Weekly Top 3: Thinking Critically About Cash For Clunkers
Yes, this 300-horsepower, twin-turbocharged Nissan 300ZX qualified as a "clunker." A belated nominee for Riswick's "Keep Your Clunkers" list. That's one thing that always struck me as silly about the Cash for Clunkers program: there were a bunch of cars on there (see Riswick's column) that I seriously doubt anyone would think of trading in.
Silliness aside, there are some real questions to ask about this episode. Here's three for your consideration.
3. Did it help the environment?
I've yet to see any compelling argument that it did. First of all, we're talking about a minuscule number of traded-in clunkers relative to the many millions of cars on American roads. I'm sure someone's done the math on how much the national fleet's overall fuel economy improved as a result -- and I'm sure this improvement is not significant from an environmental perspective.
You've also got the environmental impact of disposing of all those clunkers. And the likelihood that people will drive more than they used to because their new cars cost less per mile at the pump, making straight before-and-after fuel economy comparisons potentially misleading. And surely some other objections I'm not thinking of. I just can't believe that this program really made an environmental difference.
2. Did it help the economy?
Well, it certainly gave car dealers a shot in the arm, and of course carmakers as well. And that doubtless had trickle-down effects for supplier networks and such. But there was also a lot of value lost in the disposal program -- for example, the clunkers' engines were prohibited from being salvaged and sold, and disposing of them cost a healthy amount per car (toxic waste fees, e.g.).
And now that the program's over, demand has dropped back to pre-Clunker levels. It's like giving a starving guy a five-star steak dinner -- sure, he'll enjoy it while it lasts, but in the big picture, that juicy steak does nothing to address the fact that he's still starving.
1. Was it worth it?
Three billion taxpayer dollars. That's a lot. Sure, it's less than one percent of the annual military budget -- but it's still a boatload of money. Did it make sense to spend all that money on a steak dinner, or might there have been wiser ways to invest it in our economic future? What do you think?
Josh Sadlier, Associate Editor
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- Josh Sadlier September 18, 2009, 3:00 AM
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I'm not a big fan of the program. I don't see any substantial lasting effects.
I'm sure others will disagree and that's OK. What I am tired of is hearing TV news refer to the program as a success. They call it a success because it was popular. Handing money out to people is going to be popular, but that doesn't make it a good idea.
Always loved that 300Z model. I would love to pick one up sometime in the future.
All the arguments about "omg, something that should be kept is on the C4C list!" were pretty silly because people weren't about to trade in their 300ZX Turbo for a Hyundai Elantra...maybe a few did but it's insignificant.
Anyway, my answers:
3) The difference might be greater than you think. A 0.1% improvement in nationwide fleet economy would be worth celebrating, IMO, and C4C could have realistically achieved that. I would have to see real numbers behind that. And though people save money on gas, hence they may be driving more, don't forget that, even with a $4500 rebate, they spent at least $5000 out of pocket for a new car on top of that (and that's assuming they picked up a good price on a base-level Accent or Versa, and most people ponied up for nicer stuff than that). That's going to make people feel the pinch in their wallet enough to curb excess driving despite improved mileage.
2) I, too, disagree with the whole concept of not salvaging usable parts from the clunkers as that IS a waste of usable resources. In terms of direct effect on the economy, it clearly had a huge impact on a small portion of the economy, but in a more widespread sense I think it was a success story in a down economy and it's probably just had a good mental effect on a big chunk of the country about the state of the economy, and when people feel good about the economy, the economy does better.
1) Well, see 2). Also, 3 billion is not a very big amount for a federal program. Unlike the hugely disappoiting $700 billion TARP program, I'd say that C4C offered pretty massive bang for the buck, even with the above reservations about its success being noted.
It was a waste of money and no real help to the environment.
That 300zx looks great. I really wanted that car when I was in high school
Oh, they must've revised it to include the 300ZX TT because I checked when it first started and I didn't qualify. (not that I would, I was just curious)
I didn't care for the program, but it sure was well recieved... seeing how it was done in an instant. It got some clunkers off the road and that makes everyone happy because the government wants to say that all our pollution is from cars. They would not dare blame the real source of pollution because that is who gives them the most money...