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Saturday, November 14 2009

Government healthcare is such an emotionally-charged issue that it's become nearly impossible for people to think about rationally, without immediately putting up ideological defenses that thwart any serious conversation regarding its merits.  But the recent "Cash for Clunkers" debacle doesn't have such emotional overtones, and thus allows us a perfect example through which we can view the difference between what the liberal model of central planning and the conservative model of freedom offers the country.


Remember the worthy objectives of this government-run program: 1. benefit the consumer by giving them a financial incentive to purchase a car; 2. benefit the auto industry by stimulating demand for cars; 3. benefit the environment by replacing gas-guzzlers with fuel-efficient vehicles.  No one can or should fault the government planners for their intentions.


But what happened?  Certainly some consumers benefited from the rebate they received for purchasing a government-approved car.  But what about the consumers that didn't need cars but could have used a new refrigerator, washing machine, or oven?  What made their need any less than those looking for new wheels?  Why did the government need to show such favoritism, and how is it justified? 


Wouldn't the wiser path have been to take the conservatives' approach by giving all taxpayers a rebate in the form of tax cuts?  Putting money back in everyone's pocket would have allowed those that wanted a car the opportunity to go buy one, as well as those that wanted to pay off debt the ability to do the same.  Would that not have actually done more to stimulate economic growth instead of the liberals' attempt to specifically target one area of the economy and incentivize it?


Liberals said that the auto industry was in excessive peril and so intentionally focusing on them was appropriate.  If that's the argument, then it's helpful to see how successful the program was in benefitting the automotive industry here in America.  As it turns out, it wasn't.


Consumer Reports highlighted the embarrassing statistics: American-made cars accounted for the top ten vehicles traded in by consumers, while eight out of the top ten purchased vehicles were foreign made.  What that means is that the American government used billions of taxpayer dollars to pay citizens to buy foreign cars.  And that was supposed to stimulate a stagnant American auto industry?  Pathetic.


But what about dealerships?  There was undoubtedly a sudden rush on auto dealerships during the 2-3 month span of the program.  But it was short-lived.  Whereas giving people tax cuts (again, the conservative proposal) would have had long-lasting economic benefit, the liberal solution created a instantaneous burst of economic activity that essentially crammed six months worth of sales into a small window of time. 


This didn't create any new jobs, nor did it produce any increased demand for automobiles.  In fact, the only long-lasting impact it had was frustration and stress to the auto dealerships waiting for reimbursement from the ever-slow government bureaucrats administering the program.  Their sluggish pace put an incredible financial burden on dealers who had to absorb costs associated with the rebate mandated by the central planners.


Okay, so maybe the liberals failed disastrously on their first two objectives, but surely their strategic central planning achieved that most politically correct of all goals: helping the environment, right?  Not exactly. 


As the Associated Press recently reported, "The most common deals under the government's $3 billion ?Cash for Clunkers' program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of the new federal data by the AP."  Get that?  People exchanged gas guzzlers for gas guzzlers, despite the planners' intentions.  And it gets worse.


Other studies have shown that many of those vehicles that were traded in to dealerships in exchange for the government rebate were ones that their owner hadn't been driving anyway.  These were truly clunkers...sitting abandoned in a driveway or junk pile until liberals offered to pay tax dollars for them.  In other words, the government planners took non-polluting, immovable paper weights off of people's hands, and paid them to go purchase a vehicle that would pollute! 


What should all this tell us?  Central planning liberals always have the best of intentions.  They want to help the Indians and less fortunate, they want to give everyone a nice place to live and cars to drive, they want to help you go to college, they want to give you affordable healthcare...but time and time again we see that despite those intentions, their solutions inevitably make the crisis they hope to solve worse.  Visit an Indian reservation to see how well the government provides healthcare, good housing, good jobs, and affordable, quality education to people.


Planners fail not because they are evil, but because people are too different, unique, and have too widely varying skills and needs to be manipulated into happiness by a top-down government bureaucracy.  No matter how wise, well-intentioned, or intellectual our leaders may be, they simply cannot plan our lives better for us than we can do ourselves.


Perhaps we would be wise to learn that lesson before Clunkernomics becomes ClunkerCare.

Posted by: Peter Heck AT 02:52 pm   |  Permalink   |  5 Comments  |  Email
Great article Peter. Reagan was pretty smart!!
Posted by Derek Vester on 11/14/2009 23:23:07
The significant issue is that liberals constantly refuse to believe the reality of economic laws. Imagine for a moment the administration that decides to suspend a belief in the law of gravity and provide incentives for everyone to levitate. Such a move would reduce carbon footprints (don't need fuel to fly & travel around), eliminate some health issues, be just plain fun, etc. Whatever the good intentions, such a proposal would be laughed off the table. Why?
Posted by ChucksChants on 11/18/2009 06:57:14
Because the law of gravity is real and cannot be denied. The laws of economics are just as real. When a government manipulates economic markets, consequences are certain. The laws of economics are as inevitable as the laws of gravity and motion and so forth. As someone put it, when you pay people to be poor, you get more poor people (often attributed to Milton Friedman, but actually uncertain).
Posted by ChucksChants on 11/18/2009 07:00:37
Yes, because there is never market failure in health care markets... And, the conservative approach of giving a $2500 tax rebate would be enough to cover the medical expenses of, say, a 55 year old with hypertension or diabetes. If only people knew the "laws" of economics, then they could never support health care reform. Those liberal health care supporters like Kenneth Arrow, Jonathan Gruber, David Cutler, Ezekiel Emanuel, or Victor Fuchs obviously know nothing about economics. Get a clue.
Posted by PeterHeck=Clueless on 01/13/2010 23:56:21
Yes, I understand why you think throwing a bunch of liberal thinkers names on a post counts as substantive conversation when you make the suggestion that the ONLY conservative approach would be a $2500 tax rebate. Yes, that's a pretty accurate analysis. I guess setting up straw men works just fine when you don't have to worry about putting your own name down. Coward.
Posted by Harry Dillon on 03/26/2010 20:17:13

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