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Cash for Clunkers [SPLIT]
kedinik
Registered User regular
Registered User regular
Yeah...man..."Free cooking day" would suck for...like...diabetics.
Let's say you cook $20 worth of food for each person who shows up to Free Cooking Day.
Everyone who did not eat that food has to deal with the higher price of food that your new policy created, but did not receive any benefit.
A more pertinent, non-strawman example: Cash for Clunkers is great for people who use the program to get newer cars for cheap, but it has hurt many poor families by driving up the prices of used cars.
kedinik on
Posts
[citation needed]
1) People receive money to buy cars => demand for cars increases
2) People must destroy current cars to receive this money => supply of used cars decreases
All other things being equal, Cash for Clunkers increases the price of cars and decreases the availability of used cars. I don't have proof of causation, but the price of used cars trended upward pretty strongly when Cash for Clunkers took effect.
I would be very surprised if poor families did not depend on used cars more so than middle and upper class families.
So you don't have any actual proof that used car sales have decreased, been impacted in price, or in any way been affected from cash for clunkers outside of hypothetical car lots in your mind. Gotcha.
Not to mention that we needed to get those fuel-inefficient cars off the road, not just recycle them like a set of hand-me-down overalls.
The demand for used cars already went up, because people weren't buying new ones. That was the point of the program. However, this only applies to recently used cars, not to the "clunkers" that were being traded in.
If you want to buy a cheap and crappy used car that gets terrible mileage, you would have no trouble finding one. Supply and demand are relatively inelastic, and I seriously doubt that cash for clunkers decreased demand enough to cause a shortage of supply. One thing it did do, however, was put a lot of used parts that might otherwise be difficult to find back on the market.
The used cars market has had record high prices and very low sales volume since Cash-for-Clunkers, attributed to a low supply of used cars.
I'm just saying, it's near-impossible to create a well-intentioned policy without inadvertently hurting some people. There are rarely clear-cut "good" choices in life, at any level.
"There is not a man of us who does not at times need a helping hand to be stretched out to him, and then shame upon him who will not stretch out the helping hand to his brother."
Fallacy of equivocation. "Supply of used cars" is a big category. It can mean anything from a 30 year old pile of junk to a 2 year old car in relatively good condition.
The demand for used cars goes up in a bad economy for the same reason that sales at Walmart goes up in a bad economy. People with less money tend to be more thrifty. If demand outstrips supply, then that means that price goes up.
The reason why this didn't affect cheap, crappy cars is because there are already more than enough cheap, crappy cars to go around. You can go on craigslist and you wouldn't have much trouble finding a working car for under $1000 if you wanted. Hell, I wonder if you could have simply purchased a crappy $500 car that no one wanted and then traded it in for much more than it was worth.
But if I'm the type of person who would have brought a brand new car in a good economy, and I'm now looking for a used car in a bad economy, I don't want a cheap and crappy car. I want a good car that's almost as good as new, but for significantly less money. And those are the cars that are going up in price.
Thank you.
That doesn't mean that all used games would be in demand, though.
i.e., you wouldn't see a sudden price increase for Silver Surfer for NES, or Superman 64.
Not all used games are equal, just like not all used cars are equal.
He didn't say sales are up. He said prices are up. Small difference.
It isn't that far of a stretch to think that pulling 700kish cars out of the used market reduced supply in the used market. Naive economics says this will raise the cost of what is still there, unless demand took a corresponding drop. I don't know if that is the case.... Just, I can understand the logic of why you would think it.
Do we have anything saying this isn't the case?
Correct me if I'm wrong, but weren't you arguing the other day that there was 'proof' that Cash For Clunkers only robbed future sales? If that's the case, then many of the scrapped cars wouldn't appear as used lot inventory anyway. How do you reconcile those two positions internally?
#FreeScheck#FreeSKFM
First, what? Those positions line up directly. If they robbed future trade in sales, than those trade ins could have possibly been right back on a used lot right now. Instead, they were destroyed. Thus, supply of used vehicles was taken off of the market. That was one of the direct aims of the clunkers program. No?
Second, I was just saying that I see how that outcome could be seen. I would be interested in any data one way or another. (In the thread the other day, I was asking for more reading on it, if anyone knew of any. Sadly, I don't remember how that thread ended, now.
With a corresponding dip in future demand. Not to mention that there was a glut of cars in inventory putting a separate price strain on sellers.
How does this contradict the claim that clunkers could have increased prices? You robbed future supply of used vehicles by simply destroying the vehicles. Were it not for the clunkers plan, those vehicles that were traded in could be on craig's list or used car lots right now. I agree you also removed future demand, which gets back to my asking if anyone has better numbers showing the net effects of the clunkers program.
No the other day you posted that the demand for NEW cars was robbed by C4C.
So basically C4C simultaneously removed the future demand for new cars and increased the demand for the old cars by destroying the ones that wouldn't have been traded in if not for c4c.
Is this quantum physics?
#FreeScheck#FreeSKFM
Schrodinger's Stick Shift
alternate poast:
Worse, economics.
And what would they have been driving instead?
Technically, they only destroyed the engine. The rest of the car can still be scrapped for parts, many of which would no longer be in production.
And to say you robbed the supply of future used vehicles assumed that the seller would have sold the car if CFC was no longer in place. That doesn't seem to be the case, because if CFC hadn't allowed them to buy a new car, then they probably would have stuck with their old one.
The overall "demand" for cars is still the same. What CFC essentially did was shift that demand into buying new cars that may not have been sold otherwise. In fact, it actually decreased demand for higher end used cars, because the people who might have purchased one of those bought a new model instead (a new model that had no real demand for it.).
The other day I stated that the sales of new cars plummeted, which seems indicative that it was caused by the future robbing effects of the C4C program. Sales of used cars have also plummeted, one could surmise that some people that were just looking for a cheap car, decided to use the trade in to get a cheap new car, instead of getting a cheap used one.*
So, we had a program that robbed future sales to generate revenue. This should lower demand across the board in the future for at least a short term for both new and used. It also flat out destroyed future supply of used cars. The question, then, did the future demand of new cars offset the destruction of the future supply of them? I don't know. I just can't rule it out of hand like you are trying to do.
*One of the guys here was able to get a new Prius for about 4k after the C4C and other tax credits. Even I might have sprung on that deal, and I am a strictly buy used person now.
Do you have proof of the bolded?
dappled sunlight / strikes your butt
girl you got a / real sweet butt
Whatever, the entire point is retarded.
C4C was a subsidy. Subsidies do not "rob future demand" they increase demand while they're active.
There are two types of people who bought cars during C4C. 1. Those who would have bought a car anyway. 2. Those who would not have bought a car but did so because of C4C.
After C4C ends, we still end up with 1, not 1 minus 2. [tough there will be supply effects due to inventories]
The other thing C4C did was increase demand of clunkers[buy them to trade them in] for arbitrage opportunity and decrease demand for quality used cars[people would substitute to new cars]. This should increase the prices of clunkers and decrease the prices of quality used cars.
Any "low supply"[and its not actually low supply, get your econ jargon correct please news organizations] in used cars is going to be in clunkers and not in quality used cars. And it will be corrected as demand returns to normal fairly soon after any static changes. Remember, a single static change does nothing in the long run, since the long run supply/demand is determined by the rate[and supply of used cars/new cars is most definitely a rate]
That being said, lets figure out how this hurts a "poor person"
If a poor person has a clunker, this may make it valuable for them to sell it and make a profit. This may also make it possible for them to get a newer car that is cheaper over the long run[fewer repairs]. Each of these situations is a benefit to them. The only time it is not a benefit to them is if C4C does not run to their price point and they need to purchase a clunker during the same time or re-adjustment period at the end and cannot wait until prices go down.
In short, this is very very unlikely to hurt poor people
Cars are kind of a buy-once-keep-for-a-while item. It's not hard to believe that increasing demand for them now might hurt sales later.
Any gamers in the Danville, PA area? PM me if you're interested in some tabletop gaming.
Stupid people
Year to date [end of September] there have been roughly 10 million vehicles sold in the United States. [edit: source is WSJ
Some 250,000 sales qualified for cash for clunkers, assuming each and every one of them was a sale that would have not occurred, you're talking about a whopping 2.5% of car sales for 9 months out of the year in the United States.
Something tells me that while the sales increase is significant and had an impact on inventories, it is barely going to make a blip in demand next year or the year after[when we can expect a growing economy to purchase more cars than this year]
Here's some choice quotes:
Opposing opinions came from several angles:
So, what do you guys think of this whole issue? I'm a bit surprised/confused on a number of issues:
1. When we started the Cash for Clunkers program, some of the optimism stemmed from how well similar programs had done in Europe. From what I remember, a number of countries had developed similar programs with high success that greatly buffered the impact of the global recession. The US is a nation that's incredibly dependent on cars, so I thought the program would have an even greater and more beneficial effect here. If it was so effective in Europe, why is it so ineffective here?
2. The White House quote and Ford analyst quote seem to be at odds with one another. The White House says the study was BS and the analysis was BS, therefore any results cannot be trusted. The Ford analyst says Edmunds.com's numbers and statistics are on the dot, but they're wrongly interpreting the data. Well, whose right?
3. The description of how the analysis was done sounds pretty legitimate. Does anyone have more information about why the White House would say it doesn't withstand basic scrutiny? Are they right in that claim?
4. So overall, did the program have a beneficial effect, negative effect, or no effect on the economy? Also, I'm pretty bad with huge numbers like those used in budgets. If Cash for Clunkers had no effect, is it even a big deal or is $3 billion like chump change in our budget?
I don't think anyone was saying that those sales wouldn't have happened eventually, the whole point was to create a short term spike at the expense of future car sales during a less precarious economic climate.
So I'm confused as to what this report is saying
Any gamers in the Danville, PA area? PM me if you're interested in some tabletop gaming.
edmunds is one of the most trusted sites in used and new car pricing. It is the KBB of the internet.
It is, in general, and the name is no more idiotic than Kelley. I'm not really getting the point they're trying to make here, though, since the entire point of the program was to steal from future demand. If they're proving that CARS stole future demand because the sales would have occurred anyway just a bit later on...bravo?
http://www.xoverboard.com/cartoons/2007/070827_libertarian.html
http://www.edmunds.com/help/about/press/159446/article.html
Without similar analysis done on the European programs it's impossible to make a real determination here.