Washington Post gets around to admitting what everyone on the libertarian side was shouting from the beginning: that the Obama administration's 2009 "cash for clunkers program" (giveaway government money for people to destroy their old cars) was a dumb idea.
From the Post today:
A new analysis from the Brookings Institution's Ted Gayer and Emily Parker found that the program was fairly inefficient as economic stimulus and mostly just pulled forward auto sales that would have happened anyway. It did cut greenhouse-gas emissions a bit — the equivalent of taking up to 5 million cars off the road for a year — but at a steep cost.
Vehicle sales did rise during that period. But a detailed study suggests that consumers just bought some cars a bit earlier than they otherwise would have. Cumulative purchases over the following year were basically unchanged…
A clever 2011 analysis from Resources for the Future compared U.S. car sales under the program with those in Canada during the same time frame. Those researchers argued that about 45 percent of cash-for-clunker vouchers went to consumers who would have bought new cars anyway.
Gayer and Parker estimate that pulling these vehicle sales forward probably boosted GDP by about $2 billion and created around 2,050 jobs. That means the program cost about $1.4 million per job created — far less effective than most other conventional fiscal stimulus measures…
More importantly, and cutting through the econometric bullshit about "shifting purchases forward and backward" or whatever, the cash for clunkers program paid people to destroy useful things. We should really think twice about the supposed economic benefits of destroying useful things.
The "economy" shouldn't really be seen as being about shifting money tokens around where the government would like to see them go or "creating jobs" to replace useful things we decided to destroy, but about meeting human needs and desires on planet earth. Thus, cash for clunkers was a crummy idea no matter how much it "cost" to "create each job" when the cost was expended wrecking useful things. (Big surprise: trying to get rid of cheap old cars made old cars more expensive.)
The full Brookings analysis the Post is relying on.
Reason's Shikha Dalmia explained the economic absurdity of cash-for-clunkers in Forbes way back when.
Reason.TV's cash for clunkers ad: