Cash for Clunkers?
Published by Bob Foster
I just read that 4 out of 5 new cars sold through the “cash for clunkers” program were foreign brands. True, some foreign models are assembled in American factories, but even then, the far greatest stimulus through this program is to the foreign parts manufacturers, foreign assembly plants, and foreign owned businesses. The “cash for clunkers” program also seems to have helped Toyota get on track to become the largest auto producer in the world. (WSJ 7/29/09)
I am sure that this program does help many (not all) dealers, car salesmen, and financial institutions in the U.S. I’m also sure it has provided some benefit (at least temporarily) to the American auto industry. But, I wonder if that was the best way to spend $3 Billion (so far) of taxpayer money?
What if…
What if that $3 Billion had been allocated to small business in general. Money for expansion and growth. Money for new startups. Money for R&D. Money to retrain the unemployed. This is where meaningful re-employment will take place. Small businesses have virtually unlimited needs in order to achieve the economic recovery mandate set out for them by the current administration. And yes, small business may be the most innovative—but to innovate “quickly” they need to have access to capital. The $3 Billion just spent would have gone a long way to accomplish this.
That’s my take—what’s yours?
Comments
2 Responses to “Cash for Clunkers?”
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While this sounds logical in theory and that money could definitely be helpful in other areas to spur growth and new industry/technology jobs, we also have to look at some other issues here:
1) The US has long been in decline as true leaders (let alone innovators) in the world auto market. Their products are shoddy in comparison showing a lack of design and manufacturing pride. Toyota and Honda have shown superiority in long-term dependability and most often earn a “car of the year” status in JD Powers, etc.
Until the US can rise once again as the innovators & leaders in this industry, they will continue to fall further behind. (see PLAN A below)
2) The real reason for the “Cash for Clunkers” program wasn’t to merely try to jump-start the economy or promote consumer spending, but rather to get older, polluting and less fuel-efficient cars, trucks and SUVs off the street and back in the recycling bin. If they were merely trying to get people to buy new cars, these vehicles would show up at the auction and be back out on the street – but they’re not. They are being shredded and recycled to make new cars.
PLAN A: Here’s where the US auto industry could have a REAL chance to rise once again as the top dogs in the world auto market.
IF they were to develop better hybrid technology (starting with lead/acid-free battery technology), in a safe and affordable, yet dependable product line, they could truly take over as leaders – creating not only more jobs for manufacturing, but for parts, service and training for maintenance of this new technology.
It’s going to take time to move this forward, but if they don’t start with a plan and put it into action, then the US auto market is in a hopeless tailspin. (see PLAN B)
PLAN B: shut down the US auto industry altogether and convert the plants to creating solar panels, wind generators and monorail components.
There’s my 2¢ for what they’re worth.
Jeff
Jeff – Yes, getting old inefficient cars off the road is a good thing, but I believe what we need more at this moment is jobs. We need to get people back to work…economic recovery will not happen until we do.
GE (not the auto industry) is spending large sums on battery R&D, because they are looking to the future. Maybe the $3 Billion should have gone to support your Plan A–it likely would have been much better for the U.S. in the long run.
Thanks for your comment.
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