Slate's Gross Loves Cash for Clunkers

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Includes: DIA, F, QQQ, SPY
by: Matt Stichnoth

Daniel Gross says Cash for Clunkers wasn’t just a boon for auto dealers, but also paid a pretty good return” for the economy overall.

Really! A couple of thoughts:

  1. It’s not clear how the deliberate, unilateral destruction of a pile of productive assets (those 625,000 vehicles, at $4,500 a pop, now slated for the sodium silicate treatment) should result in incremental economic growth. I would think that fewer assets would mean, at the margin, less growth. But I am not an economist. Still, even back during Econ 101, I must have missed the something-for-less-than-nothing chapter.
  2. If Gross really thinks Cash for Clunkers has been so great for the economy, why not take the logical next step and argue that the program be expanded. Don’t just pay people to turn in old cars to get trashed; pay em’ to turn in just about anything they own—and not just autos, either. Boats, dishwashers, sectional sofas, you name it. If a small-scale Cash for Clunkers has helped the economy, then a broad-based federal subsidy of the destruction of consumer durables on a grand scale should be just the thing to get it moving once and for all. We could even make it an annual event. I’m shocked Gross didn’t include this insight in his column.

By the way, Gross relies entirely on data and estimates from the National Auto Dealers Association in arriving at his conclusions. Let’s just say NADA isn’t exactly disinterested when the topic turns to federal subsidies of auto sales.

I don’t remember Gross being so credulous about federal economic programs when Bush was president. . . .

Most-charitable possible explanation of Gross column/argument/idiotic conclusion: Maybe he’s on vacation and was in a hurry to get back to the beach. Good for him!. . . .

Second-most charitable: The thrall of Obama is only slowly wearing off at Slate. . . .

In any event, I eagerly await the return of the old Dan Gross. . . .