Another good perspective on clunkers and indeed any evaluation of an economic policy, i.e., you gotta consider the opportunity cost. And a reference at the end to Bastiat‘s Parable of the broken window. See the full article here.
Did Cash For Clunkers Work?
By Matthew Bandyk
On Thursday August 20, 2009, 4:46 pm EDT
At Slate’s Big Money, Matthew DeBord declares that cash-for-clunkers (and the broader auto bailout) is victorious:
The U.S. industrial economy is moving again. Workers are going back to work. Consumers are able to buy large and expensive forms of personal transportation, into which they will put gasoline provided by giant international oil companies. Loans are being made. Money is changing hands. In the real economy, not the elite casino located in Bubbleville, aka Lower Manhattan.
…Maybe what’s good for General Motors, and the rest of the U.S. auto industry, is still good for the United States.
But wait a minute–the fact that money is exchanging hands does not immediately lead to the conclusion that these programs are good for the economy. continue…