# Cash for Clunkers - Destroying Wealth **URL:** \ **Category:** Great Debates\ **Created:** [August 1, 2009, 4:00am UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959 "2009-08-01T04:00:05Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 1, 2009, 3:44pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/41 "2009-08-01T15:44:41Z")
And of course they will sell the raw materials oversees thus depleting the American mineral wealth. At a time when the price of many metals is at a low. Yeah, great plan. :rolleyes: ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [August 1, 2009, 3:48pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/42 "2009-08-01T15:48:24Z")
> [@Grumman](#): > > The people whose money is being spent don’t. They lose $4,500, and in exchange get a POS car worth less than a quarter of that. > > Please look up the Broken Window Fallacy. The broken window fallacy is not applicable here - we’re talking about government spending that has multiplier effects (new car manufacturing improves) and externality effects (possible pollution abatement) not some lowly shopkeeper who needs to take it on the chin to support everyone else. I means every piece of government spending is a broken window then (i.e. well if we didn’t have to fund the war in iraq, we could use that money elsewhere), which renders it irrelevant when discussing the public policy goals of the program. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [August 1, 2009, 3:48pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/43 "2009-08-01T15:48:24Z")
> [@fruitbat](#): > > I am just floored sometimes by the responses here. Welcome to my “every day.” > [@](#): > > I can’t help but feel that this is another case of people who don’t pay a lot of taxes (lower income, students etc . . .) being complacent about the cost of programs like this. Welcome to the SDMB… But seriously, I agree with you and Sam Stone. This is a silly and ignorant program which is…well hell, I can’t even describe what it is other than what I said. Even if you take at face value the goals of it, the mandated mileage improvements needed are lame. I would have mandated the new vehicles have more than 35mpg city / 40 mpg highway, rather than relying on a % improvement. And if the goal is to help people who are having trouble with money, then I would have supported a different program - giving money to lower-income folks for: - vehicle tune-ups (fuel injection, spark plugs, TPS, ICV, CSS, etc.) - new tires - fixing/replacing clogged catalysts and leaking exhaust systems - fixing evaporative emissions control systems - miscellaneous inspections and repairs for improved fuel economy That few billion dollars could have paid to fix a damn lot of cars and I’ll wager would have improved net aggregate mileage and reduced CO2 emissions at least as much as this white elephant of a program. ESPECIALLY if you factor in the CO2 emissions cost of building the new vehicles (something I never once saw the Congress or Obama mention, but then how many actual scientists and engineers are in Congress? More or less than 5?). And hey, it’s still a handout to the auto industry, in that auto dealers would likely get a large amount of the tune-up and repair money. But foremost, although I list it finally, it has the added advantage of not destroying assets. It’s disgusting to me from an energy management and asset optimization standpoint to see a working vehicle, with its investment of energy, CO2, and resources trashed. It’s a textbook example of a throwaway Society. I think it’s a shameful program and I’m disappointed that more aren’t speaking out for smarter alternatives. ---
**Author:** ![silenus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/silenus/32/166_2.png) [@silenus](https://boards.straightdope.com/u/silenus)\ **Post date:** [August 1, 2009, 3:58pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/44 "2009-08-01T15:58:28Z")
> [@Una\_Persson](#): > > That few billion dollars could have paid to fix a damn lot of cars and I’ll wager would have improved net aggregate mileage and reduced CO2 emissions at least as much as this white elephant of a program. Yes, but that wouldn’t have benefited the auto industry, which was the point of this whole fiasco. The public wouldn’t support another bail-out, so they slapped a coat of paint on it and called it “Cash For Clunkers” rather than “Let’s bail out GM while we’re at it.” ---
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [August 1, 2009, 3:59pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/45 "2009-08-01T15:59:25Z")
> [@mswas](#): > > And of course they will sell the raw materials oversees thus depleting the American mineral wealth. > > At a time when the price of many metals is at a low. > > Yeah, great plan. :rolleyes: This is actually what I was wondering about. Are you saying “of course” on assumption or are you sure they’re doing that? Anybody know the approximate value of the raw materials of a car, in a high market? I’m sure it’s not $4,500, but I could imagine it being a significant percentage of that in the right market. If we held on to this stuff for awhile, I could see us using it to pay down some of our debt to China. Of course, that would probably make it a net burden on the environment, but Johnny Public won’t make the connection. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [August 1, 2009, 3:59pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/46 "2009-08-01T15:59:37Z")
> [@Sam\_Stone](#): > > This is simply a massive destruction of wealth. The government is encouraging people to turn in valuable assets, which will then be destroyed. The government is actually requiring that the cars be turned in to salvage, and that the salvage operators MUST destroy the engines, transmissions, and other drivetrain components so they cannot be re-used. > > This is idiotic in the extreme. I understand the rationale - to get rid of older, fuel guzzling autos to increase the fleet average fuel economy. But come on… Is it really worth destroying so many assets? It destroyed wealth, but the reality is that this happens all the time, and in this particular instance, it doesn’t cost too much. The other thing is that the program allows the other parts of the car to be sold, so presumably, it isn’t a total loss. Of course the engine would need to be destroyed if we want to take these inefficient vehicles off the road. > [@Sam\_Stone](#): > > The unintended consequences of this could be pretty bad. For example, poorer people absolutely depend on the used car market to provide their vehicles. Especially hard hit would be blue collar workers who need pickup trucks, as almost all the older pickups are on the cash for clunkers list. As they are bought up and destroyed, the prices of the existing ones will go up. Why would the prices of existing used cars go up? Won’t there be fewer potential buyers and potential sellers? > [@Sam\_Stone](#): > > At the heart of this is an economic fallacy - the bright idea here is that two birds will be killed with one stone - get rid of the worst gas guzzlers, and stimulate demand for new vehicles. This is thought to improve the economy. But ultimately, the wealth of a country lies in the sum total of its durable goods and its services. The wholesale destruction of a good chunk of a country’s auto fleet is not a good thing. Well it’s far too soon to tell what the ultimate outcome will be. If this program stimulates spending, provides people with jobs, and lessens our dependence on foreign oil, I think it will be undoubtedly positive. It won’t necessarily be reflected on the government’s balance sheet, but society will be better off. My question to you is how you would change this program, or what you would propose to accomplish the same goals? ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [August 1, 2009, 4:04pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/47 "2009-08-01T16:04:42Z")
1. Government program will destroy some wealth. 2. ??? 3. Government program is therefore a terrible _net_ waste. The best #2 offered so far is: “That few billion dollars could have paid to fix a damn lot of cars and I’ll wager would have improved net aggregate mileage and reduced CO2 emissions at least as much as this white elephant of a program.” Well, I wager that Jupiter is made of cheese! Seriously, if you want to make an argument about this program, you’re going to have to estimate how much pollution it will reduce and the various other benefits and weigh them against the costs. No critic yet has even attempted to do that. This “my gut tells me the government must be wasting money but I won’t bother to look up any figures” analysis is only convincing to other people pre-disposed to believe your position. ---
**Author:** ![Rubystreak](https://avatars.discourse-cdn.com/v4/letter/r/e5b9ba/32.png) [@Rubystreak](https://boards.straightdope.com/u/Rubystreak)\ **Post date:** [August 1, 2009, 4:09pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/48 "2009-08-01T16:09:24Z")
> [@silenus](#): > > Yes, but that wouldn’t have benefited the auto industry, which was the point of this whole fiasco. The public wouldn’t support another bail-out, so they slapped a coat of paint on it and called it “Cash For Clunkers” rather than “Let’s bail out GM while we’re at it.” This is what I was about to say. Isn’t this program a backdoor way of propping up the flagging auto industry? The people who got the $4500 can now put a pretty big down payment on a new car, and will likely need to. That generates revenue for the auto makers, sales tax revenue, and helps out the banking industry, since likely most people will need a loan to buy a new car. Car insurance costs more for a new car, so they’ll make more money too. It’s a kind of economic stimulus program, with the side effect of getting inefficient cars off the road. That’s my take on it, though I don’t feel qualified to say if it’s overall good or bad for the economy. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [August 1, 2009, 4:13pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/49 "2009-08-01T16:13:57Z")
> [@Cisco](#): > > Anybody know the approximate value of the raw materials of a car, in a high market? I’m sure it’s not $4,500, but I could imagine it being a significant percentage of that in the right market. Let’s see… In 2008 the price of aluminium peaked at $1.45/lb A ton of “Hot rolled steel plate” had a max price of 0.75 per lb from 2004-2009 average weight of a car in 2003 ~4000 lbs lets say there’s 500 lbs of aluminum (no clue, just guesstimate) $725 3500 lbs of steel (gross overestimate, given that not 100% of the car is steel) $2625 i’m confident that plastic and rubber are cheaper than steel. so something like 3300 bucks. that’s before the time and expense you take extracting the raw materials from the automobile and ensuring they’re safe for re-use (no metal stresses, etc.) which is probably _very_ expensive. then you have to prep the metals for re-use and expend energy to make a new plate of steel. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [August 1, 2009, 4:15pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/50 "2009-08-01T16:15:09Z")
> [@Richard\_Parker](#): > > Well, I wager that Jupiter is made of cheese! > > Seriously, if you want to make an argument about this program, you’re going to have to estimate how much pollution it will reduce and the various other benefits and weigh them against the costs. No critic yet has even attempted to do that. This “my gut tells me the government must be wasting money but I won’t bother to look up any figures” analysis is only convincing to other people pre-disposed to believe your position. Then why don’t you run the numbers yourself for both scenarios and show us what you find out. Since otherwise by your own qualifiers you won’t convince anyone pre-disposed against the program. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [August 1, 2009, 4:15pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/51 "2009-08-01T16:15:50Z")
> [@Rubystreak](#): > > Isn’t this program a backdoor way of propping up the flagging auto industry? It’s not a backdoor - this was a stated purpose of the program from the get go. Read blinder’s article [http://www.nytimes.com/2008/07/27/business/27view.html?ex=1374811200&en=a19470300b516a2f&ei=5124&partner=permalink&exprod=permalink](http://www.nytimes.com/2008/07/27/business/27view.html?ex=1374811200&en=a19470300b516a2f&ei=5124&partner=permalink&exprod=permalink) ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [August 1, 2009, 4:29pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/52 "2009-08-01T16:29:40Z")
> [@Una\_Persson](#): > > Even if you take at face value the goals of it, the mandated mileage improvements needed are lame. I would have mandated the new vehicles have more than 35mpg city / 40 mpg highway, rather than relying on a % improvement. But how realistic is that? If nobody participates in the program, it doesn’t do _any_ good. Not everyone can or will drive a car with that kind of gas mileage until the price and specs are right. Plus, this program works in conjunction with other federal, state, and local for hybrid vehicles, etc. This is to supplement those, and to stimulate spending. > [@Una\_Persson](#): > > And if the goal is to help people who are having trouble with money, then I would have supported a different program - giving money to lower-income folks for: The program is not to help people having trouble with money. Do poor people typically buy new cars? > [@Una\_Persson](#): > > - vehicle tune-ups (fuel injection, spark plugs, TPS, ICV, CSS, etc.) > - new tires > - fixing/replacing clogged catalysts and leaking exhaust systems > - fixing evaporative emissions control systems > - miscellaneous inspections and repairs for improved fuel economy > > That few billion dollars could have paid to fix a damn lot of cars and I’ll wager would have improved net aggregate mileage and reduced CO2 emissions at least as much as this white elephant of a program. ESPECIALLY if you factor in the CO2 emissions cost of building the new vehicles (something I never once saw the Congress or Obama mention, but then how many actual scientists and engineers are in Congress? More or less than 5?). You may be right about your suggestions, but how much fraud do you think there would be if you tried to pay out to every independent auto repair person? How do you structure or control a system like that? At least with auto dealerships, there is a (generally) legitimate entity capable of dispersing this money in a relatively orderly and honest fashion. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [August 1, 2009, 4:36pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/53 "2009-08-01T16:36:23Z")
> [@brickbacon](#): > > You may be right about your suggestions, but how much fraud do you think there would be if you tried to pay out to every independent auto repair person? How do you structure or control a system like that? At least with auto dealerships, there is a (generally) legitimate entity capable of dispersing this money in a relatively orderly and honest fashion. You forget that government always works flawlessly and maximally efficient to conservatives when it engages in micromanagement of items that they ideologically endorse - like a defense budget, like paying small business owners to repair cars - and it is always corrupt and inefficient when it engages in micromanagement of items that they are ideologically opposed to - like medicare. ---
**Author:** ![fruitbat](https://avatars.discourse-cdn.com/v4/letter/f/58f4c7/32.png) [@fruitbat](https://boards.straightdope.com/u/fruitbat)\ **Post date:** [August 1, 2009, 4:40pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/54 "2009-08-01T16:40:23Z")
> [@Rumor\_Watkins](#): > > You forget that government always works flawlessly and maximally efficient to conservatives when it engages in micromanagement of items that they ideologically endorse - like a defense budget, like paying small business owners to repair cars - and it is always corrupt and inefficient when it engages in micromanagement of items that they are ideologically opposed to - like medicare. I can assure you that I neither want a massive defense budget or to pay anyone to repair cars, unless it is my car. Is the concept of not spending money unless it is absolutely necessary that foreign. Would anyone care to knock on my door and ask me for $4500 so they can buy a better car? I wouldn’t give my family that, and I am certainly not giving a stranger that money. Taking it from me by force for a benefit that seems hazy at best is outrageously wasteful. I also have to point out that Una’s post is being misinterpreted. She suggested that if you absolutely had to spend the money for this purpose there are better ways to do it. I think I can speak for us both in saying that people should buy their own cars. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [August 1, 2009, 4:42pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/55 "2009-08-01T16:42:16Z")
> [@fruitbat](#): > > I also have to point out that Una’s post is being misinterpreted. She suggested that if you absolutely had to spend the money for this purpose there are better ways to do it. I think I can speak for us both in saying that people should buy their own cars. There has been a gross mischaracterization of the C4C program. It’s, at its heart, a stimulus program with an externality of lowered emissions. It’s not an emissions control program with an externality of helping out Chrysler. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [August 1, 2009, 4:44pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/56 "2009-08-01T16:44:13Z")
The OP overstates the matter a bit. The cars must be disabled by running a sodium silicate solution through the engine. See page 127 of this PDF ([http://www.cars.gov/files/TheRule.pdf](http://www.cars.gov/files/TheRule.pdf)). That means that the “wealth” being destroyed here is only a fraction of the total value of the car. Many, even most all, parts and materials will still be salvagable from the vehicles. Now, as one who has spent a fair bit of time finding replacement parts and repairing older cars, a part of me dislikes the concept of not recycling all of the vehicle, but I am also in favor of reducing the pollution levels within the overall public fleet of vehicles. ---
**Author:** ![fruitbat](https://avatars.discourse-cdn.com/v4/letter/f/58f4c7/32.png) [@fruitbat](https://boards.straightdope.com/u/fruitbat)\ **Post date:** [August 1, 2009, 4:45pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/57 "2009-08-01T16:45:35Z")
> [@Rumor\_Watkins](#): > > You forget that government always works flawlessly and maximally efficient to conservatives when it engages in micromanagement of items that they ideologically endorse - like a defense budget, like paying small business owners to repair cars - and it is always corrupt and inefficient when it engages in micromanagement of items that they are ideologically opposed to - like medicare. Sorry one more. Government is by its nature inefficient. That is why you don’t have it do things that efficient organizations could or would do. Surely you can see that we can’t privatize defense, but automobile manufacturers and dealers have done a wonderful job matching buyer to seller for nigh upon a hundred years now. Why exactly are we fucking with this system in the most egregious way possible again? What is so offensive is that government is creating winners and losers in the marketplace. Ford gets hosed by not picking up GM’s business when it goes under. Scrap metal dealers get hosed by depressing metal prices. The scariest thing is that when you intervene to this extent you can’t even predict who you are going to screw. I guess as long as you aren’t a Ford shareholder or a scrap metal dealer it doesn’t much matter. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [August 1, 2009, 4:47pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/58 "2009-08-01T16:47:16Z")
> [@fruitbat](#): > > I can assure you that I neither want a massive defense budget or to pay anyone to repair cars, unless it is my car. Is the concept of not spending money unless it is absolutely necessary that foreign. If the US economy and the state of the environment rested on your shoulders alone, your logic would be sound. Alas, it does not. > [@](#): > > Would anyone care to knock on my door and ask me for $4500 so they can buy a better car? I wouldn’t give my family that, and I am certainly not giving a stranger that money. Taking it from me by force for a benefit that seems hazy at best is outrageously wasteful. What if they knocked on your door and asked for a quarter to improve the overall economy and the overall environment? Would that be reasonable? It’s a bit closer to reflecting the true nature of the issue at hand. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [August 1, 2009, 4:47pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/59 "2009-08-01T16:47:50Z")
> [@brickbacon](#): > > But how realistic is that? If nobody participates in the program, it doesn’t do _any_ good. Well shoot, by definition if no one participates in any program, then the program fails. What’s the argument here? > [@](#): > > Not everyone can or will drive a car with that kind of gas mileage until the price and specs are right. What do you mean? Who _can’t_ drive a 35 mpg car, like a VW Passat? Are you talking about physical size or something? I’ve heard in the past some make the argument that modern mothers “need” an 8-seat SUV to transport their 2.5 kids and 1.5 black Labradors. Oddly, we all got along just fine in the 1970’s in Toyota Corollas and Honda Civics, and our family structures were not so fragile and balanced on a Pleasant Valley keeping-up-with-the-Jones’ knife-edge as to explode into a scene from _Hillbilly Cops_ if we were a little crowded at times. > [@](#): > > The program is not to help people having trouble with money. Do poor people typically buy new cars? Having trouble with money != poor. > [@](#): > > You may be right about your suggestions, but how much fraud do you think there would be if you tried to pay out to every independent auto repair person? No more or less fraud than there is with the current DoE rebates on new windows, doors, home insulation, and HVAC upgrades possibly. Or for home business deductions. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [August 1, 2009, 4:50pm UTC](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959/60 "2009-08-01T16:50:42Z")
> [@fruitbat](#): > > I also have to point out that Una’s post is being misinterpreted. She suggested that if you absolutely had to spend the money for this purpose there are better ways to do it. I think I can speak for us both in saying that people should buy their own cars. Precisely. If the government is bound and determined to spend the money, there are more environmentally sound ways to achieve the stated goals. [Previous page](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959.md?page=2) [Next page](https://boards.straightdope.com/t/cash-for-clunkers-destroying-wealth/504959.md?page=4)