Monday, August 17, 2009

Cash for Clunkers and Higher Prices

By now, you'd have to be in a coma not to have heard about the "Cash for Clunkers" program. The G is spending our tax dollars to give people an incentive to trade in older, less efficient vehicles and purchase new. So, what do you think happens to prices with this demand stimulus. Not surprisingly, it looks like they are going up. So, if you are in the market for a new car, you get to pay for the program twice - once through your tax dollars and once through a higher price.

1 comment:

  1. Also, the carbon rationale for this program is deeply flawed. We are spending $237 for every ton of carbon dioxide removed by switching to higher efficiency cars. By comparison, currently prices for carbon credits (the price of a permit to emit one ton of CO2) is approx $20 in Europe).

    ReplyDelete