Law Of Unintended Consequences Meets “Cash For Clunkers”
Or in the words of almost any economist who knows his business – “I told you so.”
Essentially what has happened is precisely what most of them said would happen – the program, Cash For Clunkers, did nothing more than steal from future sales.
To paraphrase the Reverend Wright – the clunkers are coming home to roost:
Edmunds.com reports that “September’s light-vehicle sales rate will fall to 8.8 million units . . . the lowest rate in nearly 28 years, tying the worst demand on record. After the cash-for-clunkers program boosted August sales to their first year-over-year increase since October 2007, demand has plunged. In at least the last 33 years, the U.S. seasonally adjusted annual rate has only dropped as low as 8.8 million units once — in December 1981 — with records stretching back to January 1976.”
But fear not – Washington has learned its lesson:
Now NHTSA says that, despite burdening manufacturers with $60 billion in new costs, its new 35.5 mpg fuel mandate will stimulate the economy by boosting auto sales by 65,480 vehicles through 2016 because Washington “expects stronger consumer demand for fuel-efficient models.”
Yup, DC knows economics and it certainly knows the consumer’s mind doesn’t it? Centralized planning has always driven demand. Yessireee. That’s why the Soviet Union is such an economic powerhouse today.