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Cash for Clunkers

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As I was standing in a long line at the Post Office in Scottsdale, Arizona, at about 4:30 p.m., I said just loud enough for those around me to hear, “If you like this, wait until National Health Insurance.” There were some chuckles.

But what I was really thinking about in the intervening fifteen minutes was the article I read today from the New York Times that talked about the Cash for Clunkers program. It was mindboggling. They start out the article with comments about the government’s computer system crashing, not being able to handle the dealer’s information that must be plugged in. Think $700 screwdriver.

But what followed was even more amazing. The car dealers must destroy the engines of the cars that come in. One story they relate is of a 1988 BMW with 214,000 miles on it. In the normal BMW life expectancy, that’s about middle aged. But the dealers are forced to actually pour a sodium silicate solution in the engine which hardens into a glass-like substance that seizes up the engine and it is dead within seconds. What a waste!

Not only does this destroy an existing business of salvage yards supplying used engines for individuals, but the car itself is still drivable! If it’s not good enough for our citizens, since it gets less than 18 miles per gallon, why not send it to Mexico or Guatemala? Or better yet, Cuba. There this 1988 BMW would be a limousine and certainly one of the newer cars in the whole country. Does this make sense to destroy a perfectly drivable car getting 18 miles per gallon and replacing it with one that gets 22 miles per gallon?

What they fail to mention in the article (mind you, this is the NY Times) is anything about the broken-window fallacy and the concept of the seen and the unseen discussed by Frederic Bastiat 160 years ago in France. Of course, all he had at the time for transportation was horse-drawn carriages and hot air balloons. This renowned philosopher, author of the libertarian classic, The Law, didn’t have a Renault or a Peugeot, but the points he made then are still valid today.

To summarize, he talked about a shopkeeper’s broken window causing the business of the glazier to increase. The glazier then has more money in his pocket, and he goes out and buys a pair of shoes from the shoemaker, and the shoemaker goes out and buys a croissant from the baker. Everybody’s happy, or so it seems. The socialist jumps to the conclusion that we just need to keep breaking more windows and we can “jump-start” the economy.

Wait a second; doesn’t this sound like the stimulus program?

But is everybody really happy? What is discussed above is the “seen.” The “unseen” is if there wasn’t a broken window in the first place, then the shopkeeper would have had the money in his pocket to save, invest, or spend as he wished, rather than give the money to the glazier. Heck, he could have even bought a hot air balloon, which reminds me of politicians, and subsequently brings me to this conclusion:

Since the Cash for Clunkers program, conceived by politicians, was designed to get rid of inefficient cars, why don’t we have a similar program to get rid of all these inefficient politicians? In my program, called Cash for Skunkers, those who are interested would donate money to buy out and pay the salaries of the politicians for the remainder of their term, and replace them with … perhaps old BMW’s? This would certainly be less expensive than the billions of dollars the government is spending on the Clunker program. Of course, others may wish to get sodium silicate from all the car dealers and offer it to the politicians as a farewell toast. Whatever method is chosen, I think I’ll feel better the next time I’m waiting in line at the Post Office.

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    David Dorn is a businessman living in Scottsdale, Arizona.