In both these cases, the owner decides that the value of a new TV exceeds the cost of the new TV, plus the current value of the old TV. If you were also paying the owner $100 to switch, you’ve skewed the results. If the values are such that:
new TV + $100 > old TV + cost of new TV > new TV
then the owner will likely choose the option that makes him better off, but the overall effect is negative.
If you give me free money to buy Twizzlers, you can’t really measure success on my Twizzler purchasing habits 
Because some people have a $200 per day cocaine habit is not a reason to give kudos to people who only have a $75 per day cocaine habit. I don’t drive a Prius, I drive a car that gets 20mpg. That’s pretty poor. If gasoline conservation is the goal, it is silly to give a subsidy to someone who purchases a truck or SUV that gets 19mpg who doesn’t need a truck or SUV.
I’m not talking about personal choice. They can drive whatever they want as long as they pay for it, but don’t give a government subsidy under the guise of getting better gas mileage to someone driving a 19mpg car.
Less supply+Same demand=higher price. Poor people, especially those with bad credit and can’t finance a new car will get screwed here.
Guys, its really simple.
All government programs suck and don’t work.
C4C is a government program.
Therefore, C4C sucks and doesn’t work.
Voila! The thought process of the modern right-winger in 3 easy steps.
I was simply attempting to say that the argument that because there is demand for the program, it is therefore successful.
It’s not a good analogy. The iphone doesn’t fail as a product because there were activation problems in the early days, just like the cars aren’t a bad product because the government can’t handle the load of handing out the rebates properly. The launch of the iphone was clusterfuck, similarly the issue of dealing out rebates.
This does not mean the iphone/cars themselves are defective.
Because the program only postulated some very crappy minimum requirements. If everyone getting rid of an 18mpg vehicle got a 22mpg vehicle, would you still feel the program was a success? Did this not happen because the program design prevented it from happen - or just because the consumers happened not to want to replace their old gas guzzler with a new one that’s slightly less guzzling?
It must be nice living in your easy world of strawmen.
Did anyone hear say anything remotely like you said?
I, the person here most willing to buck the groupthink, am not even a right winger. WAIT! HOW CAN THIS BE? My 1 dimensional world view where people are either neatly right or left wingers, and therefore are evil and stupid or smart and clever can’t handle this idea!
I offered specific criticisms of the program, but conceptually and in its implementation. If there’s any blind advocacy going on here, as your strawman implies, it’s coming from the people who support the program. They refuse to acknowledge any flaw - from conception, to implementation, to execution. If you find any flaws with the idea that you can upgrade from an 18mpg to 22mpg vehicle, but don’t qualify if you want to trade in your 20mpg vehicle for a 45mpg vehicle, well, that’s just being hypercritical!
No one in this thread has blindly attacked the program based on the assumption that government can never get anything right. People have come much closer to blindly defending the problem under the assumption that the government can do no wrong.
I know who administers the plans. But if you think Part D is a failure, I’d like to know what you think are the three largest, most successful government programs.
Fair point. So was the launch of the iPhone a failure because it was not without hitches? Looking back, when I bought my iPhone 3G a few days after it came out, there was a lot of confusion, there was a long wait… and, it makes no difference. I got my iPhone, Apple got its money, and the headaches were temporal. What does that say about Cash for Clunkers?
Your point about 20 mpg vehicles not being clunkers is a difficult one. Do you believe that a 20 mpg is a clunker? How do you define clunker? You realize, of course, that the line on what a clunker is had to be drawn somewhere, and just like many decisions in life, the line is drawn in a manner so that close cases may lose out. If you think a 20 mpg car should be a clunker, what about a 21 mpg car? or 23? If 23, why not 24? Or would you be happier if a clunker was defined as a 14 mpg vehicle?
Finally, I ask: is perfection sometimes the enemy of the good?
Depends on how it goes from here on out.
From here:
Will businesses that acted in good faith end up getting stiffed due to the mess they’ve made of the logistics? The issue is by no means resolved yet, and how soon and how reasonably they resolve it will reflect on how gigantic a clusterfuck it is.
The law would be more logical to me if it demanded a certain increase in gallons per mile. Not miles per gallon - in MPG, going from 10 to 16 is a bigger gas saver for the same amount of milage than going 22 to 35 (the math detailed in the other thread on the issue). Having someone get a rebate for upgrading from 16 to 22 but not someone who went from 20 to 45 seems absurd to me.
In this case, I’d probably oppose it either way. The idea of scrapping usable machines is such a waste. But if they made the rules more consistent and logical, my objection would be relatively less.
If you encourage me to buy a new TV by throwing my old one into a landfill, thus ‘stimulating’ the production of a new TV, then yes, you have hurt the economy. In the end, there’s still one serviceable TV, but the resources used to build the new one were not available to build something else. This is called an ‘opportunity cost’.
Let me ask you - if you borrow money to pay 1000 people to dig a big hole, then borrow more money to pay 1000 more people to fill it in, have you hurt the economy?
In the case of the car, it’s true that you’re getting a new car and destroying one that’s less valuable. But that doesn’t change the essential nature of the transaction. Let’s say the original car was worth $4000. You destroy it, then entire the person to buy a $20,000 car. The net increase to the economy is $16,000, but you used up $20,000 in assets to provide it.
The effect of this isn’t seen immediately, because the money is borrowed. But this is money that has to be paid back. At some time in the future, $4500 will be taxed from someone, and that person won’t be able to use that money to build or buy new things.
The only way you can make this work is to assume a ‘multiplier’ in the original spending. But a program like this starts out in a big hole because the multiplier has to make up for the $4000 asset loss before the program even breaks even.
Again… If the CRT is just as good as the LCD, then yes, the economy suffers. In the CRT/LCD case, at some point the energy cost of the CRT and the maintenance cost and cost of desk space and all the rest overwhelms the residual value of the CRT, and then it makes sense to replace it. Note that companies didn’t need to be offered cheques to do this.
You seem to be making the argument that you can just destroy anything you want, and so long as you borrow money to replace it, the economy isn’t hurt. That really is crazy thinking.
As I said… If all the resources that are employed with stimulus money are truly idle resources, you have a point, at least to an extent. In this case, that simply isn’t always true. Even if the factories are below capacity, the raw materials are in demand - China is still growing fast, and using up a lot of steel and rubber and copper and other raw materials. Increasing demand for those raw materials crowds out other uses. This may not eliminate the multiplier, but it cuts into it. It’s one reason why a real-world multiplier won’t be as high as the theoretical multiplier.
No, but again not all cars are the same. If the stimulus keeps some factories open that should close (i.e. most of Chrysler’s), then the stimulus has a larger negative after-effect.
Also, speaking of cars not being the same - 4 out of 5 of the top cars being bought are foreign brands. Granted, a lot of them are also made in the states, but every one of them that is imported cuts into your multiplier, because the money is sent out of the country and stimulates the economy of Germany or Japan instead. With American taxpayer money.
No, the study was done on the effect of the massive military buildup in WWII. It was specifically testing the multiplier effect against a much worse economy, which started out with unemployment around 20%. The government mainly used the money to build new factories to produce war machinery.
The burden of proof shouldn’t be on me - it should be on those who advocate taking more taxpayer money for clever schemes.
Not necessarily better enough to warrant spending $4500 per car of borrowed money. You keep ignoring the cost side - if you ignore costs, you can justify anything.
Absolute rubbish! A lot of these economists are absolutely mainstream, working economists. You’re basically saying that if an economist doesn’t agree with with the administration, that makes him by definition ‘partisan’ and not worth listening to. That’s the kind of thinking that allows you to ignore all evidence not inside your little echo chamber.
I can’t find the exact quote right now, but later in his life Keynes changed his mind specifically regarding counter-cyclical fiscal stimulus, for purely practical reasons. He didn’t believe government could time fiscal spending correctly, or target it correctly.
I don’t disbelieve in multipliers. I have explained at great length their theory, why they might work, and why they might not. My position is that the multiplier you get very much depends on how and where you spend the money, and that in the real world there are many effects which will cause the multiplier to be smaller than pure theory would suggest, and in extreme cases there won’t be one at all.
There’s no evidence that it’s green at all (most environmentalists have problems with destroying public goods which take energy to re-create, you know). The bill was so watered down by special interests that we simply don’t know if the fuel mileage savings will eventually overcome the energy needed to replace the destroyed vehicles.
You have a cite for any of that?
Keynesianism has been out of favor for 40 years. It’s still out of favor for many economists. do you have any evidence that the ranks of Keynesians represents a majority of economists? What information do you have that says opponents of Keynesian counter-cyclical stimulus are in the ‘small minority’?
I hear this a lot, and I’ve never seen anyone quantify it. I’ve been following economics for a long time, and I’m baffled by this sudden massive swing to Keynesianism. I suspect that it has more to do with opportunism than with any new economic thinking. Keynes gives statists a lovely rationale for imposing themselves on the economy.
This gets my vote for ‘useless argument of the week’. It’s especially galling that it comes right after a long post by me in which I heavily cited academic sources for my opinions.
I assume that you had nothing substantive to add, couldn’t rebut anything I said, so you decided to just poison the well witih this tripe, then throw in the ‘right winger’ ad-hominem for good measure. Well done.
If the Twizzlers had an ingredient that helped stop cancer, then we can measure success on how many people get. If selling cars with better mileage had no benefit, then selling more wouldn’t be useful. So why not argue about that and stop with the idiotic analogies.
Luckily it seems that people bought cars with a greater fuel efficiency improvement than expected, so you don’t have to worry any more about the program only causing a one or two MPG jump on the average.
Surprise, it is not a guise, it is reality.
There will be plenty of used cars, many with better mileage. I keep my 12 year old car out of love, and to see if I can get it to 200K. I’m cheap, and part of the problem - but at least it gets 25 MPG. Plus, the program will go away soon, and the bad cars will come back. I await evidence of a jump in prices in the used car market - this segment can’t afford much of anything.
Among whom? Not the Obama or Bush administrations, or either party in Congress, all of whom are engaged in possibly the largest Keynesian stimulus in history.
I.e. the ones in Cato or Heritage, right?
Their near silence, amidst this current massive Keynesian effort.
You’re baffled? You haven’t even noticed, much less understood, the rapidity of the collapse that makes a Keynesian response so necessary?
It’s also called “pragmatism”. It’s done because it works and it’s generally agreed (by the less ideologically minded, that is) to be necessary at this time.
Now where’s the evidence for this “Laffer Curve” thing you find more convincing?
Specifically, the idea that fiscal stimulus would work has been discredited for a long time. The ‘New Keynesians’, including Bush’s economic advisor Greg Mankiw, advocated for Keynesian stimulus in the form of tax cuts. Even Paul Krugman was writing about the folly of fiscal stimulus and how monetary stimulus was a better tool back when Japan started to slide.
The problems of fiscal stimulus as a counter-cyclical tool were well known, and even Keynes eventually came to oppose them. The problems were practical - the inability of government to spend the money fast enough, and to target it correctly.
If you remember, Larry Summers, one of Obama’s economic advisors, said that a stimulus had to be, “temporary, targeted, and timely”. The real debate among economists was around whether the federal government was capable of any of those things.
And I must point out that recent history proves the naysayers right. The stimulus package turned out to be very poorly targeted, consisting mostly of pet Democratic projects and buyoffs of powerful Senators. It did not turn out to be timely, because less than 10% of it has been spent so far and there is a possibility that the economy is already out of recession. As for being temporary, much of the stimulus is being used to build new infrastructure and to hire new government employees, and this means it will result in a permanent structural increase in government liabilities. Failure on all three counts.
I should also point out that the administrations own economic forecasts of what the stimulus would achieve turned out to be wildly off the mark.
In short, the only evidence regarding the value of the stimulus we have to date is negative - it either did nothing, or it actively harmed the economy at the worst possible time.
No, people like William Buiter, Professor of European Political Economy, London School of Economics and Political Science.
People like Gary Becker, Nobel Laureate in Economics.
People like James Hamilton, Professor of Economics at the University of California, San Diego.
You’re only hearing silence because you don’t leave your liberal echo chamber. I’ve already linked to dozens of editorials they and others have written against the stimulus. 400 of them took out a full page ad in the NY Times opposing the stimulus.
You haven’t heard them because you’re not listening.
Can you point to a similar group of pro-stimulus economists writing editorials in favor?
I know that statists feel the need to ‘do something’, and that monetary policy has run out of bullets, so they’ve turned to fiscal stimulus as a last resort. That is not the same thing as an academic consensus that fiscal stimulus works.
So… We must do something. This is all we’ve got, so that’s what we’ll do. That’s essentially the argument.
You may notice that even among government economists, belief in a fiscal stimulus is not universal. Europe backed way off its plans for fiscal stimulus after many economists opposed it. Canada’s fiscal stimulus was done hesitatingly and is about 1/3 the size of the U.S’s as a percentage of GDP. Interestingly, Canada seems to have recovered from the recession faster than the U.S. has.
Cite?
Yiou’re really getting the hang of this, Sam, that is an artful bit of phrasing. A particular belief is not universal amongst economists? I daresay. A preference for a chocolate milk shake over a kick in the balls is probably not universal amongst economists.
So what are we to take away, here? Are you suggesting that approval of stimulus spending is the majority view, but fails to reach the threshold to stop a filibuster? Or even that is overwhelmingly preferred, but for a few grumpy hold outs who’s academic chairs are funded by wealthy alumni of a distinct political persuasion?
What I sense is that you are too honest to pretend that your views represent the common wisdom amongst economists, but had to shoehorn some doubt into it. Hence, we are offered the obvious as revelation. Still, damn fine spin!
And, boy, you just wait until the government starts running Medicare!
No, I’m saying that I’ve seen no evidence that the vast majority of economists are in favor of the stimulus program, or that the ones in opposition are silent.
But that would only hold true if the economy was running at full steam. As if to say people had to stop what they were doing to go build you a tv. People had stopped buying tvs (and cars), as a result people that were supposed to make tvs (and cars) were having their hours cut back.
So, to reverse that the government provided encouragement for people to buy a new tv (in this case a car) to get everything moving again. They also included in this stimulus an incentive to buy a more fuel efficient tv (car) so that both your electricity bill and the environment improve.
Again, I think this comes down to personal belief. If those 1000 people are laid off, does that hurt the economy? It is Keynesian economics that says the government can play a roll in reducing the effects of a recession by providing stimulus. Instead of having all those people laid off, it provides a temporary program that has them dig a ditch. Some call this a shovel ready program. An idiot would have them fill the hole back in, a slightly smarter person would would have that 1000 build something of benefit to society (like a road).
An alternative system is to encourage people to buy a product or pay for a service, that would in term prevent those 1000 people from being laid off. Can you tell me how many people were laid off in the past year? Do you think that hurt the economy?
So how does your calculation work if we assume the initial car was worth $500? And that it was going to be scrapped with or without the program?
You also said the $20,000 was “used up.” But here I disagree. That money was on the sidelines waiting to be used for a new car. The buyer probably wanted the new car last September before his/her stock portfolio fell in the shitter. The point of this program was to get that person to buy the new car they wanted to, sooner than they planned to, there by stimulating the economy. What part of that do you disagree with?
You are correct to say the $4,500 was borrowed tax dollars that have to be paid back. So the real question will be whether or not we’ll see a reduction in government spending when the economy is back on track. In my opinion, THAT is the part of the Keynesian system that politicians forget about. We should have started two wars back in September when we needed government spending, not 6 years ago when things were good.
It’s important to note that this program is not forever, it was supposed to end in three months. But when the economy heats up, and people make more income, the government will continue to receive tax revenue.
I agree, that’s crazy thinking, who is proposing that?
I’m making the argument that when people stop spending the economy gets hurt. Destroying things wasn’t the point of this, it was to get people to spend earlier than they would have, on a product they were already going to buy. The destruction part was a weird side project to cause a shift. In your CRT/LCD example, a company might be struggling with wanting to also get new desks, but having to wait until all the CRTs are replaced. This was a kick in the butt program to get the CRTs out of circulation, where they were actually having a slightly harmful effect.
Well, if we were actually in a recession, then yes, those resources were idle. I worked at a place that had to drastically cut back everyone’s hours. And yes, China continued to grow, but US consumption/demand shrunk faster. Did you notice the falling price of gas? Why do you think that was (removing the speculators)? Factories did not need as much gas/oil in October as they did the previous year, so does that show resources were idle? What would convince you that there were idle resources?
But that had nothing at all to do with the stimulus. It didn’t specify one way or another what company people should buy from. If people choose to buy from Chrysler that was entirely on their own initiative. Can you point to an aspect of this program that encouraged people to buy from an inferior company? Why would you imply this?
You say that as if we don’t live in a global economy. Are there any uniquely “made in America” products any more? A normal, healthy, and functioning US economy will inevitably cause money be spent on foreign products. And you know what, when the US economy is health, a functioning it will result in foreign capital being once again invested in the US. Does that count?
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I’m not sure it helps any of us to try and line up economists to see who has a bigger following. What was the old joke from first year economics? “If you ask two economics a question you’ll get three opinions.” You’ve got some Nobel laureates that say it’s bad, I’ve got some that say it’s good, the rest say, “it’s good BUT…”
Again, some of the cars would have been destroyed anyways. It sucks the bill was watered down, but that’s US politics. All bills are watered down (and so is your beer, ha ha ha). There isn’t much point criticizing this bill for “lacking teeth” when it seems to be US politics can’t produce a bill WITH teeth. And have you seen the results that show a significant net increase in mpg?
Sam is a raving beaver, much like yourself, he cannot be held accountable for the state of American “beer”. I have long pushed for legislation requiring that Coors Beer would be produced only for export, preferably to Australia. The movement languishes.
Why thank you!
And yet we have it anyway. Imagine that.
Sure, it’s imperfect. What isn’t? Darwin is said by some to have changed his mind about evolution, but it’s still fact, too.
And the C4C program is just that.
Or of anything else, right? And which “economists” might those be?
Oooh, some Democratic-favored stuff got done, therefore it’s a failure. :rolleyes:
That very same information can be used as evidence for its being an outstanding success, ya know. If you aren’t simply looking for reasons to disparage it, that is.
That from the faction complaining that government jobs aren’t even real. Please.
Whose haven’t been? We’ve been in a unique period.
See above. :rolleyes:
Etc. Sure, there are naysayers and ideologues available to sign petitions on any subject. Evidence that they’re the “mainstream” is lacking, however.
Ah, yes, the L word being used as an epithet. That’s *so *Nineties.
We did that one way back when. It didn’t sink in, obviously.
Better yet, I can point to results.
IOW, “That’s all very well in practice, but it will never work in theory”, huh?
Yes, and it’s one for which you have no counter.
Nobody said it was. Europe, Canada, and the rest of the world are suffering less from the US-based economic collapse, sure, and need less countermeasures. So?
You might note that that suffering is due to the Bush Administration’s fiscal irresponsibility you so loyally supported here for years.
The North American auto industry is roughly equally distributed between the US and Canada, despite a roughly 10:1 size differential. The stimulus package should be expected to have a much more positive effect on Canada, per capita. You might at least say “Thank you.”
You earlier equated belief in multiplier factors with belief in the Laffer Curve in terms of credibility and intellectual rigor. You’ve been presented with substantial information supporting the factuality of Keynesian multipliers. You’ve never provided any regarding the Laffer Curve. Care to reconsider your ideologically-driven dismissiveness and embrace reality instead?
:dubious:
Let’s go somewhere else to debate your ‘well-run’ Medicare point above. I can’t believe you wrote that a program with a $30+ trillion unfunded liability is well-run, with a straight face.
I’ll give you an example of a government program that isn’t shit. It’s the Contra Costa hazardous waste facility for disposal of household items.
I just checked their website and it looks like things have changed a bit since I was living there. But in summary
It addressed an externality (environmental costs)
It appeared to be ‘free’, thereby stimulating excess demand from users. It wasn’t of course…it was paid via local taxes.
It actually was reasonably customer-friendly. You could drive up in your car, pop open the trunk, and guys in hazmat suits would come out and pull whatever you had out of your trunk, no questions asked. Paint. Chemicals. Probably depleted uranium, if you had it.
If it wasn’t this easy, people would just pour stuff down the drain, or into an open creek.
Now THAT’s a useful government program. It addresses a clear externality. It’s user-friendly. It’s local.
None of those apply to cash-for-clunkers, unless you argue the ‘user-friendly’ part.
Clearly, if the tree-hugging hippies were in charge, everything would run better. I like it!