The news has been beaming about Obama's Cash for Clunkers program and the government is even considering extending it, is this a good thing? Sure if you are well off enough to be able to afford a new car. If your a lower income family however its making things harder.
You can read the details of the program on the government website CARS.gov, but to sum it up you trade in a car 25 years old or newer that gets 18 MPG or less and you can collect anywhere from $3,500 to $4,500 for a trade in. The government then takes the cars traded in and crushes them so they cannot be resold. It also prevents the engine and drive train from being sold off as parts.
It doesn't take a rocket scientist to see the eventual result due to supply and demand of the market.
The soccer moms driving big SUVs with duel income families will trade their cars in for new ones. Those used SUVs that would go to the used car market are now being destroyed so lower income families looking for larger vehicles to transport their families around in have fewer options on the used car market. With fewer options and the same level of demand, the used car prices will go up. This makes it harder for the poor families to afford any cars.
Oh and here's the double wammy, since the program requires the cars be crushed and not used for parts the parts market likewise has lower supply which in this case since fewer people will be able to afford even used cars, this will increase demand making it even more expensive on the poor.
Now since the left claim to hold the monopoly for caring for the poor I wondered if they've considered the effect they are having on the car market so I stumbled over to the left leaning site Salon.com and found a discussion about just this subject:
Will Cash for Clunkers hurt poor people?
Depends on what you define as poor
I remember being in a car driven by what we called a liberal back in the day. My friend was arguing against a ballot initiative that would have added a five cent per gallon tax to gasoline to fund public transit. His argument was that higher gas prices would "hurt the poor". I asked him to exit the freeway and drive along West Capital in West Sacramento. After looking around, he agreed with me that the poor generally neither own nor drive cars. However, he still opposed the gas tax.
Likewise, higher used car prices would not hurt the truly poor since they still do not own cars.
Depends on what you define as poor? Clearly this is the party of Bill Clinton aka meaning of is.