patrick.net

Fuck cash for clunkers.

It's now time for cash for DUMPS!

I don't mean to highjack, I have nothing to contribute vis the Keynes angles.

But I know about the unintended consequences of these arrogant megalomaniacs actions in the back street, the one over behind Main Street.
One man's Auto Industry Stimulus is another man's only viable option for transportation.
This crooked giveaway to the corporate elite decimated the used car market in America and hugely impacted the supply of used auto parts. (destroyed "clunkers" were not allowed to be parts salvaged. Why?)
With their disregard for anyone who might have to shop for, and drive, a used car, our elected leaders once again prove who their real constituency is.

Robert Sproul says

decimated the used car market in America and hugely impacted the supply of used auto parts. (destroyed "clunkers" were not allowed to be parts salvaged. Why?)

Wouldn't not allowing those parts to be salvaged force more parts to be made and sold, shipped, etc? That would be the stimulus you'd think we all would need, despite that damage to the used car supplies.

In any case, used car shoppers could still buy used cars from private sellers. And not every trade-in was a C4C transaction. I believe you, but I guess we'd need to see how many were actually impacted versus the whole used car market, right?

RE: Keynes. I think, just as you could argue that interest rates hurt savers and the elderly, at that point stimulating consumption, particularly manufacturing, seems like it would pay dividends, even if the car market was neutral at best.

CL says

Wouldn't not allowing those parts to be salvaged force more parts to be made and sold, shipped, etc? That would be the stimulus you'd think we all would need, despite that damage to the used car supplies.

Not everybody needs "stimulus" some people, poor people, need used car parts to keep their hoopties running.
CL says

In any case, used car shoppers could still buy used cars from private sellers.

C4C took almost 700,000 cars out of the used car supply, making good used cars more expensive. Hurting poor people.
CL says

interest rates hurt savers and the elderly, at that point stimulating consumption, particularly manufacturing, seems like it would pay dividends,

Yup, financial repression hurts savers and the elderly, driving some into poverty. Stimulating consumption does not make that up to them. They stay screwed.
The pattern is; take from the poor and give to the rich.
The Wizard of Oz, educated-past-their-intelligence, self-dealing elites making these decisions don't care, and don't have to care, about the poor or the elderly.
You play into their hand when you try to parse their decisions based on correct or not correct, smart or not smart. They are uncaring, they are unjust, they are corrupt, who cares if they are smart.

But underconsumption DOES hurt them. Even the poor get affected by the complete collapse of the system. I understand your point, but if you look at how devastating the collapse was, its effect on charities even, or the wealth effect and its impact on personal charity, then can you say that? Like it or not, the symptom and the cause of the post-collapse period was aggregate demand, right? Factories need to build and employ, lest the employees become the next poor as well. We needed to restore confidence enough to get citizens buying things again.

It's just a symptom of how terribly they fucked up, and how dependent we are on consumerism. Conversely, the poor could maintain their jalopies but that seems like a recipe for stasis at a time when stasis would have been terrible.

Robert Sproul says

(destroyed "clunkers" were not allowed to be parts salvaged. Why?)

Because the point of destroying the clunkers was to remove older fuel inefficient vehicles from the roads forever. Allowing those parts to be used to repair other fuel inefficient vehicles defeated the purpose of the program.

Or so I was told when I called.

New Renter says

Robert Sproul says

(destroyed "clunkers" were not allowed to be parts salvaged. Why?)

Because the point of destroying the clunkers was to remove older fuel inefficient vehicles from the roads forever. Allowing those parts to be used to repair other fuel inefficient vehicles defeated the purpose of the program.

Or so I was told when I called.

And in a Keynesian sense, better to make parts and buy or melt metal than to reuse already built parts. They could have just melted and formed new parts over and over again and it would have been stimulative.

CL says

And in a Keynesian sense, better to make parts and buy or melt metal than to reuse already built parts.

I think it's a mistake to over-Keynesian this. Keynesian doesn't have to mean waste; the money we could haves aved economizing keeping used cars on the road could have be deployed to other usages of wealth that produced jobs instead, like new investments in mass transit.

Cash for clunkers was done because it was easy stimulus and some lobbyists got it into law, and as mentioned above had the benefit of increasing fleet fuel economy, something liberals are for and conservatives are against.

CL says

Is some stimulus better than others in a macro sense?

I just look at things based on the "paycheck economy".

buying power is based on money, and money is generally based on income, until one reaches retirement age and the consumer is dependent on savings.

http://www.politifact.com/truth-o-meter/statements/2012/jul/31/bernie-s/sanders-says-walmart-heirs-own-more-wealth-bottom-/

40% of this country barely has a pot to piss in. It doesn't have to be this way, but we have to somehow repair local economies such that money remains within the paycheck economy longer.

Here where I live, we have real estate investors buying up all the properties, both SFH and MFH. The rents then get sucked out of the economy, off to the bay area or LA and then who knows where.

The apartment I was living until recently was sold, and per the county I see the buyer has a Boston address. That's millions of dollars now leaving the Sunnyvale economy. Of course, it can probably handle it given all the investment money flowing into it, and the high wages that a lot of people enjoy there.

Bellingham Bill says

CL says

And in a Keynesian sense, better to make parts and buy or melt metal than to reuse already built parts.

I think it's a mistake to over-Keynesian this. Keynesian doesn't have to mean waste; the money we could haves aved economizing keeping used cars on the road could have be deployed to other usages of wealth that produced jobs instead, like new investments in mass transit.

Cash for clunkers was done because it was easy stimulus and some lobbyists got it into law, and as mentioned above had the benefit of increasing fleet fuel economy, something liberals are for and conservatives are against.

That sounds right. I'm not advocating silly spending, but I think we're illustrating that stimulus in deflation is good, right? WWII was stimulative despite its death toll. It would seem like in the big picture what was needed (or deemed needed) was to stimulate spending in the recession. If we helped air quality or gave another shot in the arm to the auto sector, so be it. But lord, please go buy some durable goods.

A trillion in stimulus was needed in 2009-2010 because we'd just lost the $100B/mo influx of bubble bucks:

http://research.stlouisfed.org/fred2/graph/?g=oTb

flowing from the hosing bubble.

The economy of 2012-2013 is a bit better than I was expecting, but I mark that down to the lower interest rate regime juicing home values, plus Bennie getting serious about flooding the world with capital, which while not quite as stimulative as the departed housing bubble, doesn't hurt (as long as price inflation doesn't roast everyone alive, which it hasn't -- yet).

"40% of this country barely has a pot to piss in". The modern version of "a chicken in every pot!" would be "free pots for your piss!"

Bellingham Bill says

Nobody gets the correlation between the 1970s inflation and the baby boom entering the workforce.

Well the correlation with the ladies hitting the workforce at taht time is occasionally mentioned.

Can you expound on the boomer/inflation bit? Is it that they increased demand and that increased the wages to create real inflation? A kind of virtuous cycle resulting in inflation?

CL says

"40% of this country barely has a pot to piss in". The modern version of "a chicken in every pot!" would be "free pots for your piss!"

Mmmmm chicken 'n piss

bgamall4 says

No Reality, you have it wrong. Bailing out the car companies bailed out the parts guys who would have buckled if the car companies went down. It was not about the car companies as much as it was about the suppliers. So, taking out a car company may not have ended there.

The parts guys should face the same culling if they can not make a living selling parts to consumers and carmakers left standing.

The real reason for the bailout however was due to the union jobs and their political campaign contribution.