And by scrap you mean treasury bonds?
_____ From: [email protected] [mailto:[email protected]] On Behalf Of Stephen Rigley Sent: Tuesday, August 11, 2009 11:23 AM To: Mark Cookson Cc: Miatapower Miata Power; Martin Eby Subject: Re: NMC NPC: How to ruin a perfectly good engine yeah! G'damn for-jig-in-ers... comin' over here.. buyin' our scrap and payin' our taxes.. On Tue, Aug 11, 2009 at 2:43 PM, Mark Cookson <[email protected]> wrote: Regarding #1, that's what government does. It collects funds from the populous and redistributes them to other members of the populous, some times spending that money on people that aren't even members of the collective (foreigners). The unintended consequences of this program are yet to be known, but I suspect that some mechanics will have less work. It appears that all that they have done is moved forward a lot of purchases so there's a spike, but the number of total units will be the same. It doesn't appear that really poor people are taking advantage of this, and that's probably good, since there is a definite cost of going from a vehicle that's almost certainly paid for and switching over to having a car payment and higher insurance and registration costs (hopefully offset by lower fuel costs). Regarding #2, there's an implied premise in there, which is that these cars are actually worth something, and that's not always the case. A false premise equals a false conclusion, but for the sake of argument, I'll agree that not all of these "clunkers" were destined for destruction. However, for the two vehicles that I personally know of (father-in-law and co-worker), the cars were barely running, requiring hundreds of dollars of repairs every month and were worth literally nothing as a trade in, except for scrap. These cars were going to be destroyed by their owners by selling them to salvage yards for scrap. Instead, they get $4500 for them and they haven't destroyed any wealth or value. If we get 750,000 bad cars off the road (US government's estimate), what is the price impact on the other 234.5 million potential used cars (wolframalpha, number of registered cars in the US)? That's 0.3% of the total car market. Are we seriously arguing over the effect of 0.3%? I contend that there will be plenty of used cars available after this, approximately 233.7 million, in fact. I'm sure needy families will be able to find good deal from that pool. However, what it has done is drive up the cost of NEW cars, though this cost increase is still largely offset by the CARS program. So, the government has decided to give your money to the automakers but has let the American public decide how to spend it, and the American people have decided to direct most of that money to foreign auto makers (largely because the domestic automakers don't have enough qualifying product). It's democracy in action, and it's messy. Mark On Mon, Aug 10, 2009 at 11:39 PM, Martin Eby <[email protected]> wrote: At 02:57 PM 8/10/2009, Mark Cookson wrote: There are two effectively independent pieces to Cash-For-Clunkers.. 1) Giving folks $4500 to buy new, more efficient car 2) Having the dealer to destroy old, less efficient cars. Regarding (1) a) The money comes from taxes. The government has created nothing -- it has only decided for us that $4500 we might have chosen to spend on education, food , health care, or even, perhaps, more fuel efficient new cars will be spent on more fuel efficient new cars. Auto workers end up with more of our money, teachers, farmers, and nurses with less. b) What happens when the artificial stimulus ends and all the people who would otherwise need new cars already have them? The immediate benefit of the program is apparent, but the inevitable consequence is just as apparent. Regarding (2) Needless destruction of wealth is always, always, always bad economics. In this case the reduction in serviceable used cars and used engines will drive up the price of those items. Hence this program raises cost for the most economically disadvantaged -- those who cannot afford new cars and new engines. How many large families (who need a big car) won't be able to afford it and so stay with their even more inefficient even older big car? M. _______________________________________________ Miatapower mailing list [email protected] http://list.miatapower.net/cgi-bin/mailman/listinfo/miatapower
_______________________________________________ Miatapower mailing list [email protected] http://list.miatapower.net/cgi-bin/mailman/listinfo/miatapower
