Milo clued me in to a new scheme the British government came up with. Turn in your old car to be destroyed (at taxpayer expense!) and get a credit towards a new one.
There already is an incentive offered to get people to buy new cars. It is called a “trade in”, where cash or credit towards a new car is offered by the dealers themselves. And then the dealers fix up the old cars and sell them for a lower price to those who can’t afford a new one. Everyone wins!
But the new scheme in Great Britain would do away with used cars. Buy a new one or go without. I suppose the government over there just hates poor people.
I wouldn’t even bother to mention this at all, considering how it is an internal political matter in a foreign country, except that I just found out that Pres. Obama has suggested that the US adopt the same stupid plan!
Words fail me.
(Hat tip to Insty, and I cross posted this essay over at Hell in a Handbasket.)
I have seen speculation that the auto meltdown may change the dynamics of the auto business. People are now driving US made cars that last 250,000 miles. This is a radical change in my lifetime. The auto industry dealt with some of this by emphasizing styling and other non-utilitarian aspects of car buying. Now, we face a future with less desirable cars from Government Motors as the AGW zealots try to force people into econoboxes. The speculation is that people will just keep driving their old cars until they fall apart. It seems to work in Cuba.
In fact, if I were an auto dealer who has had my franchise cancelled, aside from suing the GSE that cancelled it without compensation, I would go into the business of repairing and restoring the orphan cars from GM and Chrysler. Most dealers make more money from service anyway. Now, they would have no incentive to sell new cars and every incentive to encourage people to keep their present vehicles and restore the used ones that come on the market. I could even see (and think I am seeing some of it now) a “classic car” market growing.
How does Socialism deal with this sort of anti-social(ism) behavior ? By force, of course. I expect attempts at incentives, like the gun buy-back programs that encourage gun theft, and if that doesn’t work, older cars will be banned.
Exactly this kind of scheme has been introduced in Germany a couple of months ago: an “Abwrackprämie”, or wrecking premium, which you get by wrecking perfectly serviceable cars nine years old.
Sheer lunacy.
Obama has no concept that the primary purpose of the economy is to coordinate useful work. We buy cars primarily as tools but Obama seems to treat the process of manufacturing, selling and driving cars as a kind of ritualized behavior that placate the economy gods.
It takes resources in terms of labor, materials and energy to create a car. When we artificially shorten a cars lifetime, we waste all the resources that go into creating its replacement. Those resources could go into making other more necessary products.
Michael Kennedy: Good idea in principle.
But who is going to manufacture the parts? Under whose license? Are patents for auto parts going to be voided when a model is deemed no longer of social or economic value? Will reverse engineering of those parts remain criminalized?
I’d sure hate to have to hold on to an inventory of parts for Hummers for the next 20 years. I say this driving a 14-y/o Mercury that’s getting harder and harder to find parts for.
can’t we shame them with the carbon footprint argument.
It’s been introduced in several EU countries. Car industry needs saving. Won’t work and not everyone is going along with it: Ford and Honda want an even better deal. Why not? If the politicians are looting taxpayers’ money, why shouldn’t they? Some of the Greens are unhappy but they are always unhappy.
No doubt they will next try to duplicate the brilliant success of British Leyland.
Going back a bit, aren’t you Mitch? Besides, I thought that is exactly what is going to happen to the American car industry: nationalization.
More ways to spend the money we don’t have.
What this represents is the willful destruction of part of society’s capital base. Money and resources will be spent manufacturing replacements for destroyed cars: these resources *could* have been applied to things that would generate future production.
I think this scheme was conceived by people who have always been able to afford new cars. For many people the ability to buy an older car at a reasonable price is the only thing that makes it possible to get a better job or live in a better area. By buying up old cars the govt will have the same effect on the transportation market that rent-control laws have on housing markets. It’s a bad idea.
It works in Japan. But they’re one of those “failed” socialist states where government meddling in the economy has utterly destroyed the nation’s economic soul.
Nice place. Little to no crime. Little to no poverty. 99 percent literacy. Dozens of a good symphony orchestras, 2 opera companies in Tokyo alone. Ahh, but they’re just so “failed” as they don’t get the Gospel According to Ayn Rand.
How’s Toyota doing these days, anyway?
“It works in Japan. But they’re one of those “failed” socialist states where government meddling in the economy has utterly destroyed the nation’s economic soul.”
That is certainly true. But, then again, it has been that way for over a decade.
“Little to no poverty.”
I think that is obviously false. And, like the moribund Japanese economy mentioned above, it has been that way for several years now.
“Dozens of a good symphony orchestras, 2 opera companies in Tokyo alone.”
I’m sure that is a comfort to the homeless and poverty stricken.
“Ahh, but they’re just so “failed” as they don’t get the Gospel According to Ayn Rand.”
Couldn’t have put it better myself.
“How’s Toyota doing these days, anyway?”
It is in bad shape. The only person who might claim Toyota is doing well is through comparing the company to other automakers in even worse shape. Sort of like the kind of guy who claims that a leper is healthy because not all of their face has rotted off yet.
James
I always told my kids that one of the ways an ordinary person can make it economically (ie, become wealthy) is buying a slightly used car and keeping it going a minimum 200K, while investing the savings. It can be proven – has been proven – that doing so for an economic lifetime allows you to retire 4 years early. Another way is to banish experts from at least a few spheres of your economic life. If you don’t have to hire a plumber, a mechanic, a renovation carpenter, etc, you can invest that too.
The point of these somewhat jejune preachments is that this program will make them difficult (becoming one’s own mechanic) to nearly impossible (getting 356K from a car). The program is congruent with the changes to the tax structure that Obama seeks. If you look via logs, it’s pretty easy even for a low-salary person to reach 10^5 in capital. But a comfortable and independent age requires 10^6 – 10^7. (10^8 – 10^9 if you want to be an important democrat.) Long-continued frugality, long-term investment, self-fix-up real estate investments can get you there from an ordinarly middle-class salary, though not as quick or as lucratively as inventing the cell phone.
Wiping out sources of economy and imposing extra taxes — it’s how to make clients of us all.
Toyota is in bad shape, not of their own doing but because of the meltdown in the credit markets. I distinctly heard a “WAHOOOO!!!!” coming from Japan at the news Mr. Obama was pushing the “Cash For Clunkers” idea. Buyers have consistently opted for Toyotas and Hondas over GM products for the last 30 years – no reason to think that is going to change when – if – the car market comes back. They will simply resume the beating.
The 35 MPG standard is also great news for the Japs. They are faster and more agile and have consistenttly responded to change very well. The Obama crowd seems to think that simply by putting their own genius and a bunch of our cash into GM the core management and manufacturing probelms will disappear. Ain’t gonna happen.
The Obama crowd seems to think that simply by putting their own genius and a bunch of our cash into GM the core management and manufacturing probelms will disappear. Ain’t gonna happen
Mostly it isn’t going to happen because they don’t understand how the union contracts have the side effect of putting restrictions on industrial design. GM or any other manufacture subject to the UAW monopoly don’t have control over their own internal manufacturing processes. That lack of control in turn restricts what designs they can use. All of that is ignoring the highly uncompetitive cost structure forced on them.
Back a few comments: Jonathan’s point about people with less money buying used cars and becoming productive. Teenagers, too, are bought and buy second hand cars. (The ones that don’t probably are either borrowing too much or getting too large a stipend from home, if you ask me.) This seems to reflect far too popular thinking that we should be middle class in our first year out of college – or, increasingly, our first year out of high school or our first year as immigrants. It is not unlike the complaint that you can’t support a family on minimum wage. This ignores the fact that it’s hard to run a business with unprepared, uninitiated youthful help – paying an apprentice like a mature & married adult makes the system essentially unfair.
I certainly agree with your points regarding the UAW, Shannon. However, the management of GM is comprised of entirely of big boys who knew exactly what they were signing when they voluntarily entered into every agreement GM has with the UAW. Methinks perhaps the pressure on short term earnings they get from Wall Street, and the self-induced pressure to hit those short term earnings goals and reap ludicrous bonuses, made the idea of a strike that might last a few months but would set their cost structure and manufacturing processes right, caused them to awaken in the middle of the night in a cold sweat. They gave the long term store to the UAW in order to look good in the eyes of Wall Street in the short term.