Clank The Door On "Cash For Clunker"

Well tomorrow is the end of the ignominious “Cash For Clunkers” – an unmitigated flop in my book.

It sold some new cars – no question about this, and that helped some dealers move inventory.

Selling cars was never the real goal as I see it. It was just another way for government to  interfere with the market and gain more control over people’s lives. It created some temporary jobs, but we’ll get back to that one.

Here’s what went wrong.

First, the market was manipulated so that people who may have wanted a new car in the next 3-4 years were pulled out of the market and sold a new car now. What happens to that evaporated demand? What about people who were enticed into buying a new car who weren’t capable of it financially?

Second, perfectly good cars – in many cases – were permanently destroyed when there were many people in this country that would love to have bought an upgraded car or a second car. There were people that needed inexpensive transportation that weren’t allowed to get it and will have difficulty in the future because a large part of the supply of those cars is gone.

Third, the dealers are still waiting for their money from the government because they had to advance it for the $4,500 discounts. My guess is that many will never be paid, and they are prohibited from repossessing the cars that they were required to deliver as well.

Fourth, the jobs. Jobs were artificially created to manage a made-up, unnecessary program. Dealers had to hire people just to fill out the government-required applications on each purchase. Then many applications are kicked back to the dealer for more work. Additionally, people had to pour the glass into the motors to disable them and get the cars ready for the graveyard.

To paraphrase Shakespeare, this was a case of way to much to do about nothing. It also was a huge blow to free enterprise.

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