After taking some time off and at the urging of my wife, I have decided to start blogging again. There are just too many interesting things going on to not say anything.
Two stories struck me about recent events. The first is Obama's "cash for clunkers" initiative which gives car owners government funded vouchers of up to $4,500 when you turn in a car that gets less than 18 miles per gallon towards the purchase of an energy efficient car.
A couple of problems with this idea jump off the page. First, if you essentially own the American auto industry, how can you stimulate car sales? Have the government pay people to buy new cars. Now that Obama owns Chrysler and will shortly own GM, he needs to find ways to move cars out the door. Obama is the head salesman in chief. More fundamentally, this is the problem with government ownership: the use of public funds to pay for private interests.
Second, even though it is throwing more public money at the auto companies, it won't even help American auto makers much. Consumers can use the vouchers on any car assembled in North America, which includes a lot of Honda, Toyota, and European cars that outsell GM, Chrysler, and Ford high mileage cars. How many of these vouchers will be used on a Honda Prius?
Third, these vouchers only require that the new car have gas mileage 25% above current requirements in each category. This means a lot of SUV's that get 23 miles per gallon are eligible for purchase. What is the point of giving some a $4,500 voucher to buy an SUV that only gets 23 miles per gallon?
Consider this the first of the Obama led push to move cars out the door at a big cost to the American public. This is why governments shouldn't get involved in private industry. Politicians use public money to support their private interests.
