Thursday, October 1, 2009

Entirely predictable result transpires

Today, the WSJ noted that in the aftermath of the Cash for Clunkers debacle, the auto industry is in turmoil, with sales declining precipitously after the artificially-created demand dried up, as would be expected from something which merely distorted the demand curve, rather than actually stimulating demand (like, for example, creating more jobs would). This is causing dealerships to struggle, distortions and inefficiencies rippling through the supply chains, and further economic damage.

So to summarize, these are the entirely predictable results of this latest brain-dead handout scheme:
- Waste billions in taxpayer dollars for no economic benefit
- Create distortions in the auto manufacturing and supply by only giving handouts for buying certain types of cars, rewarding the manufacturers of those models disproportionally (with taxpayer dollars)
- Compressing the demand curve, creating distortions in the industry which will lead to closed dealerships and suppliers, costing more jobs and doing more damage to the US economy

... and yet, even with all that, we get news reports about how this was an unexpected side-effect, and nobody could have predicted, etc. Hello? Is anybody home upstairs in any of the "news" outlets? The only headline about this should be "Idiotic Bailout does Entirely Predictable Damage to Economy", possibly with an addendum to write your congress-morons if you didn't want your children's tax money spent on hastening the demise of the American Dream.

Cause there's another equally idiotic handout extension to distort the housing market further in the pipeline...

1 comment:

  1. Hoocoodanode?

    The worst part of the plan is they paid people money to trash perfectly useable morots. In some places in the world those cars would have worth a year's pay. Those cars could have meant a lot to many people in the US. A big part of protecting the environment is re-using things if you can and not throwing stuff away and manufacturing more crap. And if you want to mfr crap, mfr products like bicycles that don't trash the environment. The gov't subsidized people to trash motors and buy new ones. I don't care how much more efficient the new cars are, trashing working products is not good for the environment.

    BTW, the housing thing is already having repercussions: rents are falling b/c the credit is targeted to 1st time homebuyers who would otherwise rent. Economists say if we want to keep housing expensive, we need to pay people who are currently living together to move into separate housing, either rented or owned. In the end, gov't can't keep fuel cheap or housing expensive. I'm hoping the American Dream is just fine. All this tinkering is just a pain in the neck.

    I'm still amazed by the rebate for trashing cars. Nothing that starts with "we need to subsidize manufacturing of cars" is good for the environment.