Destroying "Clunkers" for Cash
Does this make you sad, or is it just me? I think there's something incredibly barbaric and degrading about destroying a perfectly good piece of machinery. A well maintained engine can run for more than a hundred thousand miles. It seems almost sacreligious to just destroy it out of hand.
To receive government reimbursement, auto dealers who offer rebates on new cars in exchange for so-called clunkers must agree to "kill" the old models, using a method the government outlines in great detail in its 136-page manual for dealers: Drain the engine of oil and replace it with two quarts of a sodium-silicate solution.
"The heat of the operating engine then dehydrates the solution leaving solid sodium silicate distributed throughout the engine's oiled surfaces and moving parts," says the National Highway Traffic Safety Administration publication. "These solids quickly abrade the bearings causing the engine to seize while damaging the moving parts of the engine and coating all of the oil passages."
Over the weekend, half a dozen mechanics gathered around three clunkers marked for death at Jim Clark Motors in Lawrence, Kan. As Loris Brubeck Jr., the dealership's president, held a stopwatch, the sodium-silicate solution took two minutes flat to kill a 2002 Ford Windstar, and just a few seconds more to kill a 1999 Jeep. But a 1988 Dodge van lasted more than six minutes.
"Sometimes those old engines, they're the hardest to kill," says Mr. Brubeck.
I can't get over what an incredibly wasteful program this is.
Automobiles represent a significant share of the nation's capital stock. Even used cars often have years of life left in them, years during which owners can use them to get to work, perform work, or transport themselves and their families for education, recreation, or consumption.
"Clunkers" don't play much of a role in the lives of upper- and middle-income Americans, I suppose, but they play a major role in the auto market for low-income Americans. What the federal government is now doing is using taxpayer dollars to subsidize the large-scale destruction of functional cars that would otherwise exchange hands one or more times in the used car market. This will make it harder for poor folks to purchase cars in the future. It's an income transfer up the income distribution, at the behest of so-called progressives.
The fundamental mistake is to think that the government can magically induce economic activity with no countervailing downside. The Clunkers program is really just shifting around sales, creating the illusion of a demand for cars conjured out of nowhere. To the extent the program has enticed people to speed up or delay their purchases to take advantage of the rebate, it has borrowed demand from earlier this year or the future for a burst of sales in the summer of 2009.
The car-buying guide Edmunds.com reports that as many as 100,000 buyers delayed their purchases, waiting for the Clunkers program. And some of the roughly 60,000 trade-ins that take place in any month anyway were rushed to gobble up the rebate. "We have crammed three or four months of normal activity into just a few days," Edmunds.com CEO Jeremy Anwyl writes in the Wall Street Journal.
The Clunkers program demands that the old cars be disabled. In a ritual repeated in dealership lots across America, sodium silicate is being poured into car engines to kill them. Many of these cars have value and could be sold on the used market. They are being destroyed senselessly in a diktat reminiscent of Franklin Roosevelt's slaughter of livestock during the New Deal. Decades later, we still haven't learned that the wanton destruction of goods is scandalously wasteful economic policy.
But these consumption-promoting policies are not necessarily a boon to the environment.
First, even when new cars and appliances are more efficient than the ones they replace, the act of replacing them entails environmental costs not accounted for in the stimulus programs. Building a new car, washing machine or refrigerator takes energy and resources: The manufacture of steel, aluminum and plastics are energy-intensive processes, and some of the materials used in durable goods, especially plastics, use non-renewable fossil fuels as feedstocks as well as energy sources. Disposing of old products, a step required by most incentive and rebate programs, also has environmental costs: It takes additional energy to shred and recycle metals; plastic components often cannot be recycled and end up as landfill cover; and the engine fluids, refrigerants and other chemicals essential to operating products end up as hazardous wastes.
Policies that encourage purchases of energy-efficient products may also increase, rather than decrease, energy use by confusing efficiency with consumption. For example, Energy Star refrigerators, which now qualify for rebates in many states, are certified to be 10 to 20 percent more efficient than "standard" models. Yet the Energy Star rating is awarded overwhelmingly to refrigerators far larger than would have been the norm two decades ago, and smaller models of refrigerator, which use less energy simply because they have a smaller volume of air to cool, were not even included in the Energy Star program until 2002. Consumers who wish to benefit from environmentally friendly stimulus money, then, are pushed toward purchasing "efficient" but relatively large models rather than being encouraged to opt for the smallest refrigerator, with the smallest energy demands, that meets their needs.
Beyond these concrete environmental drawbacks, product-replacement policies also send a message that old things are dirty and inefficient, while new ones are necessarily green and efficient. Under the Cash for Clunkers program, for example, old cars must be traded in for new ones. Yet plenty of used cars exceed the required 22 mpg: The Toyota Prius hybrid, on the market since 2001, gets upward of 40 mpg, and even a 15-year-old Honda Civic gets 28. By assuming that only new products can be environmentally friendly, these policies lead us to discount the environmental gains that could be made through well-established and low-tech means, such as smaller refrigerators. They also reinforce the idea that all products, even "durable goods," quickly become obsolete -- a notion that leads to overwhelming amounts of environment-despoiling waste.
Another unintended consequence of the Cash for Clunkers program is that poor people who can't afford new cars - or expensive used cars -- will be crushed along with all those clunkers. If you can only afford $500 - $1,000 for a car, you'll find many of these vehicles are now unavailable. They have been sent to the junk yard thanks to this program.
The Blogger News Network points out that junk yards that demolish the clunkers aren't allowed to pull engines and other parts before they're crushed, making parts for older cars harder and more expensive to get.
"Cash for Clunkers" benefits New Car Dealerships primarily, by increasing sales, and the upper and middle class possibly, by giving them an extra few hundred dollars. But it's not good news at all for lower income people. We can't afford a new car, and we won't be able to continue fixing our older cars at an affordable price, if we can find the parts at all. This isn't good.
In fact, the Obama administration knew they were taking away our options to keep our vehicles running. They want our cars off the road, and they really don't care how it affects those of us with very little money. The little guy isn't a priority. Obama pretended to champion the little guy in order to get their vote, but it's becoming more and more obvious that special interests - those that have received the bailout money and those industries he is choosing to socialize - are what he really champions. Politics as usual.