08/18/09 Baltimore, Maryland
The “cash for clunkers” program is creating a small jobs boom — for the government. The Obama administration has vowed to triple the number of government employees processing “cash for clunker” vouchers from U.S. dealerships. The program has been such a “success” that the government can’t keep up with the vouchers coming in, and poor dealers are complaining that they have to sit on big losses while they wait for government reimbursement.
By the end of the week, up to 1,100 people will be working full time to process cash for clunker reimbursements.
“A growth strategy that requires wealth destruction,” writes Rob Parenteau, “in this current case, the scrapping of cars in working order, which are part of the stock of durable assets — is, to our eyes, more an act of policymakers’ desperation to ‘prime the pump’ of GDP growth than a sensible way forward. However, since major wars used to be the ultimate policy expression of this growth strategy, we will accept ‘cash for clunkers’ as a relatively more benign method of government-subsidized wealth destruction…
“There is a deeper problem, though, beyond the ‘growth through wealth destruction’ aspect of this program or the faux green shade of the ‘cash for clunkers’ charade. If the analysis Dr. Richebächer pursued is correct, stimulation of consumption by issuing public debt is not the best solution to an extended period of overconsumption… especially one fueled by household debt, which, in turn, was built up on the back of asset bubbles. Encouraging investment in new industries or new export markets would offer a better route to a more balanced growth path.”
Sign Up for The Daily Reckoning e-letter and receive a chapter from the new Financial Reckoning Day... FREE!
We Value Your Privacy.
expecting anything better from the “president” is an exercise in either futility or infatuation…..both obushma and bernanke are groupies of fdr who tried the very same trick but focused on farming – destroy hogs and cattle while people were hungry….destroy grains, produce, and cotton while people went without food, clothing, and shelter….it’s deja vu all over again….
the next thing obushma will call for is a burning of pcs and laptops…
One aspect of public “comment” is that is almost universally “against” ideas and proposals of others, new ideas or suggestions for improving our idealistic, financial or practical “lot in life”. Where are the creative juices, the new ideas and the fortitude required to present them “out loud”?? Any “wuss” can be “against” someone else’s proferred solutions, but it takes more character to offer and defend new ideas
How about bulldozing some houses and building some pyramids? Am I a “wuss” for criticizing that? Seriously though, we don’t need any g@d#$mned new ideas. We need a really old idea.It’s called a FREE market.
I agree with your view of investing in new industries. Cash for clunkers has too many negatives. It is detrimental to used car dealers, car parts stores, car repair shops, car donation charities and the poor.