Seven lessons of Cash-for-Clunkers’ failure
First, government forecasters are really bad at their job. … the money was expected to last for about six months. It lasted for one week.
Second, the government’s talents… do not include efficient administration of its programs…
Third, Cash-for-Clunkers proved that if you give people $4,500 to buy a durable good, they will be more likely to buy it while the refund is available than later. But it does not show that the increase in spending meets one of White House economist Larry Summers’ tests - sustainability.
Sixth, unionization matters. Cash-for-Clunkers added $3 trillion to the billions of taxpayer money expended to save General Motors and Chrysler, i.e., members of the United Auto Workers. What a like sum might have done for furniture makers, or the hotel industry …
Seventh, programs such as Cash-for-Clunkers have no regard for lower-income consumers. By mandating the destruction of trade-ins, Congress removed 700,000 cars from the used-car market,