Edmunds.com released a report several days ago suggesting that each incremental car sold during the CARS program (that it, sales that would not have occurred anyway) cost taxpayers $24,000. I\u2019ve seen the analysis and it\u2019s probably as good an estimate as any.<\/p>\n
The White House challenged the Edmunds report earlier today, the details of which you can link to at www.autoobserver.com. There are a number of fallacies in the White House document, but one caught my attention.<\/p>\n
According to a report issues by (Obama\u2019s) Council of Economic Advisors, the CARS program will create 70,000 jobs in the second half of 2009. This claim would be laughable if it weren\u2019t serious. Such a claim is shortsighted economics at best, and deceptive at worst.<\/p>\n
Simply stated, government subsidies that temporarily increase demand for a product don\u2019t create any jobs in the long run. Perhaps one could argue that automakers, suppliers, and related firms will need to hire more workers to meet the increase in demand. This might be partially true if cars purchased during the program would not have been purchased anyway, sooner or later. This is an especially weak argument, however as carmakers will hesitate to increase long term production because of one month of induced sales increases.<\/p>\n
This type of Keynesian analysis also leaves out an important fact. When consumers spend MORE on one product, they spend LESS on another. If jobs were \u201ccreated\u201d in the auto industry because we spent more on cars, then weren\u2019t they destroyed in various other industries where we spent less? The government central planners counter this argument by stating that consumers didn\u2019t really spend less on other products because the government incentive picked up the difference. Even if partially true, the $2.8 billion spent on the program is TAXPAYER MONEY anyway. Sooner or later we will lose $2.8 billion of purchasing power because of this program, either through increased taxes or reductions in the value of the dollar should Washington simply print the bills. Those who accept this reality might still argue that something needs to be done\u00a0to address the economy NOW\u00a0because as Keynes said, \u201cin the long run we are all dead.\u201d But at a cost of $24,000 per car, it\u2019s hard to argue that CARS did anything but squander $2.8 billion of taxpayer funds.<\/p>\n
By the way, it\u2019s time we start thinking about the long run. Decades of short term thinking\u2014and a heavy dose of it this year alone\u2014has piled up $12 trillion in debt. The average American family is already on the hook for about $100K of it. How much more can you bear?<\/p>\n","protected":false},"excerpt":{"rendered":"
Edmunds.com released a report several days ago suggesting that each incremental car sold during the CARS program (that it, sales that would not have occurred anyway) cost taxpayers $24,000. I\u2019ve seen the analysis and it\u2019s probably as good an estimate as any. The White House challenged the Edmunds report earlier today, the details of which […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/158"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=158"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/158\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}