Cash for Clunkers: Will It Help or Hurt the Economy?

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Why on earth would the government want to encourage people to trash (trash, not sell, not give to charity, but trash) their perfectly functional vehicles, to receive in exchange money towards a new vehicle? As far as I can see, there are two main reasons being put forward, and both are, in my opinion, false.

1. These “clunkers” use more gas and leave behind a bigger carbon footprint. We need to get rid of them to help reduce emissions and slow down global warming.

Sounds reasonable, right? After all we don’t want to be responsible for polluting the environment and raising the temperature of the earth. No, of course not.
Well, there are a few things wrong with this.

First of all, as you probably already know, there is a major debate going on among scientists as to the nature of global warming and what impact (if any) we humans and our cars are having on it. For more information on this debate go here

Secondly, many of the new cars people are buying and trading their “clunkers” in for do not get significantly better gas mileage. It is far from uncommon for someone to trade their old car in for something that only gets three or four more miles per gallon. Is this really going to save the planet that we haven’t even conclusively determined needs saving?

2. The purchasing of newer, cleaner, and more efficient cars will help stimulate the economy.

There is a serious problem with this claim. It is false. It WILL NOT, in any way shape or form, stimulate the economy. What it may stimulate, very marginally, and for a short period of time, is the automobile industry. Where do you suppose the $3,500 or $4,500 per traded car is coming from? You! It is coming from you, the taxpayer. Whether they take it out of the stimulus package money or some other program is inconsequential, because in the end all these programs are funded by me and you anyway. It is true that the car manufactures have made some money on the new cars that were sold, and might be able to keep a few more employees employed for a bit longer, but as who’s expense? The $3,500 that was given to help sell a brand new car, is $3,500 dollars less that consumers as a whole, collectively, now have to spend on other things. Think of all the computers, electronics, used cars, clothing, food, etc… that could have been bought with this money, had it not been taken forcibly in taxes (future or present). These commodities consumers would have bought would in turn have helped supply jobs for all these other industries, and the consumers would actually get something for their money, as opposed to throwing it out the window. This is in effect what happens in the “Cash for Clunkers” program because all the old cars are simply being junked, not resold or even given to charity. In conclusion, what has really happened here? One group of people (the automobile industry) has gained (marginally) while the rest of America has lost out.