“Cash for clunkers is war on the middle class” but why not trade one in?
August 23rd, 2009 | by mbhunter |We drove up to my parents this weekend. On the way through central PA my wife saw a sign in someone’s lawn:
Cash for Clunkers is War on the Middle Class
There was an interesting discussion over at Money Quantum (request a pre-launch invitation) on the topic of economic stimulus. Flexo posed the question:
Do you think the measures the government has taken to stimulate the economy has been worthwhile?
Furthermore, should those who disagree with the economic stimulus, in order to show that they stand by their convictions, reject all the benefits personally? Can someone who takes advantage of Cash for Clunkers, for example, truly reject the concept of economic stimulus?
Basically, is it hypocritical to oppose economic stimulus and take advantage of economic stimulus at the same time?
We weren’t in a position to take advantage of C4C but I don’t see any problem with doing so if it makes economic sense for my family. I also see that economic stimulus (a fancy word for bailout) is invariably going to make us poorer as a whole. Over the course of my life there will be a handful of such economic stimuli that I’ll be able to take advantage of. There will be far more that I can’t take advantage of, yet will pay for indirectly through rising deficits, rising federal debt, devauled currency, higher taxes, and less choice in what I can buy.
My recent jazz concert was another great example. Everyone in this country pays to maintain all of these (awesome) military musicians, but only a few people take advantage of it. I mean, heck, the concert is already put on, the jazz is some of the best most people will hear anyway, so why not?
“Wait a minute,” you might say. “Isn’t the military just subsidizing an art form that just isn’t economically viable anymore? Why can’t these guys get jobs in the real world?” Well, it is harder than it used to be to support a big band, and gas is getting atrocious, but hey, it’s still really cool! So why not?
But it goes beyond taking advantage of your own personal favorite government freebies. I contend that it’s just about impossible to avoid stimulus altogether. Do you take deductions for your charitable donations? Did you take advantage of that $8,000 homebuyers’ credit? Tax credits for adoptions? Deduct your mortgage interest? These are all stimuli designed to encourage consumer spending in one particular area. If you didn’t take advantage of these, there are probably others that you did take advanage of.
Might as well funnel some of your own money back into your own pocket. It’s leaving it ever faster.
8 Responses to ““Cash for clunkers is war on the middle class” but why not trade one in?”
By Jake Stichler on Aug 23, 2009 | Reply
I went unemployed for a good stretch a couple years ago and refused to file for unemployment benefits. Had a nice long discussion over the phone about it with a fellow libertarian, who didn’t seem to understand where I was coming from for a bit (which was odd).
Being opposed to the ridiculous taxation in this country, however, I see nothing wrong with taking tax credits. The less taxes, the better. I prefer to just pay as few taxes as possible in the first place, though.
By Chris on Aug 23, 2009 | Reply
C4C did not stimulate anything. If you believe people who had no intention of buying a car went out and bought one anyway because of C4C, then you are fooling yourself. C4C only pushed up purchases that would have occurred anyway within the next 6-12 months. So now, the purchases won’t be made. I bet you will see the number of car purchases drop substantially in the next few months. That’s the law of unintended consequences that always occurs when the government meddles in the free market. They will never learn.
By mbhunter on Aug 23, 2009 | Reply
Jake: That was noble. Lots of people don’t think that way.
Chris: A stimulus is a stimulus. Just because it only affects people at the margins (those who were close to buying anyway) doesn’t matter. More cars will be sold because of the stimulus. I wasn’t claiming that it people who had no intention of buying would all of a sudden go out to get one.
By Chris on Aug 23, 2009 | Reply
I wasn’t referring to you specifically with that statement. But if it merely moved up car purchases that were going to occur within the next 6-12 months anyway (which I believe is what it has done), then what did it really stimulate?
Another thing at has done that is detrimental is remove perfectly good cars from the buying pool. The ones they are destroying could have been purchased by someone else who needed a reliable car for cheap.
By Jon on Aug 24, 2009 | Reply
Jake:
When you get in a car accident do you not file a claim with your auto insurance either? When you get sick do you pay your doctor in cash instead of using your insurance? To me it seems only a fool would buy insurance (unemployment insurance in this case) and then not file for a legitimate claim. Just because it’s compulsory (like auto insurance in most states and health insurance in Massachusetts) doesn’t take away the fact that it’s still an insurance plan. Yes, I too would like to have a self-insurance option for unemployment but not making legitimate claims is not going to help prove the point. In fact, quite the opposite is possible. By paying for the insurance but not making claims you only make it seem more effective to the bean counters and politicians to see it as a success.
By Jake Stichler on Aug 24, 2009 | Reply
1. My insurance is liability only, so no.
2. Why yes, the last time I saw my doctor I did pay in cash, as I lacked insurance.
3. You’re absolutely right, which is why this last time, I did get unemployment benefits. Even if I am paying in to it, I still see it as a form of welfare. Similar to Social Security, really.
By Lord on Aug 24, 2009 | Reply
“is invariably going to make us poorer as a whole”
Probably, but not certainly. Lack of stimulus would also have been costly as idle factories, idle workers, and idle money also have significant costs, even more so when they lead to more idleness. It is not merely a question of the cost of program but the cost of the alternatives.
By mario@online car sales on Aug 31, 2009 | Reply
America went at its richest when taxes to the rich were at their highest, somewhere near 90% of earnings, and when its social safety net was at its tightest ever. That was in the ’50s and the ’60s.
I was struck, a few years ago, about how much market economy is deeply related with religion in Anglo-Saxon protestant communities.
Anglo-Saxon and WASP communities are tough to be pragmatic in every sphere of living… But not in economic life.
Something doesn’t look quite as it should in this picture, where you see ideologues preach what is honorable and what is not honorable in economy and not calling their discourse a religion, their discourse not being more founded in verifiable facts than any self respecting religion.
It must be a matter of the numbers of people who are following since it’s not a matter of facts.