prosper by obliterating wealth.”

    Win.

  5. Remember when the Egyptians killed all those pigs. That was awesome too.

  6. This year, in the top ten list for stolen cars: Ford Explorer, #9 (one of the top C4C trade-ins), and Jeep Cherokee, #7 (also in the top C4C trade-ins, I believe). My prediction for next year? Ford Explorer #1 most stolen vehicle, followed by Cherokee at #2. Many of the destoyed vehicles, being more marginal in the first place were probably destined to become parts fodder for the ones still on the road. The reduction in available cars to pillage for spare parts will result in higher prices for replacements, thus increasing their desirability for car theives. It might take another year or so for that to have an affect (depending on when many of those clunkers actually would have been scrapped), but watch for it. Another unintended consequence that no one thought of: So if you’re poor and nursing along your ten year old Explorer, now you will have to pay more for replacement parts, or even have your car stolen. People in that economic situation will probably not have full coverage insurance (if any) so they’ll just be SOL.

  7. Ah yes Stossel, zero training in economics, or really much of anything. Did he really say in there that people will drive more if they have fuel efficient cars? So you are just going to drive around in circles if you have an efficient car? WTF?

    Stossel has a long history of getting his facts wrong (cough AIDS death figures) and misrepresenting through fraudulent editing what people said to him.

    Also, most deliciously hypocritical, he rails against lawsuits after getting a half a million dollar judgment for a lawsuit he filed for minor injuries. Typical libertarian on lawsuits: we don’t need regulation because lawsuits are there for any harm caused, also let’s ban lawsuits.

  8. I guess I should have added that overall car theft would increase (car theft is driven typically by demand for spare parts in the US, so that is why the top ten list usually has a bunch of old, seemingly worthless cars on it). In addition to that the makeup will shift to the types removed from the market by the C4C program.

    You don’t have to be an Obama cultist to like the program; I work in the auto industry and most folks seem to think it was awesome. You just have to be one of the people to benefit from it.

    That said, many people in my industry are now worried about how much the sales will drop again now that it is over, and are aware that many of the sales were ‘pull ahead’ of future sales that would have happened anyway. So I don’t necessarily think this was any more than a temporary respite. It won’t solve the fundamental problem that there still aren’t a lot of new jobs or increases in personal income yet in the ‘recovery’.

  9. nebby, I don’t know much about Stossel, so I won’t argue with you about that, but I do not think it is so ridiculous to think that people will engage in more of an activity when that activity costs less. People do from time to time drive when it is not absolutely necessary. When it costs less, such discretionary driving is likely to occur more often.

  10. Jim, Congress outlawed unintentional consequences late in 2008, so no worries!

  11. Nebby,

    Check out Jevon’ Paradox: http://en.wikipedia.org/wiki/Jevons_paradox
    It is economically sensible that if you decrease the price for something (like driving by increasing fuel efficieny), people will do more of it. That is also why the new CAFE requirements Obama was able to push through, partly because the Big 3 were now at his mercy, probably won’t do a hell of a lot to reduce our dependence on oil.

  12. Ah yes Stossel, zero training in economics, or really much of anything.

    And yet he linked to research and articles by trained economists, unlike you.

  13. Did someone say Economic Illiteracy?

    “Get the fuck out of here or I’ll throw you out the window!”

  14. “Ah yes Stossel, zero training in economics, or really much of anything. Did he really say in there that people will drive more if they have fuel efficient cars? So you are just going to drive around in circles if you have an efficient car? WTF?”

    This is sensible and empirically well established. When people drive fuel inefficient cars, the marginal cost of a driving trip is higher, so they make fewer trips. When they are in a more efficient car, they’re more likely to drive to the grocery store instead of walk, put less effort into doing all their shopping at once, and go on more driving trips rather than flying trips. Obviously people who are very well off can just ignore the costs of fuel when they’re deciding whether to drive somewhere, but people with eligible clunkers probably don’t fall into this category, and probably have to seriously think about the cost of gas. I know plenty of folks in Chicago who have cars but take the bus to work most days to save on gasoline; many of them would probably drive two or three days a week instead of just one day a week if their cars were more fuel efficient.

  15. @Nebby – You don’t have to be an economist to realize that when you take money from person A and give it to person B, person B is the only beneficiary. C4C is simply income redistribution and it only favors a certain group of Americans.

    If you don’t realize this, you’re just unwilling to accept the truth.

  16. “Ah yes Stossel, zero training in economics, or really much of anything. Did he really say in there that people will drive more if they have fuel efficient cars? So you are just going to drive around in circles if you have an efficient car? WTF?”

    No, but instead of planning routes to minimize gas consumption, some drivers will just go run and get eggs, then go to the bank the next day, and so on.

    And this doesn’t touch people taking trips they wouldn’t have before because it’s less costly.

    It ain’t rocket science.

  17. I wonder what Obama really thinks about this program… I think the most likely scenario is that he knows it bad economics and bad environmental policy. My best guess is that he likes C4C because the great unwashed will like it and it will therefore inspire Hope. And since the current economic problems are caused by a lack of enthusiasm for the health of the economy, Hope will turn things around, even if it’s false hope. — it’s a theory so crazy, it just might work.

  18. nebby is just jealous of Stossel’s Tom Selleck-level mustache.

    “Wow, look at these men. What class! What grace! And all because of a little upper lip hair. Lois, I am gonna grow a mustache. And I’ll have it made like the Monopoly guy. Except when he goes directly to jail.”

  19. Joe_D,

    I myself have pondered the role the media play in recessions and such – if people start hearing bad news, they then start to save for a rainy day and it eventually becomes a self-fullfilling prophesy once volumes on goods and services start to drop.

    On the other hand, most people’s job prospects are local in nature. All other things being equal, if homebuilding in San Hose is dropping, it might be hot in Delaware. Car sales might suck right now, but if people are dumping their money into big screen TV’s then the people making & selling them will be working overtime. Even increased savings should result in lower interest rates, which will keep spending higher in any areas involved in borrowing (business investment, housing). So the only thing that really can affect everyone’s economic outlook is the goverment.

    Start there and work backwards.

  20. Better a little upper lip hair, than an upper hair lip…

    ba dum!

  21. I bet if nebby had a stash’ like Stossel he would appreciate Stossel’s views more.

  22. Wow… Nebby… Impressive. Truly impressive.

    Apparently the concept of people doing more of an activity that costs less is foreign to you? Perhaps you want to pick up a copy of this book.

  23. Regarding Stossel’s training, he has a BA from Princeton in Pyschology. Considering that he’s commenting on human behavior, he seems particularly qualified to make this statement. Sure, any moron could get a BA in psych where you went to school, nebby, but you didn’t go to Princeton.

    But Stossel is treading on thin ice with his cynicism. He’d better considered the warning given by another Princeton grad:

    “Barack Obama … is going to demand that you shed your cynicism. That you put down your divisions.”

  24. Damn your fast typing skills Epi! Damn them straight to hell!

    *shakes fist*

  25. It’s always sort of mind-boggling to me to see people gloss over 100% of a person’s actual arguments, ignore all facts, sources, and shove their head up their ass to deliberately avoid having to think about someone else’s ideas.

    “B-b-b-b-b-but… STOSSEL ISN’T AN EKONOMIZT! HE MUST BE STOOPID!!”

    Hate to point it out to such banal dumbasses, but Obama and no other politician besides Dick Armey that I’m ware of, ain’t no economist neither.

  26. STEVE SMITH NOT YETI! STEVE SMITH GIGANTOPITHECUS! ARRRR SMASH RAPE NUTRASWEET

  27. Ad-hominems are only valid against such rank subhumans as Tony, Dick Hoste, and Lonewacko. Shut the fuck up, nebby.

  28. Gas prices have a small effect on driving patterns, but increases in fuel efficiency overwhelm the trivial rebound effect. Doubling fuel efficiency increases miles driven by roughly 7% and that number is falling.

    People may drive less when gas is expensive, but the trivial amount of increased miles from fuel efficiency is swallowed many times over by the increase in efficiency.

    http://features.csmonitor.com/environment/2009/05/22/does-increasing-fuel-efficiency-make-people-drive-more/

    Just yelling “supply and demand” doesn’t answer many questions.

  29. STEVE SMITH NOT POST YET! RAPE NOW!

  30. Also, I never bring this up but since you commented, Princeton class of ’93 BSE.

  31. He left out the fact that consumers were enticed to take on more debt (to buy the new cars) at a time when people are already overloaded with debt and should be cutting back and starting to save. Not to mention the environmental impact of scrapping operational vehicles and building new ones that weren’t really needed.

  32. Here’s the problem… see that switch on the back of his neck? Some damn fool had it set to RAPE. Just flick it back over to FORAGE and he’ll settle down.

  33. Nebby. Here’s why you’re retarded. And here. And here. And here. And here.

    It’s not just the fact that people drive cars more when it’s cheaper to do so (which is true), it’s also that people also have this niggling little tendency to drive new cars more than old ones… Ya know, just cause it’s fun.

    Your thinking is as sloppy as an aging sex worker.

  34. He left out the fact that consumers were enticed to take on more debt (to buy the new cars) at a time when people are already overloaded with debt and should be cutting back and starting to save.

    This is something I have remarked upon before and do not see pointed out enough. I would think that nearly everyone who did C4C got a car loan, making them all in greater debt. This is good how?

  35. And for the record, I do have serious walrus envy for Stossel’s whiskers.

  36. Here’s the problem… see that switch on the back of his neck? Some damn fool had it set to RAPE. Just flick it back over to FORAGE and he’ll settle down.

    All Steve knows is forage…and smash…and RAPE.

  37. Great article.

  38. “making them all in greater debt. This is good how?”

    Didn’t you know Epi, DEBT fuels the economy by enabling banks to print more dollars, and as we all know: dollars = wealth!

  39. NO! RAPE FUEL ECONOMY! STEVE SMITH RAPE NOW!

  40. Steve sad. Tony best friend of Steve. Ride on back of Steve motorcycle. Then dirty little boy hit friend Tony in head with steel boomerang. Friend Tony die. Steve sad.

  41. I realize this is only an anecdotal piece of evidence, but the friends of mine who work in the auto repair business are pretty pissed off about C4C.

    One does not need a masters in Economics to understand the Broken Window Fallacy, and apply it in this case.

    As Stossel notes, all that happened was the government took money away from one group and handed to someone else. No wealth was created, and in the process some actual wealth was destroyed.

    One also does not need a masters in economics to realize that the government should not be in the business of overtly influencing the free market.

  42. Tman, maybe you should have a Princeton class of ’93 BSE. Dumbass. If you had a Princeton class of ’93 BSE, you would understand why you’re a dumbass. Dumbass.

  43. No Warty, a Princeton Class of ’93 BSE isn’t enough… You need a Nobel Prize in economics too!

  44. Those car buyers were either going to trade in their used cars soon or they weren’t. If they were, Cash for Clunkers simply moved up the schedule. The stimulation of the auto industry occurred earlier. Big deal.

    Actually it is a big deal. Depending on how many moved up their time frame and how long the time frame was, cars sales for the next few months could be severely low, resulting in the industry being in worse shape. Auto manufacturers may have seen an initial bump, but if they have have shifted, lets say, 5%-10% of their monthly sales over the next 12 months to the “Cash For Clunkers” program then they are going to be hurting worse as they go forward. Even worse Ray LaHood has stated that “Manufacturing plants have added shifts and recalled workers” in order to meet this one time demand. Once stock has been built back up and plants have to adjust to lower future production needs, more people will be without a job than would have been the case otherwise. Then if you start factoring in the sales that were completely lost by some auto manufacturers, Chevy and GM lost sales to Toyota, Honda and Ford as consumers sought out “bought fuel-efficient cars”, it’s going to hurt their long term viability even worse.

  45. Steve sad. Tony best friend of Steve. Ride on back of Steve motorcycle. Then dirty little boy hit friend Tony in head with steel boomerang. Friend Tony die. Steve sad.

    YOU CAN RUN! BUT YOU CAN’T HIDE!

  46. Be still Steve, be still my dog of war. I understand your pain. We’ve all lost someone we love. But we do it my way! We do it my way. Fear is our ally. The gasoline will be ours. Then you shall have your revenge.

  47. I don’t think it’s as much a case of economic illiteracy by politicians as it is a case of they simply don’t care about the substance of economics. It’s all about catering to those whom they perceive as members of the particular constituent groups that are the most significant source of their political power.

  48. JUST WALK AWAY. GIVE STEVE SMITH THE GASOLINE AND THERE IS END TO RAPE.

  49. “As Stossel notes, all that happened was the government took money away from one group and handed to someone else. No wealth was created, and in the process some actual wealth was destroyed.”

    This makes sense if your ideology states that the one axis you can judge things on is “was wealth created”. (We’ll ignore for a moment the question of whether this created wealth long term is hardly settled). We have no idea at this point whether this will net out to be a good idea economically, ecologically or otherwise.

    “One also does not need a masters in economics to realize that the government should not be in the business of overtly influencing the free market.”

    Actually PhDs in economics fight about that all day. Don’t confuse doctrinaire beliefs with data. Anyway, we are far afield of the original discussion at this point.

    N.B. I brought up the fact I share my proud alma mater with Stossel after being accused of not understanding the rigors of the undergraduate psychology degree at Princeton. Senator, I knew Princeton psych majors, I had sex with a female Princeton psych major (damn I loved that Korean harpy) and you can color me unimpressed.

  50. STEVE SMITH GRAVELY DISAPPOINTED. AGAIN YOU HAVE MADE HIM UNLEASH DOGS OF RAPE.

  51. Nebby – are you capable of not arguing from authority? I’m curious.

  52. I think you may have a shallow understanding of what “arguing from authority” is. I am not saying authorities are infallible, I am saying I am less likely to trust assertions from people with little training in a topic. Stossel shows his lack of understanding when he discusses the effect on miles driven without then doing the rest of the analysis on whether that effect is outweighed by the increase in efficiency. It is not even close. People would have to go out and drive in circles to make Stossel correct.

  53. Except that Stossel is A. right about that, and B. saying something the vast majority of trained economists are well aware of.

    Hence the quintuple linking on my part earlier.

  54. We have no idea at this point whether this will net out to be a good idea economically, ecologically or otherwise.

    Um, yes we do. Again, the broken window fallacy clearly shows why this is a bad idea economically. I’m assuming your Princeton education at some time covered the BWF? Yes?

  55. I heard something on the radio this morning that I found interesting. IIRC it was a car dealer that had sold cars under C4C program.

    She was saying the when they tried to process the rebates the dealers are supposed to be receiving that they are being told that the buyer of the car has outstanding defaults and debt IE Taxes, Child Support or any other debt that Uncle Sugar can come in and confiscate your money over.

    I found it very odd that they are going to hold the dealers accountable for selling cars to people they could not have known had outstanding debt in some cases. Just like they will not send you a stimulus check or tax refund if you owe back taxes or student loans they are not sending the car dealers the money for these particular peoples car purchases. Thus screwing the dealer but making sure they government agencies get paid what they are owed.

    I have tried a little searching for such actions to back up what I was hearing, but honestly what I was hearing is not all that hard to believe since the government feels it is free to distribute your money to your debtors for you now without any input what so ever by the debt holder. The gov will always make sure it gets paid off first. Just like my paycheck, by the time I get it Uncle Sugar has already taken his CUTS and been paid even before I have and oddly enough I am the only one that actually went to work!

    Anyone else know anything about this? If it is true and they stand by these actions I can only imagine how many dealers are likely to be screwed over on C4C deals they made to people that owed money.

  56. The increase in efficiency of about 2-4 mpg? You’re kidding, right?

    Have you also bothered to factor in the extremely high energy cost of producing the new cars themselves? Have you bothered to consider the energy costs of shipping new & used cars around the country? Have you bothered to consider the energy cost of the machinery used to demolish the used cars?

    Have you bothered to consider the effect that the destruction of 750,000 otherwise functional automobiles will have on the price of used cars… you know, the cars that poor people might want to drive?

    Your understanding of even the basic economics of this issue has so far proven to be ridiculously poor Nebby. For you to criticize Stossel at this point is just a joke.

    200 years ago Bastiat put this retarded policy in its place… Apparently you hadn’t heard.

  57. Tman are you ignoring offsetting factors or are you ignorant of the concept?

    You are aware the Austrians are just one branch of economic argument right?

  58. Are YOU aware of them Nebby? You seem to have thought through exactly 1 of them.

    Higher efficiency > People driving more = Net carbon reduction.

    Cept… 1. You’re wrong, and 2. There are a dozen or so other factors you’re ignoring (see above) and the entire thing fails the cost-benefit test from the start as it’s based on a fallacy of reasoning – one, I should say again, which was exposed over 200 years ago.

  59. Tman are you ignoring offsetting factors or are you ignorant of the concept?

    There are no “offsetting factors”. You aren’t properly applying the theory in this case.


    You are aware the Austrians are just one branch of economic argument right?

    Yes, I am aware of that. Are you aware that Bastiat was a FRENCH economist?

  60. There are no offsetting factors? I’m all ears, how did you determine that?

    Yes Bastiat was French, but it was the Austrians who turned his treatise into the Atlas Shrugged of economics for libertarians (well the bright ones, Economics in One Lesson was for the Delta minuses).

  61. “Tman are you ignoring offsetting factors or are you ignorant of the concept?

    You are aware the Austrians are just one branch of economic argument right?”

    Bastiat, the author of the classic work on the Broken Window Fallacy, was French.

    You fucking idiot.

  62. There are no offsetting factors? I’m all ears, how did you determine that?

    I love liberal arguments – “Prove a negative! Prove it! You can’t!! HAHA!! I’m Right!”

    That’s just stupid. You are making this more complicated than it is. Are you SURE you know what the BWF means, and how it applies in the C4C boondoggle?

    Yes Bastiat was French, but it was the Austrians who turned his treatise into the Atlas Shrugged of economics for libertarians (well the bright ones, Economics in One Lesson was for the Delta minuses).

    Talk about irrelevant, I have no need for including a discussion on Austrians or Atlas Shrugged in order to make the point that C4C was a stupid economic decision that is easily explained through the BWF.

  63. Nebby, you can choose rational thought & logical reasoning, or you can choose to try to acquire an understanding of the world through random chance & wishful thinking.

    You’ve clearly chosen the latter in this case, and that’s cool, but I feel duty bound to warn you: The former has a much better track record of explaining reality.

  64. Damn Tman and his fast fingers.

  65. “We’ll ignore for a moment the question of whether this created wealth long term is hardly settled”

    Really?

    Explain how a transfer payment creates wealth.

  66. Hey, nebby, go away!

  67. You guys really didn’t know the Austrians are the champions of this stuff in economics? You think I didn’t know a guy with the name Bastiat was French? Do you think Bastiat’s ideas are forwarded by some “French School” of economics? The “He was FRENCH” (note the all caps) response tells me volumes about both of you. I thought you were just being an ass when you say the BWF proved this 200 years ago, but maybe you actually think that is how this subject works. Wow.

    Next, I am not randomly asking him to prove a negative, he said he has already proven a negative. I am asking him his methods.

  68. Can anyone explain to me how breaking windows in a factory is a good thing? You have to waste wealth replacing wealth you already had?

  69. I love that Nebby is seemingly incapable of understanding the following:

    A. Assume that a window costs $100.

    B. Assume Person X has 1 Window + $100 in savings.

    C. Break window. Deplete savings to purchase new window at $100.

    D. Now Person X has 1 Window, no savings.

    Clearly – this is a massive wealth generation scheme! Ugh… I mean, even without getting into the more complex aspects of this, a person who struggles to understand an idea so deeply flawed is in trouble. ’93 Princeton BSE or not.

  70. Nebby, what’s retarded about you bringing up the Austrian school is that Bastiat wasn’t a member of the Austrian school, didn’t found the school of thought (hence why it isn’t considered a French school) and the BWF – and virtually all of “The Law” for that matter – is widely accepted across all economic theory.

    And as I tried to point out just above, it takes some hard-core deliberate idiocy to fail to understand why C4C is a horrible idea.

  71. Forget it guys. Nebby is just too smart for us non-Ivy leaguers. We just don’t understand the nuance behind a $3 billion waste of tax payer money to prop up an ailing industry and a feint gesture towards emissions reductions.

    Yep, it’s all about the intricacies of deep economic theory that we simple minded folk just wouldn’t understand.

    Oh well, back to Bejeweled.

  72. Sean,

    So you believe your points A-D are a comprehensive description of how this concept should be addressed? They cover everything?

  73. I feel compelled to pull the whole quote from Hazlitt here:

    “In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

    In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”

  74. Ah yes, Princeton’s Economics Department, doing for Economics what Bryan College’s Biology Department is doing for Biology.

  75. “So you believe your points A-D are a comprehensive description of how this concept should be addressed? They cover everything?”

    Yes, of course… which is why I said:

    “without getting into the more complex aspects of this”

    Clearly, your reading comprehension skills are beyond compare, sir.

  76. Of course Bastiat wasn’t a member of the Austrian school, and Jesus wasn’t a Christian. Bastiat was a major influence of the Austrian School. Just look him up in wiki for God’s sake.

    The complex aspects of this is the whole point. Your construction of this is simplistic and inaccurate as a result.

  77. “Oh well, back to Bejeweled.”

    Have you played the preview of the new version? It’s pretty sweet 😉

  78. Patri Friedman, grandson of ol’ Milt had this to say on guys like Nebby:

    Evolutionists have it easy. Sure, maybe half of the US disbelieves this solid scientific theory, which has zillions of weird implications many of which have been proven true and would be ridiculous things to explicitly design.

    But I bet “half” pales in comparison to the number of people who believe in what I shall henceforth call “Economic Creationism”: anything that contradicts old, well-established economic truths. Examples of Economic Creationism include the Broken Window Fallacy, confusing money and wealth[1], and protectionism (disproven by Ricardo’s theory of comparative advantage). Often these fallacies come into play when thinking that a government intervention will somehow “Create” value out of nowhere.

    These evolutionists think they know what it’s like to have to deal with people holdin up crazy theories they disproved a hunnerd years ago? Look, while regular ‘ol Creationism is uncool in most intellectual circles, Economic Creationism can be found in the hallowed pages of the New York Times. If done in an appropriately Bush or corporate-bashing way, it gets you respect – even though it’s pure bullshit.

  79. So far nebby has given one link (to the Christian Science Monitor of all things) and an assertion to support his point. The main source of the assertion in that article is not from an economist but from a member of the Union of Concerned scientists.

    All of the rest of his verbiage has been eye rolling, insulting Stossel, and making fun of libertarians.

    Very impressive.

  80. Tman I am still waiting on your methods, or did you just pull that out of your ass?

  81. My understanding was that Bastiat wasn’t a major influence to Austrian Economics, but to economics in general,much like Adam Smith?

  82. I linked to the CS because it is a conservative paper known for moderation. It is a good layman link. It also includes a link to an academic paper that covers similar territory if that is what you are looking for.

  83. Ah yes Stossel, zero training in economics, or really much of anything. Did he really say in there that people will drive more if they have fuel efficient cars? So you are just going to drive around in circles if you have an efficient car? WTF?

    A little late to the party but this comment pissed me off. I was looking at using C4C to dump my old Crown Vic Police and get a new more efficient 100%-Foreign-Made-Fuck-You-Detroit car but the claim you joke about is something that discouraged me. Right now I spend about $20 a week in gas because I drive only to work, doing all my shopping on the way home and maybe 1 or 2 trips on weekends. With a new car that not only runs better but gets better gas mileage, I would definitely drive more often, even take some road trips. I did some napkin math and found out that I’d spend as much if not more in gas.

  84. LeeJoe,

    He is pretty much a patron saint of the Austrian School. Just ask the folks at Mises.

    http://mises.org/about/3227

  85. Oh for fucks sake Nebby, I know who Bastiat was and his relevance to the Austrian school. That has NO bearing on whether or not he fucking applies here. How about you quit worrying about which authority is talking and start thinking more about the actual arguments.

    This isn’t rocket science, and actually my construction is the basic level that you need to understand to realize how stupid this is. I can explain in greater detail why – but as it turns out, I already did.

    I linked to FIVE different things you moron!

    You didn’t go to a one of them. You haven’t respond to the points made – and in fact, thus far your only skill has been to whine about who is making the point(and you’re formulating a strawman on that even, by saying the Austrians, since in this case its ME and Tman and not Bohm-Bawerk who’s doing the talking) and not what is being said.

    For people of average intelligence, this isn’t that complicated.

    If you take existing wealth – a functional car, for example – destroy it, then make people use whatever savings (or worse, borrowed/printed money) they have to replace said automobile, the world is POORER for it, not richer!

    It seems clear that you can’t understand that. This is unfortunate, since it’s goddamn easy to understand.

    The other things you pretend will make up for this massive destruction of wealth (750,000 functioning automobiles), like improvements in emissions, are non-existent benefits. They’d be negligible to start with… But when you factor in the energy it takes to produce new cars, ship them around the country, destroy old cars, not to mention the even smaller scale details like the bureaucracy costs, interest on the borrowed money the government is using to pay for this nonsense – and most importantly, the horrendous cost you are imposing on the poor by reducing the supply of affordable used cars… And not only do you not get any net benefit – you get net loses. Probably big ones! Both to the environmental side of things, where overall CO2 emissions will surely be increased by this program in the short term, and with quite likely nonexistent long-term benefit, and to the economy at large, where purchaser’s time-preference was merely shifted up a few months.

    The links I provided could take you into a deeper study of this – maybe get you to think about the secondary & tertiary effects… but it’s quite clear that you have no interest in that. For you, it’s easy enough to make some wild assumptions about the increases in efficiency (again, on average gaining only 2-4 mpg per car… which… I gotta tell you is HUGE!), and assume away all recorded evidence to the contrary.

    Well done sir. Now pull your head out of your ass, mkay?

  86. I took a shit at Princeton once.

  87. Tman I am still waiting on your methods, or did you just pull that out of your ass?

    Here is my method Nebby.

    1.) Government takes $1 billion dollars from tax payers.

    2.) Government hands back some (not all!) of this money to certain taxpayers if they promise to break one of their windows and buy a fancy new carbon neutral window.

    3.) Government takes another $2 billion because people apparently were in a big hurry to break their crappy windows.

    4.) Program ends. No additional wealth has been added to the system, and actual wealth was destroyed in the process.

    All methods above are fully explained in the BWF.

    If you can’t understand this, I suggest you ask for a refund from Princeton.

  88. I’m still waiting for an explanation of how a transfer payment creates wealth.

  89. I’m still waiting for an explanation of how a transfer payment creates wealth.

    So are a lot of us…

  90. I am not saying authorities are infallible, I am saying I am less likely to trust assertions from people with little training in a topic.

    Unless that authority happens to agree with you, right? You’re taking the assertions of politicians without any training in this area over the assertions of someone else who isn’t a politician without any training in this area. Brilliant.

  91. “and Jesus wasn’t a Christian.”

    True, but he sure acted like one.

  92. We all know that Bastiat was important to the Austrian school – he was important to all economics, Nebby. So was Adam Smith… So what?

    You’re still concerned with who is talking, and not what they’re saying.

    Drop the arguments from authority already.

  93. Looks like Imelt (GE CEO) went crying, like the baby that he is, to barry schickelgruber that barry was a meanie for giving so much taxpayers money to help the UAW, when imelt was a bigger supporter than the union thugs, and, he had sold out the “integrity” of N”BS” and MSN”BS”, in order to support the candidacy and later, any hare brained idea generated by the cretin in the White House. Barry, “no prob, Geoff, problem solved.”
    PS. GE appliances are absolute GARBAGE. Imelt has let the appliance business tank as he focuses of stealing tax dollars through his “ecobullshitimation” scam. In Jack Welch’s entire brilliant career, in which he made fortunes for his GE stockholders, he made one bum decision, sadly it was his last, and most important one!
    Regarding the discussion about the “economic value” of the C4C, I’m with Harry Truman, who died searching for a one handed economist. I’ll choose common sense over econmic theory every time. The simple fact is that any intrusion by the government into the free market via “incentives” will preclude other activity, which would have occured absent the incentive. Government intervention selects the winners and losers. That is the role of the free market, not a bunch of political hacks in Congress. C4C, like all such scams, was a blatant political play.

  94. “I know who Bastiat was and his relevance to the Austrian school.”

    So that is why you thought saying he was French refuted his association with the Austrian School? You are full of it sir.

    I read your links, none of them settle any question. The BWF is an assertion that relies on the assumption that greater efficiencies cannot be created through short term dissolution. There are about a thousand papers on this.

  95. And regarding economics, I think a great way to generate wealth would be to round up a bunch of backhoes and dump trucks (providing work for heavy equipment operators) level Princeton and then rebuild it with more fuel efficient materials (providing jobs for architects, draftsman, tradesmen as well as workers in the fuel-efficient building materials industry).

    It’s a win/win if ever there was one.

    Maybe you could take the lead on this, nebby
    .

  96. “So that is why you thought saying he was French refuted his association with the Austrian School? You are full of it sir.”

    Scroll up dumbass, I didn’t say that. How about you actually argue points that the person you think you’re refuting made, huh? Try that. It works better.

  97. “there are about a thousand papers on this”

    THEN LINK TO ONE.

    That said. Bullshit.

  98. nebby wrote

    “I linked to the CS because it is a conservative paper known for moderation. It is a good layman link. It also includes a link to an academic paper that covers similar territory if that is what you are looking for.”

    There was one link to an academic paper ‘supporting’ the aforementioned assertion. This is from page 4:

    “So, from the perspective of energy security, policy responses that mandate improved fuel economy seem to make sense, But if the goal is also to reduce greenhouse gas emissions, such regulations probably should be complemented by fuel or carbon taxes, because better fuel economy in itself may primarily alter the time pattern of oil consumption rather than its cumulative total.”

    This just gets better and better.

  99. How about we level Princeton… and… don’t rebuilt it? That would produce a net benefit to the world far outweighing the cost of destruction. Fewer Nebbys.

  100. “”and Jesus wasn’t a Christian.”

    True, but he sure acted like one.”

    He was petty and judgmental?

  101. Can someone explain to me exactly what nebby’s position is? I haven’t really discerned anything other than insults in his posts.

  102. Asshole much?

  103. His position, as far as it’s even remotely thought out – is that the net benefits from the increased emissions standards [my note: we’re talking about only between 2-4mpg gain in efficiency in reality] will outweigh all the associated costs.

    He hasn’t said this – but I suppose I have to make the assumption that he thinks whatever (and highly unlikely) modest reduction in CO2 we get from C4C is more important than the increase in costs and poorer living standards this imposes on already poor people.

  104. “Can someone explain to me exactly what nebby’s position is?”

    He’s Tony’s bottom.

  105. Or simply unemployed.

  106. Sorry Sean, Tman and Publius were the idiots who didn’t know that. I don’t mean to tar you with that brush.

  107. The thing I wish supporters of shit like C4C would do is admit that they are imposing costs primarily on the poorest members of our society in order to give a special bonus to the middle class voters and to redirect resources towards politically favored interests, like auto manufacturers.

    Even if there’s a positive environmental impact – which is absurd and impossible at this point – that still comes at great expense to the poor.

    Now – that’s a trade-off some people might be comfortable with… Like Nebby. But they should just admit that’s what they’re doing instead of pretending there’s some magic that makes this destruction of goods somehow “wealth-producing”.

  108. And nebby is the idiot who somehow believes that the Austrian school of economics predates Bastiats BWF.

    Seriously nebby, quit while you’re behind.

  109. Nebby, I think tman was aware of Bastiat’s importance to the Austrian school too, but you’re still missing the point.

    WHO CARES!? If Bastiat was wrong, then prove him wrong. If the Austrians are wrong, then engage them on their ideas.

    You refuse to do that. Instead, you insinuate that we shouldn’t listen to Bastiat because the Austrians like him, and you provide nothing at all in the way of a reason not to listen to the Austrians… Other than that they’re different from Princeton people. But since the Princeton (Krugman) crowd get everything wrong all the time, and the Austrians have a stellar track-record and better ideas based on actual historical events and proper logic instead of fictitious econometrics… I’m pretty sure the fact that they’re not like the Princeton crowd speaks volumes in their favor.

    Regardless – you keep arguing from authority.

  110. You know what else Tman… Einstein liked Isaac Newton!

    See, I can do non sequiturs too!

  111. I swore I wasn’t going to answer this inanity anymore, but I will give it one more shot.

    “Nebby, I think tman was aware of Bastiat’s importance to the Austrian school too, but you’re still missing the point.”

    Sure didn’t sound like it and he just suggested I said the Austrians influenced Bastiat, so, no, I don’t think he has even the shakiest grasp of what he is talking about.

    “WHO CARES!? If Bastiat was wrong, then prove him wrong. If the Austrians are wrong, then engage them on their ideas.”

    Do you think we just wandered up on this discussion? There are many schools of thought in macro-economics. None of them have “proven” anything. The Keynesians are just tweaking their theories same as the Austrians. It is a long term project, not some settled score. I am not arguing from authority when I use the proponents of the schools as a shorthand for the ideas of the different schools. That is how you have these discussions.

    “You refuse to do that. Instead, you insinuate that we shouldn’t listen to Bastiat because the Austrians like him, and you provide nothing at all in the way of a reason not to listen to the Austrians… Other than that they’re different from Princeton people.”

    Have you confused me with someone else? When did I say we shouldn’t consider Bastiat? I was just pointing out his theories are just one of many and calling them conclusive is silly. I am not the absolutist here.

    “But since the Princeton (Krugman) crowd get everything wrong all the time, etc etc ..”

    Oh, this is some sort of dick measuring contest for you. No wonder you are being unreasonable, we are talking about your religion.

    “Regardless – you keep arguing from authority.”

    Again, you don’t seem to grasp what arguing from authority is. I have not said Bastiat and his followers the Austrians were right or wrong. Again, when I reference two sides of a debat by their common names, that is not arguing from authority. Pointing out Stossel is not an authority of any kind is not arguing from authority that is just discussing qualifications. If I said Bastiat is right because he is Bastiat, that would be arguing from authority.

  112. he just suggested I said the Austrians influenced Bastiat, so, no, I don’t think he has even the shakiest grasp of what he is talking about.

    Clearly I have no idea what I’m talking about. I didn’t go to Princeton.

    Only people from Princeton can truly understand the nuances of economics and the various schools of thought thereof.

    The rest of you are just stupid ingrates who get in the way.

    Now shut up and hand over more of your money to us smart people, WE HAVE A PLANET TO SAVE!!!!

  113. Just cut the crap about what followers of what school believe what and direclty explain yourself how a transfer payment can create wealth.

  114. Nebby,
    What is your position on C4C? Did it work?

  115. Nebby – you’ve consistently managed to AVOID making any actual arguments – as many posters have commented about thusfar.

    Instead, you’ve spent your time trying to say that Bastiat was liked by the Austrians, and therefore… What, exactly? Oh right, and therefore he’s probably wrong?

    No… It’s hard to say… You’re using the Austrian connection as if it’s some type of negative, in order for us to forget that Bastiat actually made an ARGUMENT. One which you have yet to even partially attempt to refute.

    As I said, the best you’ve done so far is try to insinuate (you’re apparently too much of a coward to do it outright) that the correctness of one’s ideas has to do with your associations. You started this whole thread by saying that Stossel isn’t a trained economist, so he obviously doesn’t have anything valid to contribute. THAT IS AN ARGUMENT FROM AUTHORITY.

    And it’s all you’ve done so far.

    As for my “religion”… No, Nebby. I am, again, the one of us who has actually made arguments based in reality and not rested my claims on who was doing the talking. The fact that the Keynesians, or more importantly Krugman, have been wrong about virtually everything repeatedly is part of factual reality… It’s funny that you seem to be suggesting that all ideas are of equal value and that even if an idea is shown to be wrong repeatedly by reality somehow that makes it on par with ideas that are confirmed by reality… Now that is some religious thinking!

    Surely, you’d likewise recognize that the earth being 6000 years old is just as valid a theory as the 4 billion years those wacky geologists keep coming up with.

  116. “Clearly I have no idea what I’m talking about. I didn’t go to Princeton.”

    Own your words. Don’t try and doge what you said with an attack on me. Where did I say the Austrians influenced Bastiat?

  117. Nebby,

    I brought up the BWF as a clear indication of why C4C should never had been implemented in the first place because it was built on a faulty economic premise. You then asked if I knew that the “Austrians are just one branch of economic argument right?”, which is pretty stupid considering it was the Frenchmen Bastiat that came up with the BWF. I never mentioned anything about the Austrians. If the Austrians continued to expand on the BWF then bully for them, but that is completely irrelevant to my point.

    You might want to brush up on your mandarin, because at the rate you’re digging that hole you may need it soon.

  118. nebby, you clearly have no intention of addressing the actual arguments.

    Your attempts to skirt the claims are just pathetic.

  119. Do most of the Chinese speak Mandarin anymore?

  120. “What is your position on C4C? Did it work?”

    We won’t know until we see all of the ripple effects. It is too early to tell unless you want to get religious about it and argue from belief systems rather than evaluating the specific evidence collected over time after the fact. It just ended a few days ago. It will take time to analyze.

    Small moves can have big effects. The space program was a “transfer” that pushed our science forward in a way that created much more benefit than the expenditure put into it. It created a generation of engineers that went on to create huge wealth.

    Is it worth it to keep a specialized crew together with make work projects? Well, it depends on whether you will need that crew again and what it would cost to reconstitute them. I am not even arguing against BWT. The main idea of BWT is to look at the hidden costs and benefits of a transaction. It is merely applying BWT to the whole transaction and the related transactions that I am talking about.

  121. Sean,

    Ask nebby, he should know soon enough.

  122. C4C=Nasa

    Wow.

    Are you sure you graduated from Princeton, and didn’t like maybe just buy a t-shirt or something?

  123. How about we argue from logic and leave “belief systems” at the door Nebby? Cause if we do that, then it’s definitely not too early to tell.

    But again – this is why the mainstream economists that Nebby is de facto referencing here are constantly “surprised” by the results of their policy.

    And why most people think Economists don’t know what the hell they’re doing.

  124. “I brought up the BWF as a clear indication of why C4C should never had been implemented in the first place because it was built on a faulty economic premise.”

    And I explained to you that whether or not it is a faulty economic premise and how it applies to the real world is very much still a matter of debate. The side that takes your side of the debate is called the Austrians. You didn’t know that. The Austrians are the cornerstone of libertarian economic thought, ergo the Atlas Shrugged comment. You thinking I am wrong when I discuss the context of and criticisms of your belief system is not exactly a shocker.

  125. My logic kicks your magic’s ass, Nebby. Pwn.

  126. So… Seriously Nebby, you don’t have any way of actually explaining how the logic of the BWF is wrong. You don’t have any way of providing evidence that it doesn’t apply in this case (a la nasa – which last I checked didn’t DESTROY stuff intentionally as a “feature” of the Space Program). The one link you did provide said the opposite of what you are claiming…

    And you’re right back to talking about the Austrian school as if we should be concerned about it as a bogeyman.

    I’m well aware of other schools of thought Nebby. Most of them don’t contradict the Austrians on this point anyway.

  127. “The space program was a “transfer” that pushed our science forward in a way that created much more benefit than the expenditure put into it. It created a generation of engineers that went on to create huge wealth.”

    Since you have no way of knowing how and by whom those funds would have been otherwise deployed and all the effects that would have flown from it if they hadn’t been spent on NASA, there is no way you can know if it was a net generator of wealth or not.

  128. I explained to you that whether or not it is a faulty economic premise and how it applies to the real world is very much still a matter of debate.

    No it is not. If it is, please tell me what wealth was created due to C4C, or absent any wealth, what actual benefit resulted in the program other than a miniscule reduction in emissions?

    The side that takes your side of the debate is called the Austrians.

    Wonderful, but irrelevant to my point.

    You didn’t know that.

    Actually I did, but again irrelevant.

    The Austrians are the cornerstone of libertarian economic thought, ergo the Atlas Shrugged comment.

    Again, that’s really swell but has nothing to do with the BWF faulty premise of C4C that was proven over 200 years ago by Bastiat.

    You thinking I am wrong when I discuss the context of and criticisms of your belief system is not exactly a shocker.

    Again, irrelevant. If the BWF is wrong in explaining why the C4C is built on a faulty economic premise than explain why this is and don’t hide behind your disdain for the Austrians.

    And I would like an order of crab wontons, while you’re down there.

  129. Nebby,
    I take it, then, that you will also criticize, on the same basis, anyone who stridently claims that the program worked?

  130. Make that 2 crab wonton please… I haven’t eaten lunch yet.

  131. “I take it, then, that you will also criticize, on the same basis, anyone who stridently claims that the program worked?”

    Absolutely.

  132. …admit that they are imposing costs primarily on the poorest members of our society in order to give a special bonus to the middle class voters and to redirect resources towards politically favored interests, like auto manufacturers.

    QFT

  133. As a side note; 9 months ago, I had friends who kept saying “give it 6 months”, when I said that the stimulosaursus would not only not work to increase employment, but that it would actually hurt the economy significantly. It’s too early to tell, I was told. You can’t possibly know that, they said.

    They weren’t using their think-boxes properly though… Neither is Nebby.

  134. “..that was proven over 200 years ago by Bastiat.”

    And we are back to religious faith in a theory. I must have missed the QED at the end of that proof.

    I am out of here.

  135. Nebby… Logic and religious faith are different – how do you not get that? BWF is solidly established, easily demonstrable and logically sound. Not to mention, we’ve got example after example after example of it’s application to disastrous results.

    I’m not sure how you missed the proof of it, but the QED part was, again 200 years ago. If you think it no longer applies, then man-up and explain why.

    You fail.

  136. Wait nebby! You forgot your shovel!!

  137. Sean,

    Your patience in dealing with trolls is impressive.

  138. I don’t consider them Trolls in general Brian… Well… Not on the first go-around anyway.

    I don’t touch Lone Wacko, and I gave up on Chad, but obviously I still engage Tony from time to time. At any rate, it’s a little bit of straw-man beating sometimes as these people are often caricatures of real debate, but it’s still a good way to keep the teeth sharp.

  139. @Sean
    Thanks for the take down of nebby. I thoroughly enjoyed reading your arguments.

  140. Sean gets all the love….but that’s ok because I have a new shovel!

  141. Ok , I was still peeking.

    “Economists of the Austrian School and libertarians argue that the “broken window fallacy” is common in popular thinking. Examples include:

    The Car Allowance Rebate System (CARS)”

    Who argue?

  142. I’m not giving you back this shovel nebby, you left it fair and square.

  143. Hey Nebby… Since you’re still here and all… what difference does it make who’s making the argument?

    Does the argument have merit, or not? If not – WHY NOT?

    Still waiting for an answer. Maybe you are a troll.

    PS> Thanks for the props everybody.

  144. tman – seriously… about those wontons?

  145. The props. Where do you think you are? I am arguing the divinity with a Fundamentalist and he is heartened that the rest of the choir agrees with him.

    Do you notice that wiki did not say “economists say…” before the clunkers reference? This is not settled territory no matter how hard you stamp your feet. You are taking a part of your philosophy and asserting it as a fact.

    BWT has merit in the sense it is right that activity for activity sake is not an inherently good thing. It is wrong to try to expand that to say there cannot be other effects that outweigh the effect the BWT is discussing. I gave an example. If you have a specialized crew that is expensive to reconstitute, then it can make perfect economic sense to keep them occupied in a make work capacity while you wait for the next job. Increases in efficiency can flow from breakthroughs that happen due to activity the BWT would say should never have taken place. BWT just asserts there is a cost to replacing the broken window that is not immediately apparent. It does not discuss whether benefits could act together to surpass that cost. Technology advances and the like were not adequately accounted for. All thisleads to debate to it’s “correctness” and how it should be applied in the real world.

    The argument has merit becuse it is one way to analyze a problem. It is not some singulasr explanation for real world situations.

  146. On a related topic, can anyone recommend a good book for diving into Bastiat? I’ve not studied him in too much detail.

    Note: It should be written at the level of someone who went to the University of Texas, not Princeton. 😉

  147. It is wrong to try to expand that to say there cannot be other effects that outweigh the effect the BWT is discussing.

    Had you at any point of this thread argued what exactly those effects were in terms of C4C, you may not look so small to us right now all the way down in the bottom of that hole.

    You’d still be wrong, but at least you wouldn;t have wasted all that time digging.

  148. I had to explain some fundamental elements to some very thick folks before we got to where we are now. And it is totally worth it with someone who declares his conclusion as his premise.

    My only argument throughout was those effects were possible and we wouldn’t know until we saw some data on outcomes.

    He was FRENCH! I will always treasure “He was FRENCH!”.

  149. And if any of what Nebby said had applied to CARS, he might have made a point too.

    To Brian:

    Most of Hazlitt’s “Economics in One Lesson” covers a lot of Bastiat – but “The Law” is always good too.

    And I’m off for now.

  150. For all of nebby’s mis-stepping, I’d have to say I agree with the original statement he/she made.

    To those of you who would drive more because your car was more efficient, what/where would you drive? I drive a 2001 Toyota LandCruiser, 190K miles, gets about 12 mpg in the city. [did not/would not participte in C4C] I’ve never thought “Gee, I was going to drive to _____ but now I won’t because of gas prices.” There probably are some folks out there who would drive more because their car was more efficient, but doesn’t that just mean they are stupid?

  151. Props to the link for the Jan Helfeld interview – that was hilarious!

  152. I’m back…

    And…

    “There probably are some folks out there who would drive more because their car was more efficient, but doesn’t that just mean they are stupid?”

    No, of course not. Let me give you an example as to why.

    Imagine that your car has a 10 gal tank, and gets 15mpg. Say gas is $2.60 (which I think is roughly the current average) per gallon. Thus each tank costs $26.00 and you can drive 150 miles per tank.

    Now, further imagine that you can budget only one tank of gas per week on your current pay. This won’t change.

    Further say you are able to buy a new car (C4C or a loan or savings… doesn’t matter). The new car also has a 10 gal tank but you can go 20 miles per gallon now.

    To you (and everyone else) – the important thing is cost, not mileage. You can afford $26 a week on gas. Now that you can drive 200 miles per tank of gas means that where before you were able to make grocery runs, or going to home depot or visiting your grandma across town once every other week or what-have-you, now with better fuel economy you can afford to go do that more often.

    You don’t think “oh hey, I get 5 miles more per gallon, so I can drive 50 more miles per week on my budget” and then drive around in circles – you instead look at your tank and where before it would have said you were down to a 1/4th tank on Friday, encouraging you to be more frugal with your weekend driving, now it says 1/2 a tank (or whatever) on friday, so you don’t worry so much about going out to that downtown restaurant, or to your friend’s house in the next town over, etc.

    Lower costs (which is all this is) means that someone can go do more things each week that are meaningful to them. That doesn’t seem all that stupid to me.

  153. Plus, as I said upthread… Driving your new car is just more fun!

    Your old car had a busted A/C, manual window controls and smelled of that burger your college roommate left in it for a week after you let him borrow it one time.

    Your new car has GPS, an MP3 input and a sunroof, smells like leather and makes an awesome roar when you step on the gas.

    Surely it’s not that hard to see why people drive more. Also I should note, that it probably seems absurd to most people to drive 200 miles a week, but I live in Los Angeles, and that’s pretty close to average for me… Scale down the numbers to whatever makes more sense for your location.

  154. What I was saying was that I can’t picture myself in the scenario you described because I can’t relate to someone who has to limit their driving due to finances. [For me, it’s Texas Hold ’em]

    “Lower costs (which is all this is) means that someone can go do more things each week that are meaningful to them. That doesn’t seem all that stupid to me.”

    I think you misunderstood me or I mis-wrote it. It’s not stupid to be fiscally responsible. It’s stupid to arbitrarily drive more when you have more money.

    Let’s also play another game with your $26/week budget. How do you or Stossel know they will automatically put that money back into more driving? How about another round at the bar each week?

    The way Stossel worded his statement, and what nebby and I take issue with, is the idea that it’s ‘likely’ that folks will drive more. Likely implies more than 50%. I simply don’t see that. Sure, there are some cash-strapped people who will drive more beause of fuel efficiency, but they are few and far between.

  155. This is probably way after the fact but I feel I must chime in.

    The broken window fallacy simply states that pointless work cannot generate wealth. So breaking windows so they can be replaced, or paying people to dig holes and fill them back up can not generate wealth because those “services” things have no intrinsic value.

    Hence, NASA or any other RD type thing is not a good example. In those cases, money is going toward producing some sort of tangible benefit, even if it is a suboptimal use of resources.

  156. I don’t. But as a historical tendency – this has proven to be true… or at least it’s been a recurring them among many different economists (and not all Austrian school types). Too lazy to look it up right now. I can tell you that I am in the category where gas is something I would factor into whether or not I would go camping or drive to Las Vegas on the weekends.

    If my car was less fuel efficient, or I made less money, then driving 40 miles a day to and from work would be a concern too… not just my weekend activities.

  157. And yes Brian, you are quite correct. I believe I mentioned something to that effect earlier too though – something about how NASA, to my knowledge isn’t exactly engaged in breaking windows.

  158. One telling point about Nebby’s assertions:
    1) He thought that only some post-facto analysis of economic data could inform a claim of whether or not the C4C program was successful or a failure.

    2) He advanced no hypothesis regarding possible benefits.

    Yet, in evidence based science, simply collecting data tells you nothing. You must have a hypothesis that you are trying to falsify to tell you anything.

    No hypothesis => no amount of data collection will tell you anything.

    Essentially Nebby’s approach will lead to a galloping case of rationalizing emotional conclusions. In the case of all to many Princeton economists, that means post-facto justification of whatever their boses want them to “prove”.

    They may call it a Bachelor of Science over in Princeton, but what they seem to be teaching there is a pseudoscience. It’s as if a school was handing out Bachelors of Science in Astronomy while teaching courses on what happens to people born when Mars is in the House of Capricorn.

    Which incidentally is the probable cause of Nebby’s fascination with who is making arguments rather than the content of the arguments themselves. Pseudoscientists tend to want to avoid the latter since they find themselves flummoxed in the face of skeptical, reasoned examination of their ideas.

  159. Someone should throw Pete Stark out a window.

  160. I gotta admit, I never heard of Pete Stark until that clip. I love how he keeps telling the interviewer to shut up, yet he (rep. stark) won’t let him finish a questions.

  161. All my time spent debating and Tarran still comes in for the win. Well played.

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  163. What I never see mentioned is that to manufacture something resources must be used and pollution created. When will we see net return on energy invested?

    For example, if I continue to drive my 18 mpg car 5,000 miles per year vs. trading it in for a 33 mpg Civic, how many years of using less gas will it take me to make up for the energy used to manufacture and distribute the Civic? And what kinds of pollution are created in the manufacture of the Civic that otherwise would not have occurred had I continued to drive my old car?

  164. Only one problem with the article.

    The author appears to have ‘bought into’ this global warming being caused by ‘carbon’.

    Want to solve the carbon problem? QUIT EXHALING – It’s YOU putting carbon dioxide into the air.

    I thought plants thrived on Carbon Dioxide. All those years of chemistry and biology – down the tubes for the ‘new science’ ????

  165. “Let’s Cap & Trade Congress”

  166. In April, The Economist ran a story on a similar German program (before the American version). German critics had the same concerns. Aside from being a politically motivated subsidy, the biggest criticism, in my opinion, is that it just raids their own future sales for sales in the present.

    If you’re the Keynesian type, that might be justifiable if it is going to have a far-reaching positive impact on the overall economic picture (which is far more likely in Germany which has such an automotive-focused economy)… But it didn’t. And can’t. Here, it was just a cheap political ploy because auto workers vote Democrat, and for the people who bought cars through it, “Hey! Free money!”

  167. I know you guys saying “racist!” are joking but I’ve heard liberals saying it seriously, whining about how people naysaying C4C Discount Cordless Screwdriverare just trying to bring down “a great president and a great program”. I think a lot of the support for the program is cult worship.

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  169. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp.

  170. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane

  171. On a serious note though… I thought we were done talking about C4C. No rational thought got through, and California already does this stupid appliances version of it.

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