8/05/2009

"Cash for Clunkers: What Is Seen and What Is Not Seen"

From my friend David Hirshleifer at Psychology Today:

Our cognitive limitations often debase political debate, making politics a battle for voters' attention. Hence, the power of soundbites and slogans, such as "Cash for clunkers." The way to make a policy attractive is to hide the damage it does, and make its alleged benefits salient. This point was made vividly by Frédéric Bastiat in his 1848 essay "What is seen and what is not seen." He points out, for example, that even a nutty policy like going from house to house breaking windows can seem attractive as a way of providing employment to glaziers. What is not seen is that the resources people spend getting their windows repaired might otherwise have been devoted, for example, to buying shoes. So even in the short run breaking windows is not a stimulus, because it puts the cobbler out of work. And in the long run, it reduces the total wealth of society. . . .

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1 Comments:

Blogger Ed said...

The act of destroying the cars by rendering their engines useless is questionable, at best. I don't think the people who dreamed this up realize how much energy and resources went into the construction of a "clunker". Or how much additional energy, in comparison to an "efficient" car, would be consumed in the clunker's remaining lifetime. Then compare that to the wasteful creation of a replacement car.

Someone needs to do a decent write-up of the energy used just to create a car in the first place - from mining the various ores, distilling the various compounds and polymers - to assembling, painting, shipping, marketing, and selling the car. Then compare that to the energy it uses when it is running for an average year. Do the same with a hybrid. Then, look at the ages of the cars on the clunker list and determine the net cost of taking a perfectly good car off the road just because of a $4500 incentive. I think you will find a lot more waste than the green-oriented people will want to admit.

Believe me, I am all for maintaining our planet. But some things tug at the emotional brain, and not the logical brain. And people who excel at marketing know this and use it.

8/05/2009 9:39 AM  

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