| | The media has been hyping the Obama Administration's "Cash for Clunkers" policy, otherwise known as the Car Allowance Rebate System (CARS), by which used-car owners are encouraged to trade in their clunkers to a dealer in exchange for a $3,500 to $4,500 rebate, which can then be applied toward the purchase of a new, more fuel efficient automobile. But what may not have been so widely reported is the toll the program is taking on second-hand car dealers who can't compete with the government's $4,500 price tag, plus the toll it's taking on poor people for whom the opportunity to buy a good used car at a cheap price is drying up.
Used-car dealers are being driven out of business, because people are now selling their used cars to dealers who are required to destroy these perfectly good serviceable automobiles, thereby dramatically reducing the supply and availability of used cars and denying low-income people the opportunity to own a set of wheels. The whole point of the program is to get fuel-inefficient vehicles off the road, which means that the engines have to be destroyed. Reducing the availability of used-cars does, of course, drive up their prices, putting them out of reach for many poor people -- the very folks the Obama Administration makes such a point of wanting to help.
This reminds me of the farm price support program whereby farmers are paid to destroy perfectly good food in order to drive up farm prices. The ostensible purpose of the CARS program is to help the environment and serve as a stimulus to American automakers, but it turns out that there is likely to be very little if any reduction in pollution from the program, and the stimulus to American automakers may be insignificant if buyers purchase Japanese cars instead of American.
Then, of course, where does the government's rebate money come from? It comes from you, the taxpayer, who must foot the bill for yet another stimulus scheme designed to help bail out businesses who can't compete successfully in a free economy. So, used-car dealers who can compete successfully and are in turn providing a much needed product to low-income buyers, are being put out of business in order to help American automakers who cannot compete successfully and are catering to a much wealthier segment of the market.
And that, my friends, is justice, Obama style! Don't you just love it?!
- Bill
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