The Real Teachable Moment
Forget the Beer Summit; the real teachable "moment" has been the past six months. Will there ever be a better opportunity to evaluate the efficacy of Big Government?
This blog has not been shy about highlighting the deleterious effects of a system run amok. We continue to needlessly bleed jobs and endure the longest economic contraction in 80 years because Congress and the Executive Branch have chosen to co-opt the free market, rather than catalyze it. An economy itching to demonstrate its natural resiliency is being smothered by the wet blanket of fiscal liberalism.
There have been no shortage of contributing factors—including the tragically ill-conceived $787 billion non-stimulative "stimulus" program, and the disaster-in-waiting that is Cap and Trade.
But, one program stands out as almost comical in its absurdity. Cash for Clunkers.
Friday was priceless. Those elected whiz kids of ours in the House of Representatives scrambled to appropriate additional funds for their monument to foolhardiness. Did you see them taking a victory lap—holding up the Clunkers program as an exemplar? Their giddiness was palpable. Yep, they have been triumphant at getting people to accept free money. Brilliant. Well, free in the immediate sense anyway. We'll all be paying for it down the road.
Who knew that a couple hundred thousand people would each be willing to take $4,500 off the government's hands? Might it be possible that another four or five hundred thousand would be willing to do the same? Better set aside a couple billion dollars more just in case. Thank you House of Representatives.
Clearly, the government has concluded it can lose money on every car, but make it up in volume. Shrewd.
What a shame that Obama and friends don't seem to understand the ephemeral nature of government giveaways. Bush and company certainly didn't get it in February of 2008 when they handed out over $150 billion in "rebates" with absolutely no effect on our longer-term economic well-being. We got a small bump in GDP for a single quarter after a fraction of the recipients spent some/all of the money, then quickly resumed our downward slide.
In the face of incontrovertible evidence, so many still do not recognize that for stimulus to be meaningful, it needs to have a structural, long-term impact. If it doesn't lead to sustainable demand growth, then it only serves to stoke the deficit. Subsidies can create virtually unlimited demand. That's the good news. Unfortunately, subsidy-enhanced demand typically disappears when the support is withdrawn, and the subsequent government borrowing necessary to finance the deficit spending results in lower demand elsewhere. It has to. What would otherwise be expansionary private investment capital gets siphoned off to fund the debt.
Since this Cash for Clunkers program is so outstanding, at least according to our representatives, why not Money for Mortgages and/or Dollars for Dresses? It wouldn't be fair to discriminate against the housing and retail sectors, would it?
Let's discuss over a beer. I'm feeling smarter already.
This blog has not been shy about highlighting the deleterious effects of a system run amok. We continue to needlessly bleed jobs and endure the longest economic contraction in 80 years because Congress and the Executive Branch have chosen to co-opt the free market, rather than catalyze it. An economy itching to demonstrate its natural resiliency is being smothered by the wet blanket of fiscal liberalism.
There have been no shortage of contributing factors—including the tragically ill-conceived $787 billion non-stimulative "stimulus" program, and the disaster-in-waiting that is Cap and Trade.
But, one program stands out as almost comical in its absurdity. Cash for Clunkers.
Friday was priceless. Those elected whiz kids of ours in the House of Representatives scrambled to appropriate additional funds for their monument to foolhardiness. Did you see them taking a victory lap—holding up the Clunkers program as an exemplar? Their giddiness was palpable. Yep, they have been triumphant at getting people to accept free money. Brilliant. Well, free in the immediate sense anyway. We'll all be paying for it down the road.
Who knew that a couple hundred thousand people would each be willing to take $4,500 off the government's hands? Might it be possible that another four or five hundred thousand would be willing to do the same? Better set aside a couple billion dollars more just in case. Thank you House of Representatives.
Clearly, the government has concluded it can lose money on every car, but make it up in volume. Shrewd.
What a shame that Obama and friends don't seem to understand the ephemeral nature of government giveaways. Bush and company certainly didn't get it in February of 2008 when they handed out over $150 billion in "rebates" with absolutely no effect on our longer-term economic well-being. We got a small bump in GDP for a single quarter after a fraction of the recipients spent some/all of the money, then quickly resumed our downward slide.
In the face of incontrovertible evidence, so many still do not recognize that for stimulus to be meaningful, it needs to have a structural, long-term impact. If it doesn't lead to sustainable demand growth, then it only serves to stoke the deficit. Subsidies can create virtually unlimited demand. That's the good news. Unfortunately, subsidy-enhanced demand typically disappears when the support is withdrawn, and the subsequent government borrowing necessary to finance the deficit spending results in lower demand elsewhere. It has to. What would otherwise be expansionary private investment capital gets siphoned off to fund the debt.
Since this Cash for Clunkers program is so outstanding, at least according to our representatives, why not Money for Mortgages and/or Dollars for Dresses? It wouldn't be fair to discriminate against the housing and retail sectors, would it?
Let's discuss over a beer. I'm feeling smarter already.
What amazed me about the Cash for Klunkers program is how the program's success was being shouted from the mountaintop from a prominent blue donkey - something to the affect of - "This program has been so wildly successful, we've spent all the money and we need to increase the investment immediately". Uh, so let's see, the program gives away money to owners of old broken down gas guzzling cars to get brand new fuel efficient cars. Gee, that's such a tough program to sell, if it wasn't successful the originators of the program should have been fired or worse. But why is that cause to celebrate a program who's main hurdle is finding people to subsidize buying a new car, and therefore support giving more money away because the program was such a success? So congratulations legislators, you just doled out more national debt, rewarded incompetence and laziness, further subsidized inept car makers who should have had these kind of vehicles to market years ago and in the same breath, patted yourself on the back for a job well done. So well done in fact your going back to the til for more? Outstanding Private Pyle, Outstanding!
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