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The Truth About Cash for Clunkers

Posted May 11, 2009 10:45 AM by dstrohl

With no apologies to Farago for the title, we continue to round up reactions and arguments for/against cash for clunkers. First, John Voelcker over at GreenCarReports continues his patsyism for cash for clunkers. He goes after one of the environmental arguments against cash for clunkers, pointing out a Duke University study that claims to calculate just how much of an increase in mileage a car needs to offset the energy expended while producing the car.

If the math behind the study escapes you for the moment, don't worry: It's simply not necessary. The study misses the point of the environmental argument that creating more and more new cars by artificially shortening the lifespan of old cars generates pollution and waste of energy, while keeping an old car on the road simply does not. The longer one can keep an old car on the road, the fewer hits the environment takes during a new car's production.

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#1

Re: The Truth About Cash for Clunkers

05/11/2009 10:49 AM

For a related podcast regarding this topic, click this link.

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#2

Re: The Truth About Cash for Clunkers

05/12/2009 7:19 AM

I love my 1984 Mercedes Benze 300 SD turbodiesel! It has 340,000+ miles on it and runs with a Greasecar kit on used cooking oil I harvest from the local Mexican restaurant. Property taxes on it are around $20/year. I start up on diesel til the engine warms up then switch to cooking oil. I top off the diesel tank every 2 months. I use 8-10 gal of cooking oil/week, getting 25 mpg overall. Smells like BBQ driving behind me. I enjoy the freedom of not having to bow down to OPEC once or twice each week. I'd rather have this car than a new one!

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#3

Re: The Truth About Cash for Clunkers

05/12/2009 10:30 AM

And what does that teach our kids?

My 17 yr-old son is currently returning our old 1987 VW Jetta with 240,000 miles back into decent running condition. He has learned to form steel brake lines, make bubble flares on the ends, replace the moisture liner in the door panels using PE sheet and hot melt adhesive, bleed brake lines, replace wheel cylinders for drum brakes, adjust drum brakes, rebuild front calipers, replace the flaky ignition switch in the steering column, scrape and wire brush rust spots, prime and re-coat with rubberized undercoating, replace O-rings on the injectors, remove and rebuild an alternator with new bearings and brushes, replacing and re-tensioning three V-belts, etc., etc. etc. He is also learning his way around a Bentley factory shop manual and how valuable one of those books can be.

He is in essence fixing his way into a car and learning important lessons about extending the life of a vehicle with some basic knowledge and TLC. I think soon he will learn how to remove the top end and do a ring ( & piston ?) job as the compression is starting to fall off in a couple of the cylinders. Not only will he learn very important life skills but he will also own a car that should give him another four or five years of service to help get him started in his adult life (without a car payment !!).

I believe parents who buy their kids (new or near new) cars for their 16th birthday or high school graduation aren't doing them any favors. Those kids won't understand the value of a car until they have to earn it. They will buy into paternalism and dependence on the benevolence of others.

Clunkers are great teaching tools and one way to suppress that sense of entitlement present in so many of today's kids. (Like three years ago when my oldest daughter asked my wife and I what car we were going to buy for her, RAOFL. I told her she would buy a car with the money she earns at her job(s) since she wasn't interested in learning on how to fix the clunker sitting in the driveway.)

P.S. I earned my way into a rusted out 1975 Rabbit in similar fashion. When the rust finally claimed its life my fiance and I bought the '87.

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#4

Re: The Truth About Cash for Clunkers

05/12/2009 11:00 AM

One for Brave Sir Robin both for one approach to environmentalism as well as the fiscal conservancy that would do us all good.

As for the point of the blog, the environmental movement has apparently reached the maturity to splinter into too many voices - ask an economist instead.

There are any number of impacts cars make on the environment, the power to manufacture being just one. The pollution to operate being another. The pollution of removal and disposal, the entire "food-chain" involved in supply both for new as well as used, etc.

Newer cars (in general) use fuel more efficiently, produce less pollution, and are more recyclable. So pretty hard to compare apples to apples here.

New cars are also more challenging to work on, have a higher degree of integration, and are less prone to fuel system modification; and coming direct from the factory - the repair state is known.

Older cars repair state is questionable.

My impression was the Cash-for-clunkers program was an economic stimulus package anyway - not a clean air targeted effort.

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#5
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Re: The Truth About Cash for Clunkers

05/12/2009 12:46 PM

So I suppose like much of what has been going on the proposed program is simply intended to keep the price of cars up, as bank bailouts seem to me to have been engineered to keep the price of homes and property up, instead of falling.

I mean there already is typically in the US at the car dealership, a cash for clunkers program.

You trade in your old car, for a new one, and get something off the price of the new one.

If all of a sudden according to the government my used car is artificially worth much more than the dealership will give me for it on trade in, I have strong doubt that it really will be worth more.

I mean I suspect I will not be able to buy a new car from whatever I might get for my old one.

For me the ideal situation would be from a point of self interest to take advantage of such a program, if I could turn my Kia Sephia, or my Honda Acura into a Tata and not end up with a car payment.

I have strong doubt that this will be allowed.

Over the years there have come to be in place laws and regulations that are sensible, and do prevent some cars from further operation, if they belch smoke, or are unsafe to both the driver, and the company we share with others on the roads.

A few holidays ago I went to a Parade wherein many old classic cars, hot rods, and even a Dragster drove along for our entertainment and celebration of days gone past.

Good God Almighty! just the 30 or 40 of these things trolling along put out fumes that made you short of breath and clearly took some time off your breathing life whether you had bad habits or not.

Somehow they got leaded gasoline to run these parade vehicles.

Truly unleaded gas and high compression engines for cars, and catalytic converters, spare us from unpleasantness regardless of finite energy sources.

As far as whether or not to give a teenager a new car or not, I am of two minds.

I of course never expected to be given a car, but was grateful whenever I was given one, or somehow got one used at a price I could wrangle.

My father once did give me his old car that I had to crawl under every three days and extend the clutch pin on. It was a Ramble Classic 550 that I eventually wrecked when I hit the brakes hard in a situation in an intersection, and the master cylinder for the brakes blew out, and I smashed into the back of another car.

Typically these days I advise youth to just bite the bullet, and get a new car, and pay the payment and insurance, since in the end it pretty much turns out that you pay so much a mile no matter what.

One very important factor as far as cars and teenagers is that many teenagers aren't really taught how to drive, from what I can tell.

I myself was extemely fortunate to have been taught to drive by guys who really knew how to drive. All of them had NASCAR Racing Licenses, and they taught me to drive extremely fast.

Now I myself am for helping your children according to however you can, get a car of their own that is safe so they are not dependent on others to get around. I particularly want my daughter to be able to leave a party right then, if she wants to.

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#6
In reply to #4

Re: The Truth About Cash for Clunkers

05/12/2009 1:54 PM

GA, I agree with you on the economic stimulus. I believe that is the primary motivation not environmental. It is a way of keeping factory workers employed.

However, I love to look at the unintended consequences when gov't tinkers with the economy. For instance, now that there are many more newer cars on the road and far fewer "clunkers", are repair shops and repair parts businesses going to go out of business because there is no longer as many cars being repaired? Others have already pointed out that the prices on used cars will go up because any road worthy car is now worth $4,500 or whatever dollars. Admittedly, in four or five years, these cars will get "old" again and the business will pick up, but that's a long time to hang on by a thread.

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#7
In reply to #6

Re: The Truth About Cash for Clunkers

05/12/2009 2:01 PM

Actually, while this *would* keep auto workers employed, the ones who REALLY hate clunkers are the insurance industry. Speaking of unintended consequences.

Clunkers (in the states) frequently travel under Liability insurance which is much cheaper than Comprehensive, which your loan holder makes you keep until the balance is paid.

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#8
In reply to #7

Re: The Truth About Cash for Clunkers

05/12/2009 2:05 PM

very very good point. Should we put out a bounty for the first evidence of the insurance industry's lobbying efforts for cash for clunkers?

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Re: The Truth About Cash for Clunkers

05/12/2009 2:09 PM

Bankers first

Dick Durbin (Democratic Whip):

"'And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place,' he said on WJJG 1530 AM's 'Mornings with Ray Hanania.'"

And they totally skated on the Enron debacle, despite Enron's inability to carry forward their theft without the banks knowing collusion.

So we owe 'em.

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#10

Re: The Truth About Cash for Clunkers

05/13/2009 6:03 AM

We need to cut expenditures and taxes. Not dream up questionable ways to spend taxpayer's money, or more correctly, their childrens future income. We are using the national credit card. If it must go through, it should only be for purchasing very high mpg vehicles.

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