Thursday, November 3, 2011

Cash for Clunkers: the gift that keeps on giving

At the height of the Keynesian gimmick known as Cash for Clunkers, we noted that charities weren't too hot on the idea as the program succeeded in taking older, lower gas mileage, but certainly serviceable cars off the market. The very types of cars favored by lower-income folks to get back and forth to work.

It appears now that we are discovering one of the legacies of Cash for Clunkers.

For more than a century, efforts to help the disadvantaged have focused on education, healthcare, nutrition and housing. Almost nothing has been done to help the working poor afford cars, despite research that indicates it would help alleviate poverty.

About 1 in 4 needy U.S. families do not have a car, according to the Annie E. Casey Foundation. That's a serious handicap for the millions of Americans who don't have access to robust mass transit.

A nationwide survey of 353 people who bought cars with help from a nonprofit group called Ways to Work found that 72% reported an increase in income. Of those who were on public assistance when they acquired a car, 87% were no longer receiving it a few years later.

Other studies have found that low-income people were more involved in community activities and had better access to healthcare after getting cars, while their children participated more frequently in after-school programs.

"You're more likely to have a job and less likely to be fired," said Evelyn Blumenberg, a professor of urban planning at UCLA who studies transportation and poverty. "It's just a no-brainer that low-income families need cars."

Yet there are almost no state or federal programs to meet the need.
(italics, ours)

Let that last sentence sink in. Cash for Clunkers destroyed 700,000 cars. You don't think that a good chunk of that 700,000 cars, were they still around, could be meeting the needs of the poor and low income families in this country?

There was a federal program, alright. But it was a federal program that absolutely shafted people who need wheels to get to work, to go shopping, to take their children to the doctor, etc.

"Those cars could have been used for very needy working-class families," said Carolyn Hayden, a Glendarden, Md., transportation consultant. "It will go down in the annals as a missed opportunity."

More like a fantastically horrible idea. Think about it: $3 billion to essentially keep people unemployed. What's not to like about that?

The Keynesian gimmickry employed by the Obama administration to get us out of the recession were intended to be quick-hitters to boost the economy. What were finding, however, is that as short-lived as these programs were they have a legacy and a human cost that will be felt for years.


Harrison said...

Being in the auto industry I saw it first hand. Not only did it kill the charities but it also made cheap cars much more expensive.

Totally stupid and a huge waste of money.

And I think the brands that benefited the most were Japanese.

Dean said...

It was a complete and unmitigated disaster on so many levels and in so many ways.

Harrison said...

A bunch of car salesmen made money though. I wasn't one of them. :-(

Doo Doo Econ said...

You are missing the point of cfc. People are now more familiar with the fact that only Washington knows the answers and holds the keys to our personal happiness.