kertch

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

This is a poorly thought-out, slanted response conflating economics
with socialist ideology. Money doesn't just magically appear at the treasury department (though it semms to at the Fed!). Each dollar you spend on "stimulus" must come from somewhere, and currently it comes from Asia, and it comes at a cost. If this program makes so much economic sense why not expand it? Let's give all new car purchasers $20,000 in rebates, and why not give all home purchasers $100,000 to buy a home? Soon the entire economy will be growing like gangbusters! Right. We'll just end up in the same mess we're in now as soon as China takes away the treasury's credit card. If the average citizen is in debt, how will the government going deeper into debt make the problem better? Those that support this type of economic program are under the impression that a dollar in stimulus yeilds a dollar+ in output. This is only true for a short time. As in our example, the economic boost provided by the cash for clunkers program will stop as soon as the program is over. If there is no underlying economy, boomtowns become ghostowns as soon as the gold runs out. Now listen closely - it's a mathematical fact that OVER TIME a dollar in stimulus ALWAYS yeilds less than a dollar in output. Only a dollar in investment can yeild a dollar+ in real output and a positive return is not a certainty.

The myopic focus on short-term stimulus without accounting for any offsetting future financial penalty, only government cheerleading, displays a lack of any serious critical thinking.

On Aug 01 11:21 AM Marvin Clark wrote:

> This is a poorly thought-out, slanted argument conflating economics
> with political ideology. The suggested $20,000 - $45,000 suggested
> cost per transaction wildly inflated and is disingenuous.
>
> Furthermore, cars do magically materialize into showrooms. They are
> transported from manufactures to dealers, creating jobs. They are
> detailed before being delivered, creating jobs. Salespeople are paid
> commissions; finance workers and offices workers process paperwork,
> creating jobs. Taxes are paid on new transactions. New cars aren't
> purchased and parked in garages. New owners take them out on the
> road and drive them. New owners drive to dinner, visit friends and
> family; take quick trips. They test drive their new purchase. The
> velocity of money increases. By the way, this is the point of the
> program.
>
> We can debate the politics of spending money this way, but to state
> each car purchase can cost up to $45,354, without honestly accounting
> for any offsetting financial benefits, only government bashing, displays
> a lack of any serious critical thinking.

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

What an ignorant answer. Schools, roads, bridges, and other such services are govenment functions that we pay for. Bailouts are not government services. They are just a way to pay off losers with political connections. Stop using that worthless old argument to justify wasting other peoples money.


On Jul 31 04:30 PM KingGeithner wrote:

> Well, then I don't want to help pay for your kid's education, or
> the roads you drive on, or any other service you use from the government
> that I may not be using either.

My U.S. Infrastructure and Employment Plan

iThinkbig:

Yes - exactly. The problem with "big solution" programs is that the powers that be become too attached to them. If they don't perform as expected there are too many careers, egos and dollars invested to pull the plug. Look what happened with the ethanol program. We also see this in the defense department. Billions spent on systems that never work, with billions more spent on trying to salvage them before someone finnally pulls the plug. Deciding on winners before the contest has begun is a costly but all too common mistake.

My U.S. Infrastructure and Employment Plan

Once again: The alternative energy option is high on hope and short on reality. NREL is a government research lab. What do you expect them to say? Cost effective solar and wind are many, many years away, if ever? If they said that, they'd have to start worring about next year's research funding. I'm still waiting for room-temperature super conductors and nuclear fusion. They're also not science fiction either. What research scientists never tell you, and I should know because I was one, is that most "promising breakthroughs" never make it out of the lab due to economics. If you really want to know what wind and solar cost, go to your utility board and ask them. Most utility companies have built alternative energy pilot plants of some sort, and they are NOT scrambling scale them up. Yes, we can make them more competetive by subsidies or by taxing other forms of power, but that will only address the problem of polution not economics. Harnessing hamster wheels could be the cheapest form of energy if we taxed everything else enough. We might have ourselves a nation powered by clean hamster energy, but we would not be competetive with the rest of the world. Remember, large parts of Africa run on clean "human" power, but you wouldn't call them competative economies.
Right now we have to "bridge" ourselves to other energy sources, and it's a great idea to continue heavily funding research into alternative energy sources, something that past admininstrations failed to do. Wind and solar are not ready for primetime without subsidies. So rather than pick the winners why not open the field to all competitors? If biofuels can do it, go with biofuels, if nuclear can do it, go with nuclear, if tidal power is the answer, go with that. All will have thier benefits and their problems and each solution may be different depending on their location and environment. For right now we need to back the fastest things that will get us off oil, because if you think the last oil spike was bad just wait for the next one.

My U.S. Infrastructure and Employment Plan

Interesting, but I've heard all these things before. There are some good ideas and some "less good" ideas.

1) Renewable energy development
This one always sounds great - like it did in the Carter years. However, alternative energy just isn't economical yet. As an engineer I've studied some of these alternative energy projects and once you calculate the cost and efficiency of the entire plant it turns out to be more expensive than traditional sources of power. As for a polution tax, that will encourage the use of cleaner power but we'd just end up paying for it with higher power bills. How many energy intensive industries will chosse to remain in the U.S. when ultra-cheap coal power is available in China and elsewhere? How will that create "lots of high paying jobs". To initiate and maintain high levels R&D is a good thing, but a solar, wind, and geothermal infrastructure build-out is premature.

2) Power grid enhancements
An absolutely essential task. Our current electricity grid is stretched to the limit. This is truely a massive problem and needs immediate attention.

3) Housing redevelopment
After the worlds biggest residential building binge the idea of redeveloping neighborhoods in the inner city while entire tracks of houses sit vacant in the suburbs sounds crazy. Maybe all the suburbanites who lost thier homes because they couldn't pay thier mortgages will move back to these new redeveloped neighborhoods and buy these houses. Right..... The solution to a hangover is not another binge.

4) Highway and bridge construction
Here's another piece of badly undermaintained infrastructure. The amounts of money we should be spending here are in themselves a "stimulus package". The American Society of Civil Engineers estimate that to maintain our exististing transportation infrastructure and expand it to meet future demands will require $300B per year... for the next 50 years!

5) Transportation - non oil based US vehicle fleet
This is another good one, but the rapid change to non-oil based is going to take a long time. The electric part will probably happen first, but trying to choose which fuel should replace oil is just a little too statist for me. So is the idea of banning oil altogether. Perhaps the best way would be to develop an engine technology (for example a gas turbine engine) that could burn any type of gaseous or liquid fuel. That way we will never be at the mercy of a monopolistic transport fuel like we are with oil today.

6) Ford and GM Reinvestment Plan
Why don't we just merge Ford, GM, and Chrysler and call it "The Federal Department of Automobile Design and Manufacture", since this plan would essentially nationalize them. Now some of you "sticklers' will say that it's not actually nationalization, but let's get real. How "private" is an enterprise when the government funds it, tells it what to produce, and manages it's labor relations. When no one wants to buy these government mandated cars and trucks we just add it to the federal budget deficit. Problem solved! Meanwhile Honda, Toyota, and BMW, and others will come out with their own versions which people will actually want to buy, while the govenment will be subsidising these obsolete companies for years.