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U.S. Needs Cash for Clunkers for the Housing Market

Economics / Economic Stimulus Aug 20, 2009 - 04:10 AM GMT

By: LewRockwell

Economics

Mark R. Crovelli writes: Over the past six months, one of the most amazing and miraculous events has occurred in the history of economics. Few Americans appear to have grasped how truly remarkable and miraculous the event truly was, even though it occurred right under their noses. The miraculous event to which I refer is our far-seeing leader’s program designed to 1) trick Americans into buying new cars they can’t afford, and 2) melt down their old cars, intentionally destroying them. Or, as the program has been termed by its brilliant originators, it’s a "Cash for Clunkers" program.


You might be thinking to yourself, "I already know that this was a successful, and indeed almost miraculous, program. It not only saved the moribund American auto industry, but it put Americans to work, ‘stimulated’ lagging demand for cars people still can’t afford, and will help to make the American fleet cleaner and more efficient." If this is the reason you think Mr. Obama’s program was amazing and miraculous, however, you would be failing to appreciate its true brilliance and grandeur. The greatness of Mr. Obama’s program lies not in its superficial stimulation of a bloated industrial sector of our economy that should have died decades ago; rather, its greatness lies in the fact that it accomplishes something that it actually impossible in our world. It is able to defy the known laws of the world.

In order to see why this is the case, it is important to first note that the world in which we live is characterized by scarcity. That is to say, all of the things that men desire to fulfill their infinite wants and needs are in limited supply in our world. There is a limited supply of televisions, radios, cars, trees, water, gold – and, yes, (as the green people never tire of blathering about), there is even a limited supply of air in our world. This means that men are situated in this world in such a way that a great number of their wants and desires cannot be currently fulfilled. This is precisely why men work – to create things and situations that each subjectively thinks will make him better off. And, with the passage of time and the expenditure of more and more human productive energy, men are able to create more and more goods and services that fulfill more and more of their wants and needs.

It is precisely these obvious natural laws that Mr. Obama has managed to circumvent. He has managed to enact (or, at least take credit for) a bill that purports to make men better off, not through increasing the supply of the goods men actually want and need, but by tricking them into buying something they otherwise would not, and then destroying part of that same supply of goods. He has managed, in other words, to make us richer by destroying goods and diverting a part of the labor supply (yes, that’s limited too) into recreating those very same goods. The program manages to increase scarcity on the one hand by destroying goods and then remaking them, and yet supposedly makes us better off. It is a truly miraculous and historic undertaking if it is indeed working to make us better off – and who can doubt that it is doing just that, when every loudmouth politician and commentator tells us so.

When one comes to realize just how amazing and miraculous Mr. Obama’s program really is, an obvious question comes to mind: If Mr. Obama’s program can really make us richer by destroying cars and tricking people into buying new cars, then why don’t we give this miracle program a try in the housing sector? Indeed, since the financial crisis struck most severely against the housing sector, then is that not precisely the sector where Mr. Obama’s miracle program is most direly needed? The program is easily adaptable to housing, after all. All that is needed is to give people an incentive to buy a brand new house that they can scarcely turn down (or afford), and, once they move into their new home, simply burn the old house to the ground.

Think of the amazing stimulus the economy would get from having tens of thousands – or even hundreds of thousands – of perfectly usable homes burned to their very foundations. Masons, carpenters, roofers, and appliance makers would all suddenly be reemployed to the hilt. The American housing stock would be made more energy efficient, aesthetically pleasing – and more "eco-friendly," to boot.

There’s no reason to stop with just the housing sector, though, when the clothing retailers are struggling mightily. Mr. Obama could simply pass a similar law to encourage people to go into debt buying a brand new wardrobe at the GAP (or a more "eco-friendly" retailer, to save the Earth at the same time), and then round up the shoppers’ old wardrobes and sink them to the bottom of the ocean.

Just think how much better off we would be if Mr. Obama could manage to destroy half of the supply of cars in the U.S., half of the supply of homes in the U.S., and half the supply of clothing in the U.S. It boggles the mind to think how rich we would be.

For the time being, we will just have to content ourselves with Mr. Obama melting down half of our cars.

Mark R. Crovelli [send him mail] writes from Denver, Colorado.

    http://www.lewrockwell.com

    © 2009 Copyright Mark R. Crovelli / LewRockwell.com - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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