I just read today that the cars traded in for the Cash for Clunkers program are rendered unusable by running liquid glass through the engines.

Has anyone considered the impact of this on the poor? What has happened is that a huge number of low cost cars are being removed from the market. These are cars low income earners would ordinarily drive or teenagers would buy them who need to get to school or work.

What happens when we radically reduce the supply of a particular good? If there are no good substitutes, then the price goes up. In effect, this is a tax on the lower end of the market.

“Progressive” policy isn’t always good for the poor. Acton has been making that point for years. Hopefully, it is becoming more obvious.

  • David R. Larson

    Is it not the case that one of the objectives of this program is to put out out of commission cars that are ineffficient and polluting by today’s standards? Is there a better way to move toward this environmental goal?

  • a

    Mr. Baker: What evidence do you have for such a claim? It seems like quite a leap of logic to assume that a.) those who bought cars would have bought cars anyways and sold their other ones. b.) they would have sold those cars to the poor. c.) the cars that are eligible have to get 18mpg or less. How is selling a car getting that poor of gas mileage to a low-income individual helpful?

  • http://reckofthings.blogspot.com/ Jared

    A, your first point is not logically necessary from Mr. Baker’s claim. The plain fact of the matter is that the program does replace older cars with newer ones that will last significantly longer. Even had everyone planned on not selling and running their clunkers into the ground there is still a net loss of older cars in the market since they just don’t last as long. That’s part of the definition of being “older.”

    As for your second claim, how is Baker jumping to conclusions by making that assumption? In the end, that’s just a fact about who generally buys those cars. Interestingly, there is an entire market of small used-car dealers and wholesalers who are already expecting a sharp decline in business or to be run out of business altogether.

    As for your final point, when shopping around for a used car I’d much rather have one that uses a bit more gas than pay out the wazoo for those special, price inflated few that still get govt-approved gas mileage. At least, I suspect that’s the way supply and demand will swing the markets around in light of the program.

  • http://hunterbaker.wordpress.com/ Hunter Baker

    A, there is absolutely no leap in logic. It is axiomatically true that if older cars are rendered unusable by this government program, the total number of used cars in the market will be reduced. Reductions in supply cause increased prices. This argument follows as surely as gravity applies to your existence on planet Earth.

  • Pete

    In addition to the individual poor who lose by this program, countless non-profits who utilize car donations to help raise money are losing out.

  • Glenn Sunshine

    As for the environmental impact, ask how much energy and other resources are used and how much pollution released to produce those new cars, and whether the gas savings from getting the “clunkers” off the market will offset that.

    As far as the poor go, if I have a choice between a cheap gas hog or an expensive fuel efficient car, the first may be my only viable option. Eliminate that, and I do without a car altogether.

  • http://lifeskillsforfamilies.com Ed Burley

    The reality of it is Mr. Baker is that it is exactly the government’s intent to eliminate the opportunity for car ownership for the poor. This would necessitate them relying on public transportation. This would then enslave them even further to the Central Planners in Washington.

    Sorry to sound so conspiratorial, but follow the logic – you’ll see that I am right.

  • S cLEVELAND

    After watching a perfectly good Volvo S-80 get fried in one of these videos I am disgusted that good older model cars are being destroyed!! The comment “How is selling a car getting that poor of gas mileage to a low-income individual helpful?” makes no sense – the Volvo fried in that video gets 18 mpg – certainly better than a single mom with no car at all!! People – wake up – this is YOUR money!!

  • Rowland

    This is the dawning of a new era. Goverment owns GM, the banks, and now they are tricking us into buying thier new cars. Why not let the government sell these cars very cheaply to the families in need? I can’t afford a $30,000 car, much less the $350 car payments and $200 insurance payments each month. THERE WILL BE NO MIDDLE CLASS. They already beefed up Food Stamps and Gov’rment housing, why not cars? Its a complete WASTE to see nice cars being destroyed, and in some cases, VERY nice cars. Ive heard stories of an Aston Martin, BMW 7 series, Mercedes-Benz, cars that can achieve 200,000+ miles on 1 engine being ‘glassed’. Its a dark day to be a car enthusiast.

  • Ken

    FYI,I live in govt housing.We recieved a 1 week notice yesterday that any innoperable vehicle we have will be towed,against our will,at our expense.The only vehicle I own will be gone after aug 31.It’s a 1991 olds and I’m having difficulty finding parts,and,being disabled,difficulty working on this car for any length of time.No worries says my govt.,you won’t have a car to work on.So who do I thank for taking this task away from me?And,since there is NO public transportation available in my town……