Seeking Liberty

Liberty is the Fruit from Which All Progress Grows

Ignoring economics, C.A.R.S. hurts used car dealers, working families

It would seem that the Cash for Clunkers program has had two major side effects: The sharp decline in sales of new automobiles after the program ended, and a sharp increase in the price of low-end used vehciles, the type that poor and lower-middle class families buy.

From the Reading Eagle:

In her search for a cheap, used minivan for her and her husband, Krissy Dieroff has visited seven dealerships across Berks and Schuylkill counties in the last week, but to no avail.

“There’s not much to pick from, and the ones we do find are overpriced,” said Dieroff of Auburn, Schuylkill County, while browsing the lot of a city dealership on Monday.

Dieroff blames the shortage of inexpensive used cars on the federal cash-for-clunkers program, in which almost 700,000 used vehicles were traded in for newer, more fuel-efficient vehicles, and then scrapped.

Those clunkers were the cars Dieroff and her husband, Jason Boyer, would have been shopping for, they said.

“I saw the cars they were putting in the junkyard, and they were better than what we’re driving now,” Boyer said.

Not that this should be a surprise to anyone. The Car Allowance Rebate System (“CARS” or Cash for Clunkers”) ignored the very basics of economics: Incentive and utility. It gave people an incentive to BUY NOW! instead of waiting for a more appropriate time to buy a new car, and it ignored the inherent utility of the low-mileage, low-end cars to the poor and middle-class families who buy older used cars.

That’s bad news in Berks, where many shoppers seek inexpensive, used vehicles, especially during difficult economic times, said George Tabakelis, general manager of Perry Auto Service & Sales on Route 61 in Perry Township.

“Customers used to be able to find a good car for their son or daughter to take to college for $2,000 or $3,000, but now that same car may cost $5,000,” Tabakelis said. “It’s sad.”

He, too, blames cash for clunkers, which has led to fewer vehicles being available at used-car auctions, and the recession.

It’s the age-old issue of supply and demand: When you have steady or increasing demand and a decreasing supply, scracity becomes a problem. When more people demand a good or service than can be supplied, the price of that good or service will inevitably increase to ween away those who are least able or willing to afford it.

With 700,000 fewer low-end used automobiles on the market and the number of unemployed and under-employed people in working families steadily increasing, the government’s Cash for Clunkers program simply exacerbated the problem of finding affordable automotive transport for poor Americans. The supply has shrunk while demand is increasing, creating an economic catastrophe that is only of the Government’s making.

The Cash for Clunkers program represented less than $3 billion in Federal spending, yet it has caused far more harm than good. The net result has been the destruction of wealth and the further deepening of the economic mess in which we currenly find ourselves. Ignoring the basics of economics and the free market has harmed far more than it has helped.

The old axiom that “The road to Hell is paved with good intentions” seems apropos.

Originally posted at The Minority Report.

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Filed under: economics, Government, poverty, wealth, , , , , , , , , ,

Dollar Daze

National Public Radio is reporting that the Dollar has fallen, and foreign banks are increasingly keeping Euros and, of all currencies, the Yen as their reserve denomination. The Dollar has fallen 12% from its recent peak, and appears likely to lose additional value.

Quote:

In March 2008, before the financial crisis, the dollar was at historic lows against a basket of currencies. Then, when the financial storm struck, the dollar strengthened as investors rushed to the safety of U.S. Treasury securities.

Now that the worst of the crisis appears to have passed, the dollar is under pressure again. It’s down more than 12 percent from its recent peak. Fred Bergsten of the Peterson Institute for International Economics says sentiment about the dollar has now turned negative.

While this is alarming to many, to some it is no surprise. In fact, many economists predicted after the Bush Administration’s Troubled Asset Relief Program (TARP) and the Obama Administration’s Stimulus bill, the hundreds of billions of extra Dollars being dumped onto and the mounting deficits of the United States Government would depress the Dollar significantly when compared to other currencies.

The result: Americans are poorer now than they have been, compared to the rest of the world. Since the Dollar has lost value, it takes ever more Dollars to buy products from other nations. Fears of more and greater deficits in the coming years create even greater distrust of the Dollar, resulting in more hedging with other currencies. It is a wicked spiral that can only be broken by more responsible actions by our government.

The United States must come back to reality: We can no longer spend like bachelors on a weekend in Las Vegas, signing for ever greater lines of credit to cover our losses. The International Casino is rapidly approaching the point where it will call in our debts, while we have blown our chips at the craps table. Read the rest of this entry »

Filed under: economics, Government, politics, poverty, wealth, , , , , , , , , , , ,

The Real Cost of Agricultural Subsidies

CottonBy Matthew W. Quinn

Imagine you’re a cotton farmer in West Africa.  One day, the man who comes to buy your cotton to be exported does not show up.  You go to the marketplace and find there is nobody willing to buy your cotton.  In fact, there is cheaper cotton available from abroad.

You now cannot sell your crop, or at least you cannot sell it for very much.  You need to buy food and fertilizer, and your children need medicine and money to pay for schooling.  You’re in trouble now.

Are these the workings of the free market?  No.  The reason the foreign cotton was able to price the West African cotton out of the market is because it came from the United States and was heavily subsidized.

Cotton subsidies are one of the most notorious examples of government agricultural supports and it gives American cotton producers an unfair advantage over more efficient producers abroad. For example, in Burkina Faso, it costs one-third as much to produce cotton as it does in the United States.  According to the British aid agency Oxfam, the only clear advantage American cotton growers have over competitors in Africa is their ability to get government subsidies. Read the rest of this entry »

Filed under: economics, personal health, poverty, taxes, , , , , , , , , , , , , , , , , , , , , ,

There are heroes among us

Ever wanted to know what a true hero scientist looks like?

Norman Borlaug, the original 'Green Revolutionary'

Norman Borlaug won the Nobel Peace Prize in 1970. He developed disease-resistant wheat and methods to prevent famine in developing nations.  He championed the use of advanced agriculture to fight hunger worldwide, and in his life he likely saved billions of lives.

Borlaug championed the idea of teaching men to fish (or grow better crops) instead of simply giving them fish to eat.

From CNN:

He was awarded the Presidential Medal of Freedom in 1977, and the Congressional Gold Medal in 2006, according to the university’s Web site.

The agriculture institute at [Texas A&M] was named after him in 2006.

Borlaug also created the World Food Prize, which recognized the work of scientists and humanitarians who have helped fight world hunger through advanced agriculture, the university said.

Borlaug died of complications from cancer at age 95.

There are so few true heroes among us.

Rest in peace, sir.

H/T Michelle Malkin.

More from Moe Lane.

Filed under: poverty, ,

The Definition of Greed

The Green-Eyed Monster

What is greed?

The dictionary defines greed as

greed

n.  An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.

(greed. (n.d.). The American Heritage® Dictionary of the English Language, Fourth Edition. Retrieved September 07, 2009, from Dictionary.com website: http://dictionary.reference.com/browse/greed)

I have a problem with this definition, from one perspective:  Everyone has more than they “need.”  We learn early in life that our “needs” consist of food, water, shelter, air and (generally) clothing.  Everything else is a “want.”  So by the definition above, practically everyone in America and the majority of people on this planet are greedy.  We own computers, automobiles, cellular phones, washing machines, televisions and more.

Surely this is not the case?  Surely greed cannot be such a broad concept that the vast majority of people on this planet are guilty? Read the rest of this entry »

Filed under: economics, poverty, socialism, wealth