A couple of the first things that come to the mind of anyone who's not just looking for reasons to give away free money:
1) This program is only good for the purchase of new cars, and it seems highly unlikely that anyone whose current car is worth more than the $4500 in free money they'll get for it through this program would would participate. They'd rather just sell their $6000 gas guzzler for $6000. So who will be taking advantage of this free money? A bunch of people who are currently driving $4500 cars. Is that really what we want to do right now? Encourage a bunch of people who are currently driving around in $4500 (or just as likely $500) cars to go out and borrow money to buy brand new cars they can't afford? Isn't that sort of along the lines of what got us into this shithole in the first place? Something tells me we'll see a spike in defaults on auto loans in the not too distant future.
2) Not only does this encourage irresponsible consumption, but it punishes those who can't afford to go out and buy brand new cars and are attempting to be responsible by not fucking doing it. By having the government buy up a large portion of the affordable used cars that should be on the market, the supply of these cars available to those who are attempting to be responsible consumers is significantly reduced. This hurts the very poor who won't be able to find the $500 cars they need to get back and forth to their low-income jobs that they're trying desperately to hold onto, and it hurts those middle-income workers who find prices increased on the cars just out of the $4500 range as those who otherwise might have purchased those cars are pushed up into the higher price range by lack of supply.
Well, nobody can borrow money to buy a car because of the credit crunch. So that's where your beloved trickle down theory comes into play - the rich (who are the only ones who can afford it) buy the car and it trickles on down to the masses of low-wage-earners whose lots in life are improved.
ReplyDeleteIt's about sparking consumption again. After all, people's most valuable assets after their houses are their cars, in most cases. Since our economy is over-reliant upon consumption of these two products, doesn't it stand to reason that an entity with the power - in this case, the gov't - should promote consumption, where a different entity - the under-regulated financial market - caused the implosion in consumption of high-price products like cars and houses in the first place?
If no one is able to get the credit to buy the new cars anyway, then the whole program is a wash and nothing but a waste of the administrative resources needed to carry it out.
ReplyDeleteThe problem is absolutely that the economy has become overly reliant upon consumption (a product of the Keynesian idea that wealth is the product of consumption rather than production), not just of cars and houses, but in general. Programs like this do nothing to correct that problem; they only exacerbate it.