Saturday, September 4, 2010

Cash for Clunkers revisited

By Jeff Jacoby in the Boston Globe

We discussed here why this policy was so horrible last year. We should not forget how skilled our government can be at making policies that are backwards and have unintended consequences.

Cash for Clunkers has helped lead to an increase in the price of a used car. From the article:

"... the supply of used cars is artificially low, because your Uncle Sam decided last year to destroy hundreds of thousands of perfectly good automobiles as part of its hare-brained Car Allowance Rebate System — or, as most of us called it, Cash for Clunkers. That was the program under which the government paid consumers up to $4,500 when they traded in an old car and bought a new one with better gas mileage. The traded-in cars — which had to be in drivable condition to qualify for the rebate — were then demolished: Dealers were required to chemically wreck each car’s engine ..."

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