Here is a basic economics lesson not taught in most expensive colleges. It has to do with the Obama administration’s past failed effort to revive the economy by giving new car buyers a $4500 cash allowance for clunkers when buying a certain type of new car.
It was not successful after the fact, and it was not predicted to be successful, when first proposed, by independent observers.
One: The government mixed an economic stimulus concept with an environmental objective so that it confused the public.
Two: The government, as is usually the case, had no concrete administrative plan for carrying out the program to reimburse dealers.
Three: Cars sold in this manner meant that no cars would be sold normally for a couple of years after the program terminated. The public’s appetite was temporarily stimulated but then held off from future buying.
Four: Because of the way clunkers were being disposed, the used car and parts markets were adversely affected.
In addition, If money of this kind is used for clunker cars, what about clunker washing machines, or lawn mowers, and so on? Or government funds for buying old clothes?
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