According to an article I read in USA Today, economists are beginning to believe that the CFC program is causing money to be diverted from other consumer markets. Makes sense.
Every Single One Of These “Well Meaning” Socialist Government Spending Bills Has “Negative Unintended Consequences”, Every Single One!
Used car dealers should be allowed to upgrade folks to more efficient vehicles, instead they are losing potential customers to new car agencies, salvage yards are losing out on usable engines, repair shop, parts vendors are . . . etcetera, etcetera.
History truly does repeat itself. Some choose not to heed the lessons.
Socialism collides head-on with free-enterprise capitalism!
CSA
Amen.
In other news; Water is wet and the sun shines in the sky
Is DIVERSION a bad thing? Money is still circulating, isn’t it? The circulation of money is the life blood of an economy. Without circulation, stagnation, and depression, set in.
An example: you would pay the grocer for food, if someone paid you money you are due. That entity would pay you, if they received money due them, from an another entity, which is due money from another entity. In other words, money circulation.
Of course when you spend money on one item at a store you have less money to spend on something else. It doesn’t take an economic genius to figure this out. Definately when people buy a new car it impacts on other areas of their spending. Not always negative, when people buy a new major purchase they often feel better about themselves and life and go out and buy more stuff. The psychology of how people spend money is a science itself.
Now for Socialism vs Capitalism. You have to know that America is not a pure capitalist or socialist system. It is a mixture. Who wants to give up their Social Security checks? How many of our industries are regulated? Auto, pharmacuetical, aviation, radio and TV, telecommunications, utilities, and on and on. Pure capitalism sounds great, but the nature of man is to take advantage and often unfair advantage of our fellow man. Hence monopolies, price gouging and abuse of past capitalism has fostered laws and regulations which certainly could be argued as socialism by some.
I’d rather more of it was left circulating stricktly within the private sector. Having $4B diverted by the feds for diversion to the industry of THEIR choosing is not what I’d consider a healthy circulatory system.
Which do you prefer, that we bias the path more toward capitalism or more toward socialism?
Actually, socialism puts the money into universal social support systems. Healthcare, government retirement plans (for everyone), stuff like that. The government taking our money for use in a particular consumer industry falls under another definition…
But the point of my post was to shed light on an unintended and adverse (to my mind) consequence of the CFC program that’s not generally recognized.
Well, of course it is. More people are now able to afford new cars that couldn’t before, so they’re going to spend what money they have on one.
It’s not as if this program is going to go on forever. Used car dealers, salvage yards, and the like are not all going to vanish because of this.
As for capitalism vs. socialism, I think we’ve all seen what happens when all the money stays completely within the private sector; the economy damn near redlined itself to death. There has to be at least some measure of regulation and “spreading it around”, as it were, to keep things reasonably stable. As UncleTurbo said, the country is neither 100% capitalism nor 100% socialism, but a mixture of the two. We cannot go too far one way or the other. The ebb and flow of which one has a higher percentage is much like the ebb and flow of the economy itself.
People seem to equate the word socialism to mean the USSR. It’s foolish to think we are even getting within the same zipcode of that. CFC will run its course, many people will have new cars rather than old ones, used car sales will still happen, salvage yards will still operate, auto makers will appreciate the newfound business the program brought them, and everyone who participated in CFC will be consuming less gasoline. Let’s ease up and try to look at the bigger picture here, folks.
The last two paragraphs are unnecessary social commentary, which we’re not here for. I’ll leave them up just the same, but I got started and couldn’t stop. Apologies.
I did the same thing, only I saved my rant on the health care debate to a Word file rather than post it. Maybe later if health care somehow finds its way into the car talk site.
A few years ago “liberal” was a bad word. It seems the same folks are now moving onto “socialism”. I voted for a democrat not a socialist. There was a socialist candidate but that is not the person that got elected.
There was a time when Joseph McCarthy got everyone all worked up using “Communist” as the buzz word. For now it is socialist that gets everyone tied up in their shorts.
The USSR was communist rather than socialist.
And I’d argue that the economic downfall was initiated by government intervention in the mortgage market via the Consumer Reinvestment Act of 1977. That started the ball rolling on the creation of “creative financing” that became “toxic loans”.
But that’s a whole different forum. My post was to raise the issue of secondary and tertiary effects of the CFC program that are just now beginning to be recognized. My post was specific to the CFC program. Not that I don’t enjoy debating the other issues.
What’s good for General Motors is good for America!!
It Always Amazes Me That People Can Rationalize And Try To Logically Explain The Government’s Spending Of Other People’s Confiscated Money To The Point Of Running Completely Out, Printing More, And Continuing To Spend, Indebting Me, My Children, And Their Children.
I have always lived within my means, debt-free, by being thrifty, conservative, and working for everything I’ve got. I expect no less from this Country’s leaders. Where did this silly Government spending sickness come from?
Even if the Government had enough confiscated tax dollars to spend on CFC without just firing up the presses and printing more, the whole program is unfair. I qualify for no Government hand-out programs because I live within my means and don’t create extra pollution by driving a “Clunker”. However, I am expected to pay for these programs.
There is no logical explanation to the waste programs like Cash For Clunkers represent. Our own Government caused all of our current economic ills and is fanning the flames.
CSA
Perhaps what’s really good for America is to let GM figure out on its own how to survive. Perhaps having only the effective producers in the market segment is the best thing for America.
Perhaps what’s good for America is for the feds to rein in spending of our tax dollars in the private sectors. In eight months we’ve gone from a $500B deficit budget to a $2 Trillion deficit. How is that good for America?
There is no logical explanation to the waste programs like Cash For Clunkers represent. Our own Government caused all of our current economic ills and is fanning the flames.
I think we’re seeing a lot of this at these disrupted town-hall meetings across the nation. It seems to me that a fair chunk of the American populace simply has no trust in the government to do anything right, regardless of what it is.
I can’t speak to how accurate that really is (is the government solely culpable for all of it, or were they just one of the players?), but you’re definitely not alone in that train of thought.
I think that there are many people that don’t understand what it costs to borrow money or even have any concept of dollars. Many people go into an automobile dealership and just ask “What will my monthly payments be?” They can’t live within their means because they have no concept of what their means are.
I taught a freshman computer class and had the students use a spread sheet to determine the cost of a loan. In 1977, I bought a house valued at $20,000. I put $4000 down and financed $16,000. The students were amazed at how much I had to spend to rent the money. We then calculated the same loan at the same percent over 4 years and assumed a person bought a $20,000 car and had a $4000 trade-in for the down payment, so the amount financed was $16,000. The interest paid on the loan was more than what gasoline at $3.50 would cost assuming 12,000 miles a year and 20 mpg. The reaction of my students was amazing.
In this country some people brag about not being able to do mathematics. I think it is a disgrace and we are paying the price for this ignorance.
What’s the cost to borrow $2 trillion?
If you want to have fun with them and demonstrate the concept of compounding, have them figure out the solution to the following:
Give me a penny the first day of the month and give me twice as much every day for 30 days (2 cents the second day, 4 cents the third, etc.). I’ll put it all in a closet.
How much will I have in the end?
How long will it take for me to be a millionaire?
It will take 27 days to become a millionaire.
At the end of thirty days you’ll have $10,737,418 plus change.
They’ll have fun.
You’ve given the type of problem our high school students should solve and solve without a calculator. This is a great way to introduce the sum of the terms of a finite geometric progression. When the powers of two get large, it is time to introduce logarithms.
I cringe when I see calculators used in the elementary classrooms. The excuse given is that the arithmetic “gets in the way of learning mathematics”. I maintain that the arithmetic is the gateway to understanding mathematics.
Mechanical advantage made sense to me as a youngster when I would change the sprockets on my bicycle. I had one set of sprockets that would let me really dig out. I had another set that would let me go fast, at least until my legs gave out. When I took physics, the concepts made sense.
I’m afraid that in our educational system today, we don’t let the students work with the application of the concepts–the students just memorize the concepts. When I taught calculus classes some years back, I assigned application (read word) problems to the students, where many of my colleagues omitted these problems. At the end of the term, my classes were often two chapters ahead of the other sections taught by my colleagues. Teaching the applications, in my opinion, paid big dividends in understanding the concepts.
I’m afraid that this “new math” (which really isn’t new at all) promotes memorizing of theory at the expense of understanding how mathematics is used. The result is that we now have a couple of generations that don’t understand how much they are really paying for a major purchase. Some days, I’m glad that I am a geezer and had teachers that made me apply what I learned.
Calculator use is required in the very bottom University of Arizona algebra course. Most students use the TI83 graphing calculator.It is not shameful to master the TI83,in fact I felt very proud.
When I think Socialism, I think of Sweden or Finland, not USSR