Remember Cash for Clunkers?


Yeah, it was an environmental nightmare.

According to E Magazine, the “Clunkers” program, which is officially known as the Car Allowance Rebates System (CARS), produced tons of unnecessary waste while doing little to curb greenhouse gas emissions.

The program’s first mistake seems to have been its focus on car shredding, instead of car recycling. With 690,000 vehicles traded in, that’s a pretty big mistake.

According to the Automotive Recyclers Association (ARA), automobiles are almost completely recyclable, down to their engine oil and brake fluid. But many of the “Cash for Clunkers” cars were never sent to recycling facilities. The agency reports that the cars’ engines were instead destroyed by federal mandate, in order to prevent dealers from illicitly reselling the vehicles later.

The remaining parts of each car could then be put up for auction, but program guidelines also required that after 180 days, no matter how much of the car was left, the parts woud be sent to a junkyard and shredded.

Shredding vehicles results in its own environmental nightmare. For each ton of metal produced by a shredding facility, roughly 500 pounds of “shredding residue” is also produced, which includes polyurethane foams, metal oxides, glass and dirt. All totaled, about 4.5 million tons of that residue is already produced on average every year. Where does it go? Right into a landfill.

Cash for Clunkers didn’t drive sales. It simply compressed the rest of the year’s sales into a few weeks creating the image of driving sales. Few people who weren’t in the market for a new car would have spent the thousands of dollars above and beyond the Cash for Clunker subsidy. Nobody who bought a new car in the rush of July and August is going to buy another one any time soon.

So what did Cash for Clunkers accomplish other than dirtying up the environment? It took money from some Americans and gave it to others to buy cars they were planning to buy anyway. It also paid them to destroy assets with remaining value driving up the cost of used cars. It was a net negative for the environment because of the dust-to-dust energy cost of a new car is much higher than a “recycled” used car. We destroyed all the recycled cars.

One more economic cargo cult boondoggle from a central bureaucracy that believes destroying marginal utility helps the economy. It doesn’t.

If it did, why not pay people to demolish their houses and build new, energy efficient houses? Why not give people money to trash old appliances and buy new that use less energy? There are thousands of things we could be paid to destroy besides cars. We could pay businesses to destroy machine tools and farmers to destroy tractors and combines. Think of the sales that would be the result! If using tax dollars to pay to destroy assets grows the economy and is “successful beyond anybody’s imagination,” why stop now?

Repeat after me. Breaking windows does not grow the economy. It is a fallacy. It is nothing but a shell game where money is hidden and moved around. It is damned embarrassing that so many people believe otherwise.

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4 Responses to Remember Cash for Clunkers?

  1. R.D. Walker says:

    It doesn’t take an environmental biologist or a macro economist to understand this isn’t good for the environment or the economy.

  2. notamobster says:

    It’s amazing that “intelligent” people believe the broken window fallacy. Of course, they did elect President Lud. Twice. 🙁

  3. trebor snoyl says:

    This is like watching someone commit murder.

  4. James says:

    Cash for Clunkers hurt poor people by eliminating the supply of cheap used vehicles. If you are a college student without the up front capital to buy a new car, but can afford the incremental cost to operate one, you’re going to buy a $500 beat up gas guzzling SUV. Especially if your commute isn’t long.

    Nah, it’s better to buy a new Prius and put the tab on your student loan, so you’ll never pay the government back.