from Coyote Blog by admin
I have written a lot about the Cash for Clunkers law, and the fact that it was a hit with its beneficiaries because it bought cars that blue-booked for just under $1500 for two or three times that amount. Other studies have shown that the program did abate some CO2, but at ridiculously high prices per ton.
But I have found a reason to love the Cash for Clunkers program: it is a fabulous demonstration project for just how utterly pointless government stimulus programs can be. Stimulus programs tend to be hard to evaluate in our complex economy — sort of like trying to calculate the effect of a butterfly flapping its wings on world climate. But since cash for clunkers only lasted a few weeks and hit only one industry, we can learn a lot about the effectiveness of government stimulus.
Here is the US Census data for auto dealer sales (source). Thanks to my friend Scott who first pointed me to the analysis:
The dotted line simply averages the sales for the month of the clunkers program and the month after. I think it is pretty clear that we spent a few billion dollars making some used car owners happy (by overpaying for their vehicles) but did absolutely nothing to move the trend line in auto sales, as the program appears to have just pulled forward purchases rather than stimulated new ones.
https://feedproxy.google.com/~r/CoyoteBlog/~3/HuFNIdSa5f0/stimulus-was-a-clunker.htmloldId.20100603180633620
This article and assessment are completely wrong at best, and dishonest at worst.
Take a look at the actual census data here : https://www.census.gov/retail/#mrts
The trend that is described as a "pull[ing] forward purchases" indicated by a lull in sales on the graph after the program ended was a completely reasonable expectation considering that people hesitated in the hopes that the program would be restarted. However, even more likely is that that the program ended at the end of August which is the typical time of year when car sales drop. It’s the model year change and people wait for the new model year or wait for price reductions in the late model cars. Take a look at the data for other years. Car sales nose dive every year, starting in September.
FWIW, at no point in 2009 do ADJUSTED car sales even drop to 47 million dollars like that chart indicates. I think our bro was looking at non-adjusted sales.
You can be anti-car and still be honest when assessing the success of the program. Besides, there are far better arguments to make if you’re trying to point out the failure of that program.
Anyway, check out the cars people traded in and the cars purchased: https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System#Economic_effects
Why don’t you point out the positive trend of compact car purchasing?