Gherald is pretty dead-set on believing that the “Cash for Clunkers” program was a wasteful, ineffective boondoggle. Leaving aside my baseline argument against that,* I wanted to post in a decent explanation of one of the primary reasons I consider the program’s outcome to be largely effective:
Was there waste? Sure. Could we have pumped in money to another sector to boost spending? Sure. But when we ponder what appears to be a decent nudge to improving perceptions about the economy, I think the signs are positive and we probably even got a pretty good bang for our buck.
For my money, though, the uncounted benefit of the program has been its effect on the intangible economic force John Maynard Keynes calls “animal spirits.” For weeks, the news and blogosphere have been loaded with images of busy car salespeople explaining that they were selling out of the Ford Focus (when did you think you’d hear that?). Car shoppers appeared on camera with an acquisitive gleam in their eyes that has been in hiding since 2007. And we were treated to the vision of a federal stimulus program that actually seemed to be working. If you wanted to persuade consumers that the economy really is starting to recover, you couldn’t buy more convincing advertising.
Animal spirits, by their nature, aren’t easily measured. But Tuesday’s consumer confidence survey results did register a far greater rebound in optimism than economists expected. (The survey was taken in early to mid-August, when it was becoming clear that Cash for Clunkers would burn through another $2 billion, easy.) Interestingly, consumers say they believe that the economy is still in terrible shape. But their faith in the future has risen to levels not seen since before the recession began. Faith doesn’t easily yield to a cost-benefit analysis, but It’s hard to overstate its economic importance, as Nobel prize-winning economist George Akerlof points out in this MoneyWatch.com video.
Obviously, Cash for Clunkers didn’t account entirely for the jump in consumer confidence, and there’s no guarantee that it won’t fade again, especially if unemployment refuses to fall. And while confidence can’t cause a recovery, a recovery can’t happen without it. So to the extent that the clunkers program gave Americans a reason to believe that things can eventually return to normal and to have some faith that government has a handle on recovery, it was a pretty good investment.
* – I.e., The program was designed to pump billions of dollars into the economy to boost spending and consumer and business sentiment. It did just that without producing any significant negative externalities. Ergo, CFC’s outcome doesn’t meet the definition of “failure“.
President Obama announced that he is going to end a decades-old monstrosity from the early days of Jesse Helms-inspired (may he rot in the hell I don’t believe in) AIDS hysteria:
A couple of years ago Michelle and I were in Africa and we tried to combat the stigma when we were in Kenya by taking a public HIV/AIDS test. And I’m proud to announce today we’re about to take another step towards ending that stigma.Thank goodness for meaningful change that makes a difference in people’s lives.
Twenty-two years ago, in a decision rooted in fear rather than fact, the United States instituted a travel ban on entry into the country for people living with HIV/AIDS. Now, we talk about reducing the stigma of this disease — yet we’ve treated a visitor living with it as a threat. We lead the world when it comes to helping stem the AIDS pandemic — yet we are one of only a dozen countries that still bar people from HIV from entering our own country.If we want to be the global leader in combating HIV/AIDS, we need to act like it.
And that’s why, on Monday my administration will publish a final rule that eliminates the travel ban effective just after the New Year. Congress and President Bush began this process last year, and they ought to be commended for it. We are finishing the job. It’s a step that will encourage people to get tested and get treatment, it’s a step that will keep families together, and it’s a step that will save lives.
Claiming that the president was preying on the public’s fear of contracting a fatal disease last week when he declared the H1N1 virus a national emergency, Republican leaders announced Wednesday that they were officially endorsing the swine flu.
“Thousands of Americans—hardworking ordinary Americans like you and me—already have H1N1,” Republican National Committee chairman Michael Steele said during a press conference. “Now Obama wants to take that away from us. Ask yourself: Do you want the federal government making these kinds of health care decisions for you and your family?”
Other prominent Republicans opposing Obama’s declaration of emergency include Louisiana governor Bobby Jindal, who urged residents of his state to continue not washing their hands.
Entirely predictable news…
With 85% of 1st time home buyers who were eligible to collect the tax credit planning to buy a home anyway, the Brookings institute estimates that the $8,000 credit equates to a cost to the taxpayer of $43,000 per home. This is based on the belief that 85% of the almost 2mm buyers are getting free money. Edmonds.com…is estimating that the Cash for Clunkers program cost taxpayers $24,000 per vehicle sold. They estimate that 82% of sales would have happened anyway and thus the handout of up to $4,500 really only enticed 18% of the buyers of 690k vehicles sold under the program.I’m curious to know whether any readers here dispute such figures, or still believe—despite the grave waste previously discussed—that C4C was, somehow, an economically or environmentally sound and efficient stimulus.
…rather than a wasteful but politically popular program which merely succeeded in pleasing misguided leftists, new car buyers, and dealers—as it appears to me.
More of this please:
The annual American Bankers Association meeting in Chicago is not going as planned.
Besieged by activists from the Service Employees International Union, the AFL-CIO and Americans for Financial Reform, the leaders of America’s financial sector were interrupted Sunday night as a throng of protesters poured into the conference area and began to chant.
The meeting, scheduled to continue through Tuesday, will feature “[exceptional] speakers like FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan, former Speaker of the House Newt Gingrich, and political commentator George Will,” the ABA’s site announced.
“All we wanted to do was deliver a letter to the Wall Street bankers to let them know how much they’ve hurt our communities – and what they need to do to clean up their act,” the SEIU’s blog declared. “They wouldn’t listen to us. They kicked us out. But the bad news for them is that we’ll be back.
Instead of delivering a letter, they shouted their message. “Bust up big banks!” activists chanted. When police confronted a senior who was damning the ABA over a loudspeaker, the crowd shifted into cries of “Shame on you! Shame on you!“
When police finally got around to pushing them out, cheers of “We’ll be back” shook the hotel’s lobby.
“Our demand is simple: stop taking our tax dollars and squandering them away on billion dollar bonuses and massive lobbying campaigns against financial reform,” the SEIU said.
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