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August 27, 2009

Comments

Alex Marshall

So I understand the big stimulus package being in part a extension of government "control." But, I don't quite understand your representation of the "Cash for Clunkers" deal. I don't think that the deal by any means gives the government more control. If you are satisfied with your perfectly serviceable car, then keep it. The government isn't mandating that you give it up. But if you are looking for a new car, they are giving a bonus for getting one that is more efficient. Unless I have significantly misunderstood how the program works, I don't see how it is any way reducing your control (you still have all the options- you can choose whether you want a new car, what kind of car you want, etc.). Yes, it rewards a certain action, but it certainly doesn't mandate it.

Austin

Alex,

Your problem, like many so many others', is myopia. I would recommend reading Ron Paul's "The Constitution: A Manifesto."

In it, you will read one of Dr. Paul's principle complaints with the current theory of what constitutes a proper role for the Federal Government: the problem of the forgotten man.

A (the government) decides B (you) could use a car. A further decides it should help B buy the car if B wants to. B does so, and A pays for it. And nobody gets hurt, right? Wrong.

That is because A gets the money to pay for B's car by taking it from C. While we have laws against theft (the coercive taking of property and reallocating it to one's self) the government itself is increasingly an intermediary of exactly this kind of theft--wherein a lobby re-allocates some portion of millions of Cs' taxes to itself. (Cough--Cough--GM!--Cough) We properly tolerate that taking when it is constitutional, i.e. funding national defense or a post office. But that doesn't change that doing so is, fundamentally, an exercise of control over the C's from whom the funding is received.

This "forgotten man" theory is the main reason Cash for Clunkers is an exercise of control. But there are other ways in which Cash for Clunkers represents a gross overture of soft tyranny. I have bulleted them in a second post:

Austin

The government intervention artificially suppresses demand for used cars, in effect subsidizing market competitors it deems "worthy" and hosing those it deems "unworthy."

The government intervention is inequitable by definition: only cars the government wants off the road can be turned in. If the government wants your car on the road, too bad--you don't get to participate.

The method by which this program is funded actually compounds the problem of the forgotten man if it is debt financed: the program devolves onto an unrepresented constituency--generations of taxpayers yet unborn who will bear higher tax rates to service this program's piece of the national debt.

Cash for Clunkers taxes people on a portion of the PURCHASE PRICE of the car (the amount of the rebate). This is a close cousin to the taxation of imputed income, and represents a "double dip" on wage taxation. (Admittedly, this is one of the more technical arguments in this comment; I just don't feel like explaining it right now.)

Dealers use rolling inventory numbers to move product. Thus, a dealer may sell 104 cars, but only have rebates in hand for 2. (Many dealers report being in exactly this situation.) On the assumption that they will, in time, be paid for the voucher amounts in question, these dealers, in essence, are being forced to give the government an interest free loan.

The other problem, of course, is that they run a risk of becoming balance sheet strong, but cash flow insolvent if the federal bureaucracy tarries too long with rebate funds. If, on the other hand, they opt not to participate, they run the risk of losing market share and revenue they otherwise would have gotten pre-government-market-intervention to competitors.

Ask yourself, with regard to any of the last 5 matters I have described, is there any way that any of those matters can be optional? The answer is "no." Therefore, the program is in multiple ways an exercise of control even without appealing to the theory of the forgotten man.

Randy

Alex,
I didn't bother to read all of your post, because within the first few sentences, I realized you don't get it. Why should I, Mr. Taxpayer, be forced to subsidize you, Mr. Recipient, the privilege of purchasing a new car at a discount?
Randy

Bo

"One of Washington's all-time dumb ideas."

"...you can't raise living standards by breaking windows so some people can get jobs repairing them."

http://online.wsj.com/article/SB10001424052748703628304574453280766443704.html?mod=djemEditorialPage

Austin Fleming

And one piece of the price tag to the forgotten man is in:

http://money.cnn.com/2009/10/28/autos/clunkers_analysis/index.htm

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