Clunkers

            The end of every year brings out lists of all kinds: the year's best and worst, its successes and failures, its most notable events, and so on. Consumer reporter John Stossel made up a list of his own: the worst programs introduced by government. Among them was Obamacare, of course, plus government funding of sports arenas that sit idle most of the year, tax credits for raising alpacas or buying electric vehicles, the increase in the minimum wage, and subsidies for ethanol.            

            My vote for the most stupid government idea of the year goes to Cash for Clunkers. Politicians fell all over themselves praising the program for stimulating car sales. It did that for a brief period, certainly. But look at the unintended consequences. Car sales for the following months plummeted; the program added billions to the deficit; and money that was spent on new cars was not spent elsewhere, making the program stimulus neutral.

            The worst part of the program, however, was crushing the clunkers that were turned in. Why was this bad? Because It deprived the used car market of many usable vehicles, thereby denying potential buyers of more affordable transportation. In fact, the law of supply and demand caused all available used cars to go up in price.

            If Cash for Clunkers makes economic sense, shouldn't the genuises in Congress be encouraging us to smash our TV sets and dump our refrigerators and washing machines in favor of new ones?

            Here's another unintended consequence. A close personal friend of mine owns an auto repair shop in Florida. Several of the people who took advantage of Cash for Clunkers were customers of his. As a result of the program, their clunkers no longer need servicing. My friend's shop has been operating in the red ever since. He says Cash for Clunkers is the worst thing the government could have done to his business. He told me the other day he was forced to put his shop up for sale a couple of months ago. He hasn't had any takers nor, in this economy, does he expect any. So he soon will have no choice but to close his doors and send his employees to the unemployment line.   

            As the 112th Congress gets down to business, I sure hope it doesn't try to outdo the 111th in stupid ideas.