Friday, July 31, 2009
Economy The Beauty of Social Engineering
Posted by Charles Mudede on Fri, Jul 31, 2009 at 4:40 PM
It is here that I side with economists like Paul Krugman: Give money to the poor. Why? They will spend it. What evidence is there of that? The federal "Cash for Clunkers" program. NYT reports:
WASHINGTON — The House of Representatives voted to provide an emergency $2 billion for the “cash for clunkers” program on Friday, and the White House declared the program very much alive, even though car buyers appear to have already snapped up the $1 billion that Congress originally appropriated.Seriously, if the billions that were thrown at the banks went instead to programs like this, (social engineering) programs that circulate money and have some positive environmental results, then we would be climbing out of this recession at a faster rate. And, yes, I'm a lover of successful soft social engineering.The House shoved other business out of the way on its last day before the August recess to rush through a measure to address the cash shortage of the car program. The vote was 316 to 109, with significant support from Republicans as well as Democrats.
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1
Cash for Clunkers is hardly money for the poor. The program only gives a rebate for your clunker trade in if you buy a new car. Poor people do not buy new cars; they buy used cars that are soon to be clunkers.
2
i ain't poor, but i can't afford a car payment - so our 1995 SUV keeps on keepin on. at least we barely drive it.
3
Cash for Clunkers is a case of amazing branding. It should be "cash for rarely-driven second and third cars which would be replaced in 2-4 years anyway."
We're all paying to help people buy new cars sooner. Where's $4000 off a 4-year old, equally clean-burning car?
And separately, if you're advocating for wealth distribution, just call it socialism and be honest.
We're all paying to help people buy new cars sooner. Where's $4000 off a 4-year old, equally clean-burning car?
And separately, if you're advocating for wealth distribution, just call it socialism and be honest.
4
As #1 said, Cash for Clunkers is a subsidy for the middle class. And a crappy one at that--in the name of environmentalism, it pays to have your perfectly usable (and, no doubt, more fuel efficient than many of the cars available to the truly poor) car crushed.
Reduce, yes. But not reuse or recycle.
Reduce, yes. But not reuse or recycle.
5
Mudede I'm so with you on this one. The money to the banks was a knee jerk reaction due to the fear of change. We know that ultimately our economy is unsustainable but our politicians know it is political suicide to try anything new. Perhaps this little program, which personally I think isn't even progressive enough (we should really be trying to get people out of cars entirely) will be a tiny light bulb in the minds of congress.
6
How about we hand out free condoms and birth control instead of giving people a tax rebate if they have kids? Or how about free IUDs and vasectomies? I think when they were debating the stimulus package, Obama wanted to give out free BC to poor people because, "The last thing a poor woman needs is another mouth to feed." What the hell happened to that program?
Oh, wait, now I remember: The Republicans.
Oh, wait, now I remember: The Republicans.
7
Also, I'm not too enamored of the 'cash for clunkers' program because they're giving out money to people to buy cars that get 25 miles per gallon. Come on, at least make it 30mpg.
9
I heard Fienstein wants to extend it to purchase of used cars. If that happens, 2007 Prius, here I come.
10
I wonder how many people who have taken advantage of Cash for Clunkers usually bitch, bitch, bitch about government programs?
11
So, the initial billion subsidized around 220K car sales, a drop in the bucket considering GM alone sold 9.7 million vehicles in 2007. I wonder if this even moved the needle.
13
Other than food and housing, most of the money spent by the poor goes outside of the United States because that is where the purchased goods are manufactured.
14
This seems like a bad program to me...you're only eligible if you're driving around a car that gets less than 18 mpg - so we're rewarding people for driving gas guzzlers, and letting them buy cars that get 25 mpg to replace them. What car that isn't too old for the program gets less than 18 mpg? SUVs and trucks, I would imagine.
15
So wait: The thing to do is to encourage people to buy more stuff? Wasn't that what the Bush/Cheney axis told people after 9/11 -- "keep shopping!"
As was explained to me last night in one of the DVD extras of the film "The Godless Girl" (~1925), the way to prosperity is to spend more cash! "That's how we'll get this economy working again!" And yes, there is some truth to that. But only some.
But it has been shown that positive-interest currency systems systematically channel wealth to the wealthy. Money trickles up. Reagan's "trickle-down economics" is a disproven pile of poo; it doesn't happen that way.
Capitalists always argue that the More You Buy = More Jobs = More Prosperity for Everyone. But it doesn't. It ='s More Profits for the Owners, while they hire robots to put you out of work.
Encouraging people to buy more "stuff" (esp. cars) will not change a system that fundamentally rewards greed, and will only contribute to the cascading problems of waste and crappy food of which we still seem to be so dimly aware.
I'm surprised to hear you supporting this position Charles. It appears to go against your general orientation towards economic democracy.
As was explained to me last night in one of the DVD extras of the film "The Godless Girl" (~1925), the way to prosperity is to spend more cash! "That's how we'll get this economy working again!" And yes, there is some truth to that. But only some.
But it has been shown that positive-interest currency systems systematically channel wealth to the wealthy. Money trickles up. Reagan's "trickle-down economics" is a disproven pile of poo; it doesn't happen that way.
Capitalists always argue that the More You Buy = More Jobs = More Prosperity for Everyone. But it doesn't. It ='s More Profits for the Owners, while they hire robots to put you out of work.
Encouraging people to buy more "stuff" (esp. cars) will not change a system that fundamentally rewards greed, and will only contribute to the cascading problems of waste and crappy food of which we still seem to be so dimly aware.
I'm surprised to hear you supporting this position Charles. It appears to go against your general orientation towards economic democracy.
16
Actually, most of the people using Cash for Clunkers aren't poor.
They are the epic savers.
And this gets them to finally start spending again - they won't spend more than they earn, but it opens their pocketbooks again.
They are the epic savers.
And this gets them to finally start spending again - they won't spend more than they earn, but it opens their pocketbooks again.
18
@6, discouraging birth control is a means to breed an underclass as a source of cheap labor and a source of prison inmates for even cheaper labor through the largest prison-industrial complex in the world.
19
@3 - Yes, because instead of distributing wealth, we should do the opposite - just bunch it all together into a few tightly clenched hands. News at 11: that's the status quo.
People in this country who advocate for "wealth distribution" to the poor are merely trying to level the playing field.
People in this country who advocate for "wealth distribution" to the poor are merely trying to level the playing field.
20
I just read something more about it. If you're an SUV owner, you can get $3500 to get a new vehicle that gets TWO MPG MORE than your old one. TWO? So why are we doing this again? Why can't someone who drives a high-twenties clunker trade it in for a hybrid or something, but someone with a 14 mpg SUV could get the handout to buy a new one that gets 16 mpg?
21
It's not really that good for the environment either, because the minor saving of a few MPG does not make up for the massive waste of scrapping a usable car and replacing it with a new car. If this was really about the environment they'd be subsidizing engine replacement - with hybrid, electric, or clean diesel.
What it's really about is a big fat gimme to the poor sad car companies.
What it's really about is a big fat gimme to the poor sad car companies.
22
@20 - good question! and, it turns out, there's an answer, explained pretty well here:
http://freakonomics.blogs.nytimes.com/20…
"In fact, upgrading the inefficient S.U.V. to a more efficient one would save a lot more fuel — 372 gallons per year — than the 250 gallons saved from the switch from an efficient S.U.V. to the most fuel-efficient car on the market.
Why does 10 m.p.g. matter more than 22? The reason is that the relationship between m.p.g and fuel savings is not linear but curvilinear. Ten m.p.g. at the bottom of the range matters a lot more than 22 m.p.g. higher up.
This is a hard concept for us to get our brains around. "
http://freakonomics.blogs.nytimes.com/20…
"In fact, upgrading the inefficient S.U.V. to a more efficient one would save a lot more fuel — 372 gallons per year — than the 250 gallons saved from the switch from an efficient S.U.V. to the most fuel-efficient car on the market.
Why does 10 m.p.g. matter more than 22? The reason is that the relationship between m.p.g and fuel savings is not linear but curvilinear. Ten m.p.g. at the bottom of the range matters a lot more than 22 m.p.g. higher up.
This is a hard concept for us to get our brains around. "
23
Thanks for that Cash for Clunkers thing...it was the best heist since our HUD scam. Me and Pauli shaved off the vin numbers on some clunkers and them through the paperwork like a thousand times! Keep the program funded, I need a new Seville for my goomah.
25
@24: RTFM
You don't get to post live URLs until you log in and identify yourself.
Call yourself more like "Comp Lit To the Rescue", ding-dong.
You don't get to post live URLs until you log in and identify yourself.
Call yourself more like "Comp Lit To the Rescue", ding-dong.
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