Wednesday, June 10, 2009

Washington Can Do Everything

I, for one, welcome our new Top-Down Economic Overlords. I’d like to remind them that as a trusted blogging personality, I can be helpful in rounding up others to toil in their diversity workshops. From the AP:
Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker.

Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.

Rep. Betty Sutton, D-Ohio, the bill's chief sponsor, said the bill showed that "the multiple goals of helping consumers purchase more fuel efficient vehicles, improving our environment and boosting auto sales can be achieved." Sen. Debbie Stabenow, D-Mich., has backed a similar version in the Senate, which has the support of automakers and their unions.

The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles — built in model year 1984 or later — and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500

This is what happens when you don't believe in the invisible hand. You feel obliged to do everything: help consumers, companies, save the environment, all in one swoop. But one must remember that money from the government does not come from a cookie jar, it comes from us, so we are really deciding, top down, to subsidize the demand curve for autos, the supply curve of low-end cars, sure that creating a new car is better for the environment than using an existing one.

Next item, how many new refrigerators need to be made? Which ones should be replaced?


But What do I Know? said...

Isn't this subsidizing bad behavior? I went out and bought a fuel efficient car the first time, so now when I want to buy a new one I have to pay for it all myself, but if I had purchased a Hummer, the Feds would give me money to Do The Right Thing!!!

How is this fair?

BTW, nice Simpsons quote use. . .

Anonymous said...

And surely the government should take control of refrigerator production now, to ensure that the proper number are produced so that they can be provided to all and only those that need them. And if the government mandates the design, it will simplify repair and competition so nobody profits unfairly. The government can set labor prices, dictate repair parts production and availability based on its notorious ability to forecast accurately... I already miss my old fridge.

Anonymous said...

"This is what happens when you don't believe in the invisible hand. "

Would that be the invisible hand that recently guided the world financial system over a cliff?