Cash for clunkers a bad deal, hurts the poor, and some other notes.

[naaman fletcher]

I don't post here all that much because I am what I call a "moderate" democrat. I am pro-civil liberties and anti war. I am also, however, a believer in markets and capitalism. Now, I believe markets get out of control and so I believe in some regulation, and I believe in a fairly generous welfare state so I believe in the taxes to pay for it. But, I am not a socialist, and so I avoid all the Chavez threads and such.

I believe that the poor often (usually) get the short end of the stick.

Anyway, I also don't think that everything Obama does is great. One example is cash for clunkers, which is another one of the many ways that the poor are getting the short end of the stick.

First, you need to understand that there is no such thing as a free lunch. Every dollar comes from somewhere. So, taxpayer dollars are being used to get people to turn in their old cars to buy new ones.

Now, if the goal is only to reduce the amount of pollution on the roads, then this will achieve that goal. New cars, even lower mpg ones, pollute far less than older cars.

But from an economic standpoint this program is a disaster.

1. These cars being destroyed have value.. and the cars are being destroyed. Every car destroyed is a reduction in wealth.
2. Every taxpayer, including the poor, foots the bill.
3. The benefits are going to the wealthy. The average FICO score of the buyers is over 700. Now, not all people with high FICO scores are wealthy, but on balance they are. So, most of this money is going to the wealthy, paying them to engage in economic transactions that they would otherwise not do. And who gets the shaft? The poor. The poor buy inexpensive used cars. The price of inexpensive used cars is a function of the supply and demand for used cars. Guess what? This program is seriously reducing the supply of inexpensive used cars as the cars being turned in are destroyed.

So why exactly is this program a good thing? The only answer seems to be that Obama proposed it and the auto unions like it.


Some other notes: OK, I will address the Chavez issue. It is easy to predict what will happen. I predict this: The output of EVERY SINGLE INUDSTRY THAT CHAVEZ HAS NATIONALIZED will be lower two years from now. So, he takes over coffee plantations, there will be less coffee produced two years from now then this year. Also, price controls lead to shortages. That is economics 101. Like zimbabwe, the price controls will lead to shortages of even the most basic foodstuffs. Who wants to bet against me on the output of nationalized industries, or that with price controls in place there won't be more shortgages? Economic decisions made by politicians don't work. See soviet union, north korea, Cuba (yeah I know, they have lots of drs. which apparently is the only metric by which one is allowed to judge Cuba on this board).

BIRTHERS: This birther movement is a great thing. It reminds me of when the GOP was all caught up with the Vince Foster stuff. Let them waste their time on the birther issue. It will prevent them from ever coming to grips with themselves and mounting a forceful challenge. Of course the GOP did well in '94, but the GOP had Gingrich and Armey, who, as evil as they are, were smart and long range-looking politicians. People like that are mostly gone from GOP power, replaced by the christian nutcases who only care about whatever BS moral issue is on their minds at the moment. Although it looks like Gingrich is running for President and has raised a lot of money. People don't really like him, so it seems hard to believe that he could get anywhere, but he is the one who pulled off the GOP takeover in '94 because, as evil as he is, he is a smart and visionary (albeit evil) politician. He is the one to watch out for, not the fundamentalists wackos. (sure he gives the fundies lip-service, but he is not one of them).

[RUMMYisFROSTED]

1. lol

[babylonsister]

2. Oi vey.

Maybe the clunker program is successful because Americans are actually taking advantage of it?

But thanks for all of your herd werk.

[naaman fletcher]

13. huh?

You didn't address what I posted. Of course Americans are taking advantage of it. When you had out free money, people line up to take it. Now, please address this: Do you agree that reducing the supply of used cars will raise their prices?

[orleans]

95. no. because i think there are so many fucking cars this is hardly

going to put a dent in it.

i do think it will help get some gas guzzlers off the road

i do think it will give some people a better opportunity to afford a new car (since if they turn in one of their older cars they can get between $3500 - $4500 off the sticker price, plus whatever other discounts the dealer has going on)

i do think it will give dealerships a bit of life and a pick me up that they need

which will benefit those connected with the dealership, including auto parts stores


if you go on the website for this program you can see which dealer in your state is participating in this program--not everyone is. i heard some freeps bitching and whining about all the paperwork and this asshole's dealer isn't going to do the program. (the paper work means they have to prove that an individual owned the car for at least a year with proof of insurance--so the dealers can't scam and get rebates for older cars they haven't sold)

and this will help the car manufactures that are dying for work--and the blue coller people that work for them

[mkultra]

97. not if demand also decreases

which is what has happened here. You should also factor in that used parts for these cars are now much more available(cheaper) making it easier for some poor to maintain their clunkers if needed.

[mkultra]

98. This represents .2% of cars on the road

that is POINT two percent. meaning two tenths of a percent.

[MNDemNY]

3. Where is your bridge located? Must I answer 3 questions to cross it?

[Ignis]

20. "What is your favorite color?"

"Red...no, Blue! Aiiiiieeeeeeeeeeee!"

[Hutzpa]

36. dupe - delete wrong reply n/t

[Hutzpa]

38. Would you like the BLUE pill or the RED pill???

:dilemma:

[Enrique]

4. a "disaster", eh?

maybe like a "mini Katrina"?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x348527

[naaman fletcher]

17. oh come on..

Of course that's absurd, and I guess "disaster" was a stupid word choice by me. But, it is not an economic benefit to the nation, and it hurts the poor (and most people) for the benefit of a few.

[orleans]

96. there are plenty of used cars around for the "poor" n/t

[aquart]

5. I have ant bait. I have roach traps.

Surely something can be done.

[wininboy]

6. You need to study economics a bit more

But cars that will soon depreciate to $0 value are not "wealth". You also ignore the fact that the depreciated car is being replaced with a brand new car.

[naaman fletcher]

19. no you do..

All cars will depreciate to zero some day. Does that mean that no cars are wealth? Ok then, I offer to pay you one dollar for your car, deal? Why not? Because it is worth something. If it's worth something, then it is wealth.

The car is being replaced by a new car. So what? The fact is that the supply of inexpensive cars is being reduced to help a few mostly well off people.

[wininboy]

25. The old car is being replaced with one that has a greater value

Therefore, it increases wealth.

And it doesn't just help the "well-off". It also helps the thousands and thousands of workers in the auto industry who are in danger of losing their jobs. It helps everyone by reducing the ranks of those who need govt assistance due to a recently lost job.

It's a classic Keynesian stimulus. It's Eco 101.

[naaman fletcher]

31. not neccessarily..

If that is the case, then the country could become much wealthier by having the government simply pay everyone to trade in their car for a Porsche. Yet, somehow we all know that doesn't increase wealth. The answer of course is that someone has to pay for the stuff. The money comes from somewhere. Keynes made the point that during a recession when aggregate demand drops the government should step in to prop it back up. However it is not clear to me that paying people to destroy things of value does that. There are other ways the economy can be stimulated without as many middle men, who of course like getting their cuts for being middlemen, but in the long run are not engaging in economically productive behavior.

[wininboy]

41. Yes. Necesarily

You're just flip flopping on your own argument. You just got done talking about how dumping cars with value was a reduction in wealth. Now, you're arguing that producing cars worth far more does not increase wealth, as if the new cars have no value

And your mythical hypothetical does nothing to for your argument or your credibility. Argumentum ad absurdum is a logical fallacy. Look it up.

[naaman fletcher]

55. not flip-flopping at all..

take a used car worth $3,000. If you destroy it, that is a destruction of wealth of $3,000. You are asserting that a new car (let's say it is 25K) represents an increase in wealth off 25K. Well sure, the car is worth that, but don't forget someone paid for it.

In a free transaction that two parties enter into voluntarily, you assume that each party is better off than if they did not enter into the transaction. From the sellers standpoint, it is usually obvious. If it cost GM 20K to make a car, and they get 25K for it, they are 5K better off. The buyer, on the other hand, probably felt that the car was worth more than 25K to him, i.e. he would have paid more. The difference in what he would have paid-25K is what is called his consumer surplus.

Anyway, wealth is generated all along as people engage in voluntary economic transactions.

The problem here is that people were not willing to engage in the transaction until the government paid them to, so really one has no idea if wealth was created.

[musette_sf]

73. we have a "Chicago School" economics preacher here

let me guess, you either haven't read The Shock Doctrine, or you hated it.

[wininboy]

91. Sure you are

Either the value of the car is wealth or it is not. If they now own a $25K asset instead of a much lower value asset, then they have more wealth. There's really not much wiggle room for you there

Furthermore, you're forgetting the Cash part of the CFC program. The consumer got an asset for much less than its' value. You can say no one has any idea, but that won't make it true.

[naaman fletcher]

110. It's pretty straight-forward really.

If someone gets a car for 25K that they paid 24K for, they are not wealthier by 25K, but only by 1K.

that's a good deal. OK, so why does one need gov't money to make that deal? they don't. So it is neccessarily the case that deals done without government support might not be creating wealth. yes, the person who gets the subsidy is cheaper, but at the expense of everyone else.

[armyowalgreens]

103. I don't think you know what "wealth" is in the first place.

Crushing a car worth 3,000 dollars does not destroy 3,000 dollars worth of wealth.

[naaman fletcher]

109. Fascinating..

Can you please tell me your definition of wealth then? If it is "worth" 3,000 dollars, then my definition says that the person who owns that has 3,000 dollars worth of wealth. What is your definition?

[armyowalgreens]

102. This person doesn't sound like they like intervention in markets...

Hail Free markets!!! :sarcasm:

[naaman fletcher]

111. somewhat true.

I believe that markets by and large create wealth. That is why the capitalist countries of the last 50 years are much more prosperous than the former soviet union, cuba (BUT THEY HAVE LOTS OF DRS!) and other socialist countries. That being said, markets obviously get out of control and I believe in regulation and a welfare state. But the point remains that by and large politicians surrounded by lobbyists don't always know the best thing to do.

[armyowalgreens]

118. Please stop using the phrase "welfare state"...

There is no welfare state and there should never be one. The right uses that phrase to demonize the idea of wealth redistribution through public goods and services.

And for the love of god stop putting the USSR in the same boat as socialism. THEY ARE NOT THE SAME. The USSR was a pseudo communist dictatorship. It was drastically different than socialism. The same goes for Cuba. While they are not as authoritarian as the USSR was, certain aspects of their government restrict development.

There are plenty of successful socialist countries. In fact, you are living in one. GASP!!!!


"politicians surrounded by lobbyists don't always know the best thing to do."

face/palm


Where do the fucking lobbyists come from??? The private industry. It's private industry that is constantly causing havoc in the government, not the other way around. You hail capitalism so much, yet you hate lobbyists. Make up your fucking mind.

[FrenchieCat]

7. Poor people breathe too! This Cash for Clunkers is not simply about

"giving" something to someone....it's about getting the high exhaust emmiting vehicles off the road while boosting the economy, in particular the auto industry.

The average FICO score of the buyers is over 700 = Middle Class people with a job and a mortgage who pay their bills on time. Those are the same people who as Taxpayers pay the most taxes ...so yes, perhaps they benefit the most, but they are not the only ones.

Poorer folks who because they are poor pay less Income taxes (if any at all...as many, if there are children involved, are getting earned income credit if they had a job for any part of the year), They also benefit if they have a limited amount of money, but must buy an auto. It may be the difference between them buying a used car vs. a new car.....cause poor folks do sometimes buy cars, you know.

So this program is good for
The environment,
Middle Income people who pay a lot of taxes (it's their money after-all)
the Auto Industry who needs a boost (and this is coming from the RECOVERY package...which was the whole point anyways; to boost the economy),
Anyone buying a new car, but wouldn't normally be able to afford it....


I'm not so sure why you think one program is supposed to benefit everyone in the entire country?
Why would you even want to believe that this could be possible? One can't please all of the people all of the time with one teeny weeny program aimed at helping one sector of the economy.....with money that came from a recovery program already passed. Doh.

[naaman fletcher]

21. OK..

Yes, as I said, it will help the environment. And no, I don't think a program is supposed to help everyone. But, first of all the spin is that it is a win-win for everyone. That is not true. There is no free lunch.

Second, perhaps it boosts the economy. It certainly does in the short run (not sure about long run). But, there are much, much more efficient ways to boost the economy than this.

Again, if the main point is to help the environment, then fine. But, real money is being paid to certain people at the expense of others. Let's at least make that clear.

[PA Democrat]

87. You cannot look at just one program in isolation.

Funding for food stamps and for unemployment benefits have been increased as well. Obama's stimulus includes money for energy assistance for the poor and money for weatherizing homes of low income people. The states have received additional funding without which they would be cutting even more programs which benefit the lower income people.

So you found one downside for one program of many within the stimulus. Every program will have a downside, but in this case of the cash for clunkers, I think the overall impact will be positive, even for low income people. Lower gasoline consumption will lower fuel and heating oil prices, put people back to work, decrease asthma in children (poor children are more likely to suffer from asthma). Plus you cannot assume that without this program those clunkers would have been on the market to be bought used. Many people would have kept them because they could not have afforded a new car otherwise.

[armyowalgreens]

104. Yes, money is being taken from the rich and given to the middle and lower class...

boo fucking hoo. Are you really trying to say that taxation (the redistribution of wealth) is a bad thing? Yes this program is not going to please everyone. It isn't going to please the rich. Big deal. They are already loaded.

And you make it sound like this is the ONLY program that the new administration has put into effect. Have you lived under a rock for the last 7 months? There is an elaborate system of stimulus programs that have been in effect for a while. Get a clue and start reading your newspaper.

[dysfunctional press]

123. "But, there are much, much more efficient ways to boost the economy than this."

give three ways that the same amount of money could have been more stimulative.

[scheming daemons]

8. "I don't post here much"....

That's because you joined 12 days after the election.


Smells moldy in here.

[naaman fletcher]

24. yeah well..

so what? Actually I had another login, OKprogie, or okieprogie.. something like that but lost the email address, login, etc. That goes way back. But yes, posting on message boards increases around election times. News at 11.

[hfojvt]

29. and it is probably silly to expect the average OK Democrat

to be as progressive as somebody from San Fransisco or Boston.

I joined after the election. The 2004 election, because I wanted to find a support community to help me cope with Bush's re-election and also work for 2006, 2008, 2010, etc.

[Bill McBlueState]

9. your points 1-3 might be interesting to discuss

But by making this thread about so many other things: your overall view of politics, your overall opinion of Obama, Hugo Chavez for some reason, etc., you've set it up for a big unrec-fest.

[naaman fletcher]

26. good point..

But I figured I would be accused of being a GOP plant for disagreeing with the cash for clunkers program, and would have to answer for my worldview anyway, so I decided to just lay it all out.

[AndyA]

10. The clunker program is a bit short sighted.

It could have done more for those in need. For instance, the real clunkers, the rusty, smoking, oil burning 1983 Plymouth Minivans, driving around on bald tires and with no muffler, aren't eligible for this program. And they are doing far worse damage to the environment than the newer cars being turned in.

They force the engines in the cars to seize up by draining all the oil and pouring in a compound that hardens when it gets hot. Sometimes, the engines only run for a few seconds. At other times, they run for minutes or longer. As they begin to struggle, they start smoking, burning oil and sludge deposits inside the engine. This is bad for the environment, and they just let it spew out the exhaust. Nice, Mother Nature thanks you, America.

I think the more recent cars should be given to those who can't afford to buy a newer car, to get their old, unsafe, polluting, real clunkers off the road. It took resources and energy to build these cars, to destroy them ahead of their time is wasteful. Now demand for new cars increases, using more resources to manufacture. It just doesn't make sense to me.

We could have really helped everyone with this program, instead we're helping those who can afford to buy a new car, the car makers, and local dealerships. The poor people who can't afford a newer car are still stuck with their rusty, smoking, polluting Plymouth. :(

[BluePup]

16. Yep

and the poor don't vote, generally.

Oh well. More money for the rich and well connected.

[SammyWinstonJack]

22. +1

:thumbsup:

[snooper2]

46. It sounds like you are "sad" for the clunkers

don't worry, nobody's going to get rid of their 88 Firebird with mint interior...

"As they begin to struggle :rofl: , they start smoking, burning oil and sludge deposits inside the engine. This is bad for the environment, and they just let it spew out the exhaust. Nice, Mother Nature thanks you, America."

Yeah, versus same car spewing for another 3-10 years....

[AndyA]

90. The damage done to the environment when these engines seize up and smoke and spew out pollutants

is much worse than years of normal use. Plus, multiply this by the many thousands of vehicles that are now being "disabled" in this manner. Bad, bad, bad for the environment.

[armyowalgreens]

107. BS. The entire cars are being crushed and recycled.

Fluids will be drained and either recycled or disposed of in a proper manner.

An inefficient car on the road will generate much more pollution than an inefficient car being taken off the road and recycled.

Where are you getting this crappy information from?

[BobRossi]

11. Yes, creating jobs bad, keeping the poor poor good.

Got it.

[sandnsea]

12. You're right, but you're wrong

Yes, this is really just another give-away to the wealthiest. Yes, the real credit problem is that people with 600s credit scores can't get a loan.

However, you're wrong because this program is creating jobs. It's also giving people the confidence to realize there is still some buying power in this economy. And even though they are destroying cars, that is good news for the poor who won't be forced to buy the gas hogs because they're the cheapest. The "free market" will gravitate to a $3,000 price that working people can somewhat afford; but they'll get better gas mileage cars because the clunkers have been destroyed. Of course, less demand on fuel will bring gas prices down too, if you believe that hyped up excuse for gas hikes. So economically, it is beneficial for the poor, although not directly.

The benefit to the air and environment is a bonus you can't put a price on. Unless you calculate the health care benefits, which the poor will benefit from the most as well.

[musette_sf]

14. this is a libertarian/repube meme:

"And who gets the shaft? The poor. The poor buy inexpensive used cars. The price of inexpensive used cars is a function of the supply and demand for used cars. Guess what? This program is seriously reducing the supply of inexpensive used cars as the cars being turned in are destroyed."

the libertarian in my house spouted this same gem of BS last week. :puke:

i do find the "concern for the poor" twist to be rather amusing, given the source.

does anyone on DU know which libertarian/pube came up with this one? i've been wondering since i heard it last week.
on edit: no shocker here, it's Ron Paul. i should have guessed.

oh, and thanks for your "concern for the poor", libertarian troll.

[naaman fletcher]

34. So you disagree with the point?

That reducing the supply of new cars will hurt the poor? Or do you just hold whatever opinion is opposite of the opinion of people you don't like?

I thought of this point when the bill came out and it was mandated that the old cars be destroyed. I wasn't that opposed to it before then.

[musette_sf]

43. no, i think you're not a Democrat,

i think you are a member of the Republican "Liberty" Caucus,

and you're pushing Ron Paul BS here.

that's what i think.

don't put words into my mouth.

[naaman fletcher]

56. well..

1. I didn't put words into your mouth.
2. I would never in a million years join the GOP in any form, although as I said I consider myself a "moderate" democrat.
3. You are engaging in the logical fallacy of fighting an argument by attacking the person who made the argument, and.
4. That is silly and stupid considering that you know nothing about me other than that I disagree with Obama on one issue.

Good day.

[musette_sf]

58. your post is a classic example of tortured libertarian "logic"

1. lie
2. lie
3. lie
4. lie

only libertarians post Ron Paul crap here.

[Name removed]

60. Deleted message

Message removed by moderator. Click here to review the message board rules.

[musette_sf]

62. ah, running away,

the last refuge of the libertarian scoundrel

you are not a "moderate dem", you're a liar.

turn right at Lew Rockwell

[Raineyb]

76. I think you reveal your bias when you discuss this in terms of the supply

rather than demand. The point of a government stimulus is to increase demand and stimulate further production as the inventories are reduced. It is not about supply the economy is never about supply. Supply side economics is the domain of whores who will pervert what they know to be true in order to tell whoever pays the bill whatever they want to hear even if what they are telling the benefactor is completely false.

[naaman fletcher]

80. huh?

I understand your point about supply side economics. It's fairly straightfoward. Keynes advocated an increase in aggregate demand during a recession. The supply siders came along and said that if you instead increase supply, you get a better result. Of course increasing supply meant giving them tax breaks.

When I am talking about supply I am pointing out the simple fact that price is a function of supply and demand, and if you decrease supply, price goes up.

As for the general stimulating of demand, I am for it. But, like Keynes, I prefer that the government do it in infrastructure projects and other areas that the private sector can't do anyway. That is, I'd rather have more infrastructure than propping up a broken market. This program has the affect of keeping dealers in business, when it is clear that the market is saying that there are too many dealerships. That is inefficient.

[Raineyb]

92. You have it backwards. The price doesn't go up because there's a decrease in supply.

The decrease in supply raises the market's equilibrium price assuming there's no change in demand which is not really happening here. You seem to be positing that by having the government buy these clunkers it's reducing the supply for used cars and will thus raise the price of used cars for poorer people who can't afford new cars. Without the incentive to buy new cars the people trading in their clunkers would have held on to their cars anyway so to it doesn't make sense to assume that this program would drive up the price of used cars. As it is poorer people are not spending their money on big ticket items like vehicles anyway so the current supply of used cars is likely more than adequate for the demand of used cars and as such the price of used cars if it were to move in any direction would more than likely go down as they try to entice consumers to buy the used cars they already have in stock.

Granted it would be best if the government went for infrastructure projects but that's a far cry from saying that the cash for clunkers program hurts the poor.

[JuniperLea]

15. Hahaha!

Hilarious! Throw me some more clues, mkay?

Excuse me... Oh will you excuse me? I'm just trying to find the bridge... Has anybody seen the bridge?

Have you seen the bridge? I ain't seen the bridge!

Where's that confounded bridge?

[Minimus]

18. "Now, not all people with high FICO scores are wealthy, but on balance they are."

I find this hard to believe. Can you point me to where you got this statistic?

[wininboy]

30. My FICO is over 700 and I haven't worked in 5 years.

[naaman fletcher]

37. that's a good point..

I will try to find a good source for that. I asserted it due to my general knowledge from a job that I used to have in the fixed income markets, but I should make sure it is correct.

[hfojvt]

23. too many notes

I agree with parts of the things you said about C for C. Destruction of a working car does not even seem to help the environment from my POV. It takes energy to destroy it and energy to build a new one. So I don't see a huge energy savings.

It is also people who are better off who are taking advantage of the subsidy. Poorer people are not buying new cars, even with $4500 thrown in.

However, it is kinda silly to assert that poor people are also paying for it. Unless they are single, poorer people are not paying that much in taxes. The income taxes paid in 2005 by people with incomes under $20,000 was less than 2% of the total.

Unfortunately, this destruction is one way to create jobs in our capitalist system and re-energizing our system is far less complicated that trying to re-create it.

[musette_sf]

27. THIS IS A RON PAUL MEME

that is all

[naaman fletcher]

39. I wasn't aware of that..

But does that make it incorrect?

He is also against the Iraq war, does that mean the Iraq war is a good thing? Of course not.

[musette_sf]

45. i call BS

Paul is the source of this meme and you knew it damn well. you practically quoted him verbatim. don't play disingenuous.

[naaman fletcher]

57. Do you have ESP?

Thanks for knowing things about me that I didn't know. Can you tell me what the combination to my gun safe is? I forgot it. Thanks in advance. I did not know it was a Ron Paul meme, but sure, I could have guessed that he was opposed to this program as he is opposed to every government program just about.

[musette_sf]

61. keep squirming Paulbot

the more you protest, the deeper you dig your hole.

[Ikonoklast]

Ron Paul also likes to eat, breathe, and drink water.

Like a great many people on Earth.

But it doesn't make him correct on any issue such as this.

And, yes, it is a libertarian theme. Prove to me that the poor you are so concerned about will be hurt by this program.

Show your statistics, graphs, and supporting factual evidence.
Please show how many of these vehicles being turned in are worth more than the $4500 credit given, even as a salvage vehicle.
Please show how many poor people now have to walk, as they can no longer afford a used car because of this program.
Please show how many older cars are junked in this country, on a daily basis, that are still useful in some way, and could be sold cheaply.

You have an opinion, unsupported by facts, proclaimed as truth.


Meh.

[naaman fletcher]

59. huh?

What is there to prove?

The price of goods in a market is determined by supply and demand. If supply is reduced, the market price for the good goes up. The supply of inexpensive cars is being reduced, therefore price will go up (or not go down as much as otherwise).

http://en.wikipedia.org/wiki/Supply_and_demand

[musette_sf]

71. the Von Mises Fan Club

weighs in

[musette_sf]

75. + 1 and thank you for your post.

:toast:

[Freddie Stubbs]

49. So was opposition to the war in Iraq

[musette_sf]

50. Ron Paul did not start or own opposition to the Iraq War

and just because a broken clock is right twice a day, doesn't mean it isn't broken.

[Freddie Stubbs]

53. So perhaps he is right about the Cash for Clunkers program also

[musette_sf]

63. i don't think so

libertarians are not exactly known for their Franciscan characteristics.

[rhett o rick]

125. Do you support the Cash for Clunkers? Or do you just like to disrupt? Go to any town hall meetings

lately freddie?

[musette_sf]

51. Ron Paul did not start or own opposition to the Iraq War

and just because a broken clock is right twice a day, doesn't mean it isn't broken.

[reflection]

28. Are the clunkers actually being "destroyed"?

Or are they scrapping them for parts? Recycling them? Something else? Something tells me they are not just crushing them into little cubes at the scrapyard.

Perhaps we could export them...

[MNDemNY]

32. Engines are disabled. parts other than engine and drivetrain may be recycled.

[reflection]

35. Thanks.

I didn't figure they were just being cubed. That would seem a bit foolish. The parts industry is alive and well, and metal is always in demand.

[lumberjack_jeff]

106. Everything that is not sold within 30 days must be crushed. n/t

[kcass1954]

119. The dealers in South Florida are sitting on them for now.

They haven't received their dealer codes to get reimbursed, so they haven't disabled anything yet.

[Greyhound]

33. You might like to read this.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6224102&mesg_id=6225937

[naaman fletcher]

40. thanks.. I agree..

[hugo_from_TN]

42. It's not even good for the environment

Studies have shown that the carbon footprint of producing a new car far outweighs the carbon savings from driving an old car till the wheels fall off. The program is a net increase in carbon emissions.

[letmebefrank]

77. Good for the environment?

If the cars are clunkers, aren't the wheels already "falling off"? Not sure this argument makes ANY sense. Lastly, I read that the average person involved in this transaction will save 287 gallons of gasoline PER YEAR, on average, a net reduction of over 72-Million gallons of gasoline per year in this country, based on only the first quarter million vehicles. I call that good for the environment.

Lastly regarding the original post's argument that too many clunkers are being destroyed, thus driving up the cost of used cars for poorer people. Seriously? Do you HAVE any idea how many old, used cars are on the road in this country? There are some 260-million vehicles on the roads in the US. Let's say only 10% of them are "older clunkers" that poorer people could afford. Destroying 250,000 old vehicles is less that 1% of that 10%. I can't see that affecting the prices in the used car marketplace in a drastic way.

[naaman fletcher]

81. It's hard to quantify the price efffect

Of removing the clunkers from the road.

It is a simple fact that it will affect the price, the question is how much. You are saying "not very much". OK, even if I accept that, it still affects it. And across all used cars transactions, its still a lot of money. Money that the people buying the cars can least afford, and its all going to a special interest program. You want stimulus? Why not instead employ the people with the 3K cars building infrastructure? Same amount of money.. with jobs to those who need, and when its all done the infrastructure exists instead of propping up the bloated dealer network and an auto industry that is also rotten in many respects.

[hugo_from_TN]

100. The point is that the 287 gallons of gas saved per year

does not make up for all the energy used and carbon emitted to produce a new car. While counter-intuitive, it is more environmentally friendly to keep driving the low fuel-mileage car as long as possible to amortize the carbon emissions required to produce it.

If I could build a new house that saved 5% on my electricity bill, do you think it would be environmentally a good thing to destroy my current house and build a new house?

[armyowalgreens]

108. I don't think that applies across the board.

Each manufacturer and individual car model has a different production footprint. You are arging against the inefficiency of manufacturing, not against the concept of the program.

[snooper2]

44. wrong...

On point 1- Sure the car destroyed has value the scrap of $200 goes to the person getting a new car. Your comment "every car destroyed is a reduction in wealth". Who's wealth? The person contracted for the scrap work gets to sell the seats and body panels, sales person and dealer "increase in wealth", the previous owner has a new ride for a good value. ( Two of my co-workers got new jeeps in the past week for $9000 off...nice :) )


On point 2- Every taxper foots the bill.....fine by me. A couple billion dollars out of the Over TRILLION dollars given to WallStreet.


On point 3- Only the benfits go to the wealthy. Well, if your poor you probably wouldn't be in the market for a new car anyway. It's not good for cars over 45 grand so no 540i's are being bought. Oh, and the lady who got her new Jeep Compass at my work got rid of her 20 year old Nissan Pathfinder that was on it's last leg. She makes under 50K and is thrilled as a spring kitten. And your stupid comment that poor people can't maintain a decent credit score is just fucking stupid.


Oh, and there are shitloads of decent used cars out there so don't worry your head about that. Come on down to Dallas and I'll put you in something with A/C and less than 100,000 for under 2K

got it :)

[naaman fletcher]

64. was just in dallas! fun time.

1. Look, its simply a fact that if you destroy something of value, there is a reduction in wealth. OK, so some goes to scrap, still there is a reduction in wealth.
2. I agree with you, and I would prefer a trillion dollars go to programs like this over bailing out Wall Street. But I don't see why we need to choose one or the other.
3a. There are people who buy 3K cars. That is a fact. Whatever group of people buys inexpensive cars will see the prices go up (or not down as much as they otherwise would fall).
3b. Saying that poor people can't maintain a decent credit card would be a fucking stupid thing to say, which is why I didn't say it, so please don't put words into my mouth.

Sure, there are lots of decent used cars out there. So? On the margin, every used car taken off of the market raises the price of used cars. Econ 101. A reduction in supply increases price. So the fact that there are still lots of used cars out there doesn't change that fact.

[musette_sf]

67. - 1

no one put words in your mouth

you put words in mine

you're projecting your misdeeds on others

:thumbsdown:

[naaman fletcher]

72. please quote..

Please give me an exact quote of words that I put into your mouth, or apologize and leave me alone.

[musette_sf]

74. i'm not apologizing

and you know what you did.

take your Ayn Rand Fan Club @ss back 40 years and turn right at Lew Rockwell.

[gmoney]

47. There are PLENTY of beat up old cars in the marketplace

Think of it as a gun buyback...

[naaman fletcher]

65. and?

It is simply fact that a reduction in supply increases price. So what if there are lots of cars on the market? You take some off the market, and the price of the rest goes up, on the margin.

[Raineyb]

120. You've got it all wrong.

The supply is not being reduced it's merely not being increased. There are already used cars on the market. What this program is doing is giving an incentive to buy new cars without adding the old cars to the used car market. The supply is not being reduced. Furthermore, a reduction in supply doesn't cause the price to go up. It shifts the supply curve thus raising the equilibrium price but as the number of cars available on the used car market isn't being changed by not adding to the already abundant supply your argument is disingenuous at best.

[abumbyanyothername]

48. Without getting into economic theory

(which I disagree with, vehemently) . . . the current US economic troubles, labeled variously recession or depression, are technically overcapacity.

We have too much stuff, nobody wants to buy it, no need to produce any more, no way to put people to work so they can buy stuff.

Destroying wealth, and productive capacity, is exactly what capitalism needs to do now in order to keep rolling.

So better cash for clunkers than WWIII.

[naaman fletcher]

70. Well ok..

Yes, for example, the US housing market has an overcapacity problem. For various reasons known and unknown, the economy built too many houses.

But, I am not sure where you get the idea that destroying wealth and productive capacity solves any sort of problem. How does it?

Let's say you destroy something of value, then what do you do? Well whatever it is you do, why did you need to destroy something of value to do it?

Another way of asking that is this: If destruction of wealth helps the economy, why don't people do it voluntarily?

[abumbyanyothername]

82. Because it doesn't serve their self-interest

short term.

[jpak]

52. what a stupid post

C4C is doing precisely what it should do - stimulate economic activity when the private sector cannot.

It's working - and that's what chaps the collective ass of the Ayn Rand Cult.

:rofl:

[musette_sf]

69. and the OP is a card-carrying member of the Ayn Rand cult

no matter how much he denies it

denial is where he is at. also projection.

[armyowalgreens]

105. Yep. Anytime preaches about "markets", they are a closest randian...

I gag a little every time I hear someone talk about the efficiency of markets. Like markets are lifeforms capable of logical thought.

[naaman fletcher]

112. as opposed to what?

What is your theory about why Western Europe and the United States became prosperous over the last 50 years while socialist countries failed into a ruin of poverty and pollution? I say its because markets allocate resources better than politicians do. What's your theory? And, sincie most of the world believes in this basic point, yet only a small portion of people are in the Rand cult, it is hardly accurate to say that people who believe in markets are randians.

[armyowalgreens]

117. Take a history class. It will do you good.

You are referring to pseudo communist totalitarian states that failed in Eastern Europe and in other locations.

The reason why the US and other European countries succeed is because we aren't actually capitalists. The US is a hybrid form of capitalism and socialism while most of the western European countries are socialist. America has survived because of market intervention. Our stability has little to do with free-market capitalism. In fact, the majority of our depressions and recessions can be blamed on private industry.


Markets are good at one thing and one thing only. The immediate acquisition of wealth. They cannot self regulate. They are unstable and, many times, they act as a barrier to entry.


Anybody who believes that free-market capitalism actually works is delusional. And most of the free-market capitalists are libertarians.

[naaman fletcher]

121. I'm not sure what you mean.

Obviously the US is not a purely capitalist country, no country is. But, in the end, prices are set by markets and not governments. It is markets that decide what kind of products should be produced, what features they should have, how they should be produced, etc. There are no government officials sitting around deciding what the price of things should be. So, this is what I refer to when I say capitalism. Now, I agree markets need to be regulated, and the primary reason for that is, as you say, they are short-sighted.

This wall street fiasco is mostly about each individual player ignoring the long term (gee, what happens if we loan money we can't pay back) in favor of the short term (I can make a million bucks this year loaning money to people who can't pay it back).

So I agree, but, in the end, the computer I am typing on was made by fee markets. It,s capabilities, looks, feels, features, its price.. no government official decided those things.

Of course, in lots of countries, historically, government did decide those things. For example, in India, they basically produced the same car from the 50's through the 80's. In the meantime Toyota had become the company it was, producing the great cars that it did, responding to market forces.

If you can find me a country where prices were not set by markets that is stable, I will retract my view.

[naaman fletcher]

78. I'm all for stimulating the economy..

But there are different ways to do it. For example, there are certain things that the private sector can't really do efficiently. One is highways, roads, bridges, and other infrastructure projects. These of course are the types of things that Keynes advocated that the government do during a recession.

My objection to much of the "stimulus" being done is that it is being done to help special interests, when the money could be used elsewhere.

Now, of course the worst of all of this is all the various programs designed to bail out wall street, when wall street should be allowed to go under.

But, the money going to this program is helping a small number of people, at the expense of others. If it were instead spent on the types of infrastructure projects that Keynes typically advocated, you would get stimulus, and you would employ people, and you would have assets for the future. (you also wouldn't be destroying things that have value).

Here you have stimulus, but much of it is going to people like car dealers, when there are probably too many of them than the economy needs. So yeah, the car dealer makes money and spends it, and in two years you have more car dealers than needed. Or, you spend it on infrastructure, and money goes through the economy, and in two years you have the infrastructure. I'll take B.

The point of all this is to understand that just because we run the government now, doesn't mean that the system isn't still geared to help out the few at the expense of the many, as it always has.

[jpak]

84. Clue #1 - they ARE spending stimulus money on roads and bridges.

Clue #2 - 'Atlas Shrugged' was bad fiction and so is Libertarian Dyseconomics,

Clue #3 - C4C proves without a doubt that government stimulus programs are working - something that Teabaggers say is impossible.

Clue #4 - Suffer :evilgrin:

[naaman fletcher]

86. ???

Yes, they are spending money on infrastructure. They are also spending money helping special interests on wall street and in the auto industry. I say spend it all on infrastructure, or at least direct help to people who need it, as opposed to helping special interests.

But then again, I understand that even when we control the government, the day to day is still driven by the special interests, which is why I look at things like this with apprehension.

[jpak]

88. Clue #5 - government intervention into the financial industry saved us from full economic collapse

Clue #6 - this is what happens when government lets Wall Street assholes operate on the Ron Paul economic model.

Clue #7 - Obama and the Dems are going to re-regulate those markets - something Ayn Randers can't stand either.

Clue #8 - The auto industry makes up a substantial fraction of the US economy - to ignore that is stupid.

Clue #9 - Ron Paul/Ayn Rand cultists are just plain wrong on everything.

[naaman fletcher]

113. I disagre

I think the wall street bailout was/is a disaster. Markets don't work when profits are privatized and losses socialized. The people who caused the losses should be out of business. Yet, W and Obama bailed them out. the stated theory is that markets would cease.. yet the gov't could have affected one day bankruptcies where the owners were wiped out and the businesses transferred to others with resources and a history of sound management.

The markets should of course be re-regulated, particularly if bad decisons result in bail-out instead of wipe-out.

In the long term propping up an industry with over-capacity does no good.

They are not wrong on everything.. they were/are right on War, and on programs dreamed up by lobbyists to bail out the few at the expense of the many, like the wall street bailout.

[Iggo]

54. On second thought...

...I'm not getting into this.

[Spike89]

66. Negligible effect on supply of used cars

Let's be realistic here. There will be fewer used cars available--true. It will affect the poor--unlikely. The actual percentage of used cars being destroyed is very small in relation to the overall inventory in this country. Additionally, the "clunkers" being destroyed aren't exactly the cars anyone, even the poor, are wanting. If the car is worth $3,500/$4,500 the CARS program isn't an incentive.
As for the whole "destroying wealth" idea, it isn't real and is contradicted by the assertation that the imagined scarcity of used cars would become priced out of the poor's reach, i.e., making old cars worth more = increasing wealth. Who owns more old cars? The poor. So in a sense, your argument is that the poor suffer because their cars gain value.
Granted, not everyone benefits from the program, but the people who are actually harmed is exceedingly small, and the damage they suffer almost nil. It is much like the health care issue--single payer could (should) hurt a lot of middle income workers in the bloated health insurance industry, but overall would be a huge boon to the poor, middle class, and even the high income earners.

[Raineyb]

116. I made a similar point earlier. I suspect you'll be hearing a lot of crickets

if you're looking for a reply.

[Politicalboi]

68. This program cash for clunkers isn't going to go on forever

Right now the auto industry needs help real bad. Especially when it comes to jobs. This is just a kick start. Not all used cars are worth $4500. So there are plenty of old clunkers out there.

[MadHound]

79. Actually this is fairly classical Keynsian economics

The government is stimulating the economy by giving out this money for old cars. Thus, this also helps the poor. It stimulates the economy, creating a demand for new products, creating new jobs.
Cars are being sold, wage are being paid, not just to salesmen, but also to the grunt workers at an auto dealership along with those people who work at junk yards, recycling centers, steel mills, etc. etc. That money paid out in wages flows throughout the community, stimulating more demand, etc. etc.

As far as the poor now having to pay more money for used cars, that's not necessarily so. First, having a 4,500 dollar coupon in the form of a clunker will actually allow many poor people, for the first time in their lives, to own a new car. Secondly, the cars that qualify for the clunker program are only from selected makes and models. There are lots of makes and models that are still out on the used car market, namely ones that get better gas mileage. So in a sense we're cleaning up the new and used car market. Finally, look at the numbers. There are over sixty million cars in the US, yet this program has only taken approximately a quarter million of them off the road. Even if they pump another couple billion dollars into the program, they will still be taking far less than a million cars off the road, and again, it will be those who are the most polluting. I doubt that with those kind of numbers that the price of a car will go up that much, if at all

Sorry to disappoint you, but this is a great program, probably one of the more effective ones to come out of this administration. It has worked better than expected, and our economy, along with our environment, will reap the benefit from it.

Oh, and one more thing, please back up your assertion that it is the wealthy that have high FICO scores. I've been either homeless, poor or middles class in my life, yet my FICO score is in the high seven hundreds. So either back up that assertion or we'll have to disregard it.

[naaman fletcher]

85. a few points..

1. By spending, the government is increasing aggregate demand. Ok. But a lot of people are misled by this. That doesn't mean money should be spent on just anything. For example, if the government paid everyone to dig holes and fill them up again, analysts would say "hey money is being spent, that is stiumulative" but obviously everyone would soon starve to death.

This is why Keynes advocated that the money be spent in areas where the government was needed anyway, infrastructure and such, as opposed to helping out special interests.

If you want to help the poor, a better way would be to give them jobs in infrastructure problems. They get paid directly, the economy gets the infrastructure. No un-needed car dealer taking a cut.

I can't back up my FICO scor assertion, so I retract it, but I will say that everyone I know making under 30K has zero or terrible credit.

[MadHound]

89. The thing is, this money isn't being spent on holes, it's being spent on cars

Honestly, your criticisms sound like those folks who opposed the WPA and other such New Deal programs that helped out immensely during the Great Depression.

Let's look further at this. Yes, the government is increasing demand, which is probably a good thing. Do you realize how stacked up car lots were? This is 2009, yet car dealers were/are still selling "new" cars from 2007. Do a quick search, you'll find article after article in city after city about how local car dealers were becoming desperate because they had two years worth of inventory on their lots, and the 2009 models coming out soon (if they're not already out). There was some serious speculation earlier this year about car dealers having to literally trash the cars because they couldn't sell them, couldn't afford to store them. Now how wasteful would that have been.

And while this isn't infrastructure per se, it still benefits the public at large in many areas. I know of two local city governments that are turning in their clunkers, which up to now they couldn't afford to replace, and getting new, more efficient cars. Hmm, benefits for the taxpayer in terms of less maintenance needed and better fuel efficiency.

Oh, and we are giving the poor jobs that deal with the infrastructure, or haven't you heard of the stimulus bill that was passed and signed earlier this year? Yeah, I was a bit disappointed in it because Obama was insisting on being bipartisan on it, and thus one third of the stimulus was composed of tax cuts, which is the least efficient way of stimulating the economy, but that still left roughly a half a trillion in "shovel ready" stimulus money. That program is starting to have a noticeable effect, even though less than half of it has been doled out so far. The cash for clunkers was not just a stimulus program, but it was also designed to clean up our environment while doing so. Again, it's a huge success, providing jobs at car dealerships, but more importantly in my opinion, green jobs in recycling all that steel and plastic, something that we've got to build our economy on. And frankly recycling jobs are ones that generally employ the poor:shrug:

So you can't back up your FICO score assertion eh. Oh well, we can both play the anecdotal examples game, since I can provide a counter example for every one of yours. Hell, look at me, I've been making $0(zero) dollars for the past three years(went back to college), but as I said earlier, my FICO is golden, always have been.

Your case on this issue is weak on this one, given both the overwhelming success of the program and the sheer simple numbers that I provided earlier. So tell me, what's your real reason for opposing this?

[naaman fletcher]

114. well.

Yes, it is not being spent on holes, but on cars. holes would be 100% waste, but the point is that at some level there is waste if people are buying cars they otherwise would not have bought.

The fact that car lots are overstacked is all the more reason this is bad. Just as digging and refilling wholes is a waste, creating artificial demand for an industry with over-supply is also a waste.

I can't find the backup for my Fico score assertion, so I retract that.

[Beaverhausen]

83. I have a FICO score over 800 and I am NOT wealthy

last I checked it is 804. Trust me, I am doing OK but I am not wealthy.

[mkultra]

126. income has nothing to do with your credit

And over 800 is pretty high. Are you sure your talking about your actual FICO? only like 10% of people in the US are over 800.

[Gidney N Cloyd]

93. If the clunkers weren't traded in for new cars they'd mostly remain with the current owners

and not wind up on used car lots for the poor to buy.

[G_j]

94. I'd like to see a clunker for clunker set up

take the traded-in clunkers and offer an even trade to people with even less efficient clunkers, and perhaps cars with over 100,000 miles.
Then maybe destroy those cars.

:think:

[proud patriot]

99. I take it you don't know anyone who's job depends on car sales

x(

[naaman fletcher]

115. so?

So what? What if we propped up buggy whip salesmen when autos came into being? What if we propped up type-writer makers when computers came along? Prior to this bill, everyone agreed that there were too many car dealerships. It does not help the economy to have people engaged in occupations that are not needed.

[armyowalgreens]

101. You couldn't have picked a more successful program to hate. Good job.

Cash for clunkers is genius.

[enviralment]

122. HAHAH

So true. its insane how much people hate this thing. Its the most successful program to come out of the stimulus package. go and check out my blog about it at enviralment.wordpress.com

[divideandconquer]

124. What about tens of thousands of safer cars on the roads replacing unsafe SUV's?

All those rollover prone worn out Explorers being replaced by cars with side airbags, antilock brakes and 5 star safety ratings will surely save billions in hospital bills and deaths.