Another dark side of Cash 4 Clunkers

So, Cash for Clunkers was made to stimulate the economy.  We’ve heard an awful lot about the problems it has had so far.  In brief:

– It’s undoubtedly hurting charities.
– It’s well behind schedule in payments.
– It’s part of the “broken window” fallacy. Basically, it assumes you can create wealth by destroying wealth.
– It’s highly likely it will drive up the prices of both used cars and used car parts, thereby hurting the lower and lower-middle classes.
Etc., etc.

I’d like to mention something most don’t. Basically, one of the big problems with the “broken windows” fallacy is that it ignores opportunity costs. Fortunately, with C4C, we know exactly what that opportunity cost is. The extra $2 billion that was poured into the program came at the expense of loan guarantees for new energy projects. Think about that for a second. Think about what the opportunity cost was.

What does this mean? It means it’ll be harder for new alternate energy projects to be funded. These are the sort of projects that are the first ones cut during a credit crunch like this recession. After all, they’re unproven technology, and therefore high risk. Personally, I know over a dozen biofuel companies who have dramatically slowed down their commercialization plans after the big crunch last year. These people would love loan guarantees in order to star putting cement on the ground and get their projects running.

At worst, these loan guarantees would be no less stimulating than C4C, as any company that fails is no different than blowing up cars. In fact, in the grand scheme of things, its better, as every failed company tells everyone else what not to do, and thus increases the odds for everyone else.

At best, these loan guarantees would be a real stimulus, helping to form stable, long term companies that generate wealth and provide dozens of direct jobs without government funding. And would also reduce CO2 emissions if you’re into that sort of thing, possibly reduce energy imports, prove that such projects are possible and create a boom of new projects (thereby stimulating the economy even further), and so on.

Given the loss of 2 billion dollars of loan guarantees here, I think it’s safe to say that C4C has failed in stimulating the economy.

Advertisements

4 Responses to Another dark side of Cash 4 Clunkers

  1. koi.de says:

    Apart from the design of engagement rings, another important consideration when going
    ring shopping is your particular choice of jewelry store. The second option will require more diamonds but will
    give the engagement ring a fuller appearance. When you
    plan on asking that special someone to spend the rest of your lives together, there are many different types of
    engagement rings to choose from.

  2. Kids are under more pressure than ever to succeed in school.
    Once your clothes have been washed and waterproofed as necessary,
    place them in an airtight container and store them in
    a location that’s dry and out of direct sunlight. Adult comfort – It is all well and good to have your baby comfortable, but if your back carrier is not comfortable then you will not be going far (or you will only be doing it once.

  3. dyson dc24 says:

    Finally, replace the bag and clean or replace the now dirty exhaust filter.
    The attachments and unique design of the Bissell let you keep your home free
    of allergens and pet hair. It is also important
    that you should consider its form.

  4. A�The Stephen Joseph backpack will solve this problem
    for it comes with a personalize design. Many times if you use our suggestion you
    will find that the quality backpacks are the same price as the cheaply made backpacks.
    To do this I still put a large plastic bag in my backpack and pack everything
    in this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: