Cash for Clunkers, One Year Later

Fri, 03 Sep 2010 00:12:36 +0000

Jeff Jacoby summarizes what we know about the impact of the Cash for Clunkers program, one year later.  It isn't particularly flattering, for reasons easily predicted in advance and well summed up in this paragraph:

Congress and the Obama administration trumpeted Cash for Clunkers as a triumph — the president pronounced it “successful beyond anybody’s imagination.’’ Which it was, if you define success as getting people to take “free’’ money to make a purchase most of them are going to make anyway, while simultaneously wiping out productive assets that could provide value to many other consumers for years to come. By any rational standard, however, this program was sheer folly.

I like the way he discusses the price of used cars now -- much higher than last year -- which has terrible distributional consequences.  I recommend the whole thing. (h/t Greg Mankiw)