Wednesday, September 16, 2009

Cockamamie Cash for Clunkers

From an email circulating on the Internet:
  • A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline
  • A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year
  • So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year
  • They claim 700,000 vehicles so that's 224 million gallons/year
  • That equates to a bit over 5 million barrels of oil
  • Five million barrels of oil is about 1/4 of one day's US consumption
  • Five million barrels of oil costs about $350 million dollars at $75/bbl
  • Therefore, we all contributed to spending $3 billion to save $350 million
I will add
  • Most of the new vehicles sold were not domestic brands
  • The environmental impact to destroy the clunkers and build and operate the new vehicles may exceed that of running the clunkers for their normally expected lifespan
  • Destroying these older vehicles puts them out of the grasp of lower income families
  • Government significantly hurt the used car industry in a predictably misguided and futile attempt to "stimulate" the economy and "help" the environment
While I haven't run the numbers myself, they are close enough to convince me that this is one of the most cockamamie schemes ever dreamed up by any government. It had no beneficial effects; it was pure negative side effects. I think this proves beyond a shadow of a doubt that we are living in a kakistocracy.

Politicians, if you're going to screw things up this badly, I think it's best if you just step away from the controls.

1 comment :

  1. Nice piece, nice blog. Came over here from GOC and will check back in the future.
    Most of us with even the barest inkling of how the economic theory of supply and demand works could see this coming. Since I don't watch TV, I couldn't say if the media have covered the reports of the tanking used car market, but if they do mention it you can be sure that it won't get the same amount of coverage that was given to the idiotic dotGov program that brought about this mess.

    Rob J


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