Cash for Clunkers: A Failure by Even More Than We Thought it Would Be

In the “I Told You So” file:

Over at the Boston Globe, Jeff Jacoby details the failure of the “cash for clunkers” program. We now have numbers to back up the dire prognostications from the pundits (read Cato adjunct scholar Jeffrey A. Miron’s here). In many cases they are worse than expected: used car prices have risen 10%, we paid an average of $24,000 per sale, and prices on the most affordable vehicles have skyrocketed. Moreover, we paid $237 per ton of CO2 we removed from the air, nearly 12 times the price of a ton of carbon emissions on the carbon credit market.

Anyone with a rudimentary knowledge of economics should not be surprised. The idea that productivity can come from destruction (the broken window fallacy) always returns. But environmentalists, who have generally never been gifted in the economic way of thinking, are sure to label this a success. They’ll cite the incalculable gains to long-term environmental “sustainability.”

Politics is largely pageantry anyways; putting on a good show for the audience matters more than results. The pageant will move forward, ensuring that we have not seen the last of cash for clunkers-type programs.

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