[OT] Calculating "Clunkers"
Wade Preston Shearer
wadeshearer.lists at me.com
Tue Aug 4 08:33:39 MDT 2009
CNN ran a special commentary by a guest author today on the Cash for
Clunkers program. The author is Jeffrey A. Miron is senior lecturer in
economics at Harvard University and a senior fellow at the Cato
In addition to highlighting most of the points that we have already
made, he goes on to point out the following:
"Government policy should not favor some industries at the expense of
others, but that is exactly what cash for clunkers does. The program
helps consumers who can take advantage, and it increases profit and
employment in the auto industry. But funding for the program comes
from all other taxpayers, so it harms the consumers and industries not
supported by the program.
"Thus cash for clunkers creates winners and losers based on political
considerations, not economic values. Whether or not government
spending is a good way to stimulate the economy, the specific kind
embodied in this program is misguided because it distorts the
economy's allocation of resources across consumers and industries.
"Any spending stimulus, of course, tends to favor some sectors over
others, which is one reason stimulus is better accomplished via
reductions in tax rates, not increased spending. Tax cuts improve the
incentives to work, save and invest, thereby making the economy more
productive going forward. Reductions in tax rates are neutral across
sectors and therefore let private valuations of costs and benefits --
not political connections -- determine winners and losers."
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