Cash for Clunkers in Action

I watched quite a few of those videos. As someone who grew up around a gas station, I can certainly understand the upsetment of the mechanics who had to destroy perfectly good cars.

The level of waste is bizarre and totally disgusting. :

What were they thinking? Who concocted this idea of CFC?

Yes, every use of the F-word was entirely justified. Billions added to our national debt to destroy good cars. As idiotic as the Republican congress was, the current congress is incredibly irresponsible.

David Henderson,

Many thanks for posting this.

This is a great update of the “broken window fallacy” for modern times. Maybe there’s a whole generation of “car guys” who’s learning to have a deep skepticism of government schemes. We can only hope.

That video–with dialogue that couldn’t be more perfect if it were scripted–is an instant classic.

C4C Hurts Charities and Developing World, Increases Pollution, Wastes Energy and Resources

August 18th.
LUCAS DAVIS and Matthew Kahn suggest that you can’t judge America’s cash for clunkers policy without considering its international impacts—and its international impacts are troubling:
“Cash for clunkers” programmes can reduce carbon emissions both in the US and abroad, though at a high cost to consumers in developing countries. Because retirement rates are lower in low-income countries, imported vehicles may be driven for years while such vehicles would be scrapped under the cash for clunkers programme. This programme effectively raises the price of used vehicles in developing countries.
In addition to affecting greenhouse gas production, the “cash for clunkers” programme also affects average vehicle emissions in importing countries. If the exported vehicles are dirtier than the average vehicle registered in the exporting nation but they are cleaner than the average vehicle registered in the importing nation, then trade in used vehicles will reduce average vehicle emissions in both countries.
In our new paper…we document evidence of this trading pattern…Our NAFTA research has documented that the US is exporting relatively high-polluting vehicles to Mexico but that these vehicles are cleaner than the average vehicle currently registered in Mexico. This suggests that trade lowers the average vehicle emissions in both countries. Since Mexico’s total base of registered vehicles is much smaller than the US, the composition shift is much more quantitatively important for Mexico than it is for the US.
The authors note that the net effect of the policy on total greenhouse gas emissions depends on several behavioural responses; will developing nation residents respond to an increase in used car prices by driving older and dirtier cars longer, by not driving, or by purchasing a new vehicle? Will Americans respond to the programme by simply driving more? As an environmental policy, the effect of cash for clunkers is far from clear and may well be counterproductive.