Is cash-for-clunkers a good idea?

About a year ago — when the economy was merely bad, not yet apocalyptic, and automakers were still solvent — economist Alan Blinder proposed a left-field stimulus plan: the government should pay people to take their old, crappy automobiles off the road.

Cash-for-clunkers programs supposedly offer three benefits: environmental, because old cars pollute more; social, because the money primarily flows to the poor; and economic, because the rebate circulates back into the economy.

Now the idea is actually getting some traction. Germany has implemented a rebate that has resulted in a car-buying boom, and in the U.S. two separate versions of a program are working their way through the house and senate.

Does the idea make any sense? Freakonomics guy says no: “policies which might be a good idea if implemented as one time, short term programs, can be much less attractive if made permanent because of the way they distort incentives.” The article lists a number of ways that a cash-for-clunkers program could be gamed or create weird downstream effects, and Freakonomics guy is right that we should be careful about how we design such a program. But the criticisms remain frustratingly vague. Even if the program doesn’t work as well as advertised, could it still work? Alan Blinder offers up a lot of compelling data nuggets of his own (“cars 13 years old and older accounted for 25 percent of the miles driven but 75 percent of all [presumably non-carbon] pollution from cars”) and it’s not at all clear — to me, at least — how the numbers would wash out in the end.

George Monbiot criticizes the program from a different angle, one dear to my heart: he calculates the per-ton price of carbon reductions from such a program to see how well it stacks up against other uses of the funds. The answer, according to Monbiot, is not very well. His math is a bit hard to follow, but I think he comes out with a figure of about $740 per ton of CO2 reduction, which compares unfavorably to, say, geothermal energy at about $5 per ton.

There are two problems with Monbiot’s analysis. The first is that it applies to a British program that differs in some important ways from the versions being considered in the U.S. The second is that Monbiot is so obviously motivated by a hatred of car companies that it becomes difficult to sort out analysis from spleen. So I ran some figures for a U.S.-based program, and came up with a figure closer to $210 per ton. A lot of assumptions go into a calculation like this, and I wouldn’t put too much stock in the exact figure. It’s certainly more favorable than Monbiot’s, but it’s still quite high.

Is the program worth it? Hard to say. Weighed against the high per-ton price are any stimulative effects on the economy, plus other unquantified benefits, like a substantial drop in particulate emissions. Certainly there are more cost-effective ways of reducing greenhouse gas emissions (e.g., building weatherization). Just as certainly, there are worse ways of spending stimulus money (e.g., building massive new highways). Personally, I’d like to see some more data come out of the trial cash-for-clunkers programs underway in California and Texas before rolling out a national program.

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  1. Tom Harrison - April 7, 2009

    Adam –
    Economics is a wonderful thing, but it can go terribly wrong in this kinds of analysis. Economics works best when it measures or takes advantage of the “unwitting” behavior of people, that is, the responses we all have to incentive or conditions that we don’t feel like or even realize we actually have control over.
    (It fails when we are “witting”, because we quickly figure out how to outwit the rules made by the nitwits).
    All the (wonderful) examples in “Freakonomics” utilize regressions to show only what turned out to be strong correlations, after the fact. While interesting and instructive, I think they mainly instruct us to be wary of predictions based on economic calculations (or political conjectures).
    Or, more pointedly, consider the so-called “Davos Consensus” from last year, where all the best economists calculated that the most cost effective thing we could do with public funds was to fight disease … while climate change was pointedly 10th on the list, if my recollection serves me. Maybe they were right. I don’t think so.
    So we can do the math and agree that this quixotic and unexpected solution seems not to compute. But there’s more to it than just the economics, or carbon benefit, or other “measurable” things.
    I am no acolyte of Alan Blinder (although it was his textbook I used in college, and I sat through a few of his lectures in Econ 201). Looking back at the article you reference, from last fall, I think there are key points here that support the idea of Cash for Clunkers.
    Mainly, I am swayed by the fact that there are some existing programs with demonstrated successes. There’s nothing like reality to swish away the abstraction of economic analysis :-)
    If anything, I think the merits of the idea have become stronger since last fall — we have stimulus money (and now, even a new budget), we have a nearly failed auto industry that could use help, we have even more people who haven’t been able to replace old cars, and, while we seem to be headed in the right general direction, we’re not exactly ahead of the curve on carbon reductions.
    In other words, I agree — it’s a good idea!

  2. Chad - April 8, 2009

    Tom, just a couple points on trying to run a cost-benefit analysis on global warming
    1: Your result is entirely dependant on one critical assumption – the discount rate – which is philosophical, not technical. When deciding whether a dollar next year is worth 4% less or 5% less than a dollar today, and extrapolating 100 or more years into the future, your answer changes by a factor of two or three. When your outcome varies more due to your assumptions than it does due to the data, your whole process is suspect.
    2: Every cost-benefit I have ever seen is incredibly simplistic and leaves out anything hard to quantify. 20% of species wiped out? That counts for nothing in most of these consensuses.
    3: All of these consensuses miss an even larger point – fighting climate change is not a charity, it is a responsibility…and that makes a world of difference. I am not responsible for malnutrition or malaria in Africa. I AM responsible for climate change. There is a much stronger argument for forcing people to help solve the latter than the former, even if the former provides more bang for the buck.

  3. Roger - April 8, 2009

    If you look at the reality that this society is absolutely dependent on the automobile… for everything, and that this is not going to change any time soon, then there is a lot to be said for this idea.
    The biggest criticism I have is that there is some momentum in requiring or providing additional incentives to buy American cars: have you looked at the model offerings by the Big Three lately? They’re disgusting! When you consider that there are at least a couple of dozen models currently available by Ford, GM, and Chrysler, there are only a couple that offer decent gas mileage and are anywhere near practical and aesthetically appealing.
    Go to the Websites of, say, Fiat, Renault, and Citroen, and the difference in model line-up is nothing less than stunning. All three have a wide range of sporty, gas-sipping, and practical cars to choose from, cars that look like they would be a blast to drive and own. To get a sense of what has gone so wrong with the American automobile industry, go to the GM Website and compare what is available there to Americans: ugly, obese, and singularly unappealing gas guzzlers dominate the line-up.
    What happened? How could the American automobile industry, the crown-jewel of American manufacturing and know-how, go so badly wrong? If the Sean Hannitys of the world think that this “American Way” is something worth defending, and that “socialist” Europe is evil, then we’re in real deep deep trouble. I’m afraid that with the current American model line-up, introducing cash-for-clunkers is not going to help our carbon footprint that much (already double per capita than other industrial countries), whereas in Europe it is bringing real tangible benefits.
    Sympathy for Waggoner? You’ve got to be kidding!

  4. Barry - April 8, 2009

    What if the person uses the money to buy a shiny new, recently discounted SUV? If this program is implemented, perhaps it should be a rebate or credit for using the money to buy a fuel-efficient vehicle.

  5. Aaron - April 8, 2009

    I suppose the plus side is this could count as a stimulus to the car manufactures. Bundle stimulus. More bang? There would definitely have to be a mpg rating for the purchased vehicle.

  6. Tom Wilson - April 8, 2009

    I have a 23 year old, 4 cylinder Taurus. Will the C for C program give me 50 grand?

  7. David ben-Avram - April 8, 2009

    I have a 4600 lbs. ’93 Buick Roadmaster with a big, mean 5.7L V8 and it gets 25mpg–yes, it does! It’s registered in CA and its scores on it’s most recent smog test were FAR better than the average given (in EVERY category). That’s about 30% mileage less than a new family car, but gas consumption is only part of the equation of the damage that cars put on the environment. People should be incentivized to maintain their cars than destroy them–within reason, of course. Disposable (vs. “durable”) goods reeks greater havoc on our environment. I’ll keep driving my grandpa mobile another 16+ years provided I can afford it’s *proper* upkeep.

  8. Adam Stein - April 8, 2009

    Barry, the versions being considered in the U.S. have requirements around the fuel efficiency of the new vehicle. I think one of them also allows the money to be applied to public transportion. I’m not too sure of the details, though, and I do know that one version of the bill is considered more environmentally friendly than the other.

  9. Brian K - April 8, 2009

    Where we live, road salt does a good job in getting old cars off the road!
    CBC radio interviewed someone from one of the European countries. He indicated that when energy required for making the car is included, we should try to keep them on the road as long as possible. Two other points – auto maintenance maintains jobs, and investment in public transit would be more effective in reducing emissions.
    Bottom line, I think the idea is simply to support the auto industry.

  10. Ted O'Neill - April 8, 2009

    Economists may impress folks who are new students and in academia, but realistically these ideas are generally impractical. If you pay cash for clunkers, what sense does it make when you are poor or even just cheap, because you will need to replace the vehicle more than likely. The cost of replacing a vehicle tends to far out weigh what ever payment someone will receive. Let’s say you redirect a chunk of the bailout money currently being spent to individuals so there is a generous payment made via a voucher that can only be used to buy new cars. Then the car companies will get cash from the government for these “sales”. Since the auto companies are supposedly dealing directly with the customers, then the government may not have the leverage to have proper oversight and enforce regulations or spending abuses of what is literally taxpayer dollars (that’s how they get the money for any program). Also are these clunker payments going to USA car companies (all are owned multi-nationally, so that is not even a real option), so the funds may shift more significantly to foreign companies, that may not provide as many jobs here, so more folks are out of work and the USA car companies go under. Hopefully this economic crisis will realign folks priorities on what they buy. For older folks, you may remember hearing stories about living through the Great Depression and how those older folks at that time, learned to live without excess and it became a part of their life. This is what we need to learn, the Hummer has significantly lost its appeal as well as the spend it all lifestyle we have recently experienced. We need to save and live frugally, not rely on the government and buy into the sheltered unreal world of academia economics. Most of those teach because they can’t start and run a successful company in the real world. They do like to impress others, mostly to benefit their own egos. Most folks are smarter than many economists believe, look how many read this and try to practice practical living. More than you think.

  11. darooda - April 8, 2009

    With the current state of the national deficit and a budget that does nothing to address it. I don’t think we need another federal program, at this time. I’m all for the social and environmental benefits, even the help it could give US auto makers … maybe the incentive could specify US built autos AND a mpg requierment. However, if we don’t get our debt under control, it all won’t matter for much.
    I’d rather see an up swing in support for charities that perform tune-up for clunkers. The tune up, can greatly reduce emissions for a fraction of the cost, and the charity model helps ensure the dollars go as far as they can strech them, something the government always fails to do.

  12. Den Mark - April 8, 2009

    I have two 21-year-old ’88 Plymouth Reliants. They pass emissions tests by huge margins & get 30+mpg highway. Using these great cars, public transit, bike, & feet, i’m doing very well. Instead of cash-for-clunkers, how ’bout cash-for-bus-passes or cash-for-bikes or some such.

  13. Mark S. - April 8, 2009

    Without an “integrated marketing” approach following any government actions or incentives like C for C, I feel much of the long-term benefits of such programs would be lost. For example, much of the car-buying public (and the public at large) would benefit from more education about the reasons for and benefits of maintaining cars and how to do so in an eco-friendly way (i.e. not dumping motor oil on the ground or in drains, or old batteries into the trash.) These responsible actions would both bolster the economy and protect the environment. This kind of advertising is one thing the government might be able to do cost effectively, possibly in conjunction with a C for C program.
    Another aspect of the disposal of clunkers is that many of them are not junked or recycled, but rather end up being driven for many many more years in developing countries where they continue to wreak global environmental havoc. This may render any C for C program (lacking sufficient vertical integration), whether operated by charities or government, quite impotent insofar as environmental protection is concerned.
    Also, the reasons for granting driver’s licenses to people under 18 have always been nebulous to me. I personally have been responsible for destroying more cars through bad or irresponsible driving between the ages of 16 and 19 than I have in the more than 20 years since. If a big reason for allowing teenagers to drive is to bolster the American auto industry, this, like many of the auto industry’s other lobby schemes has apparently been ineffective in insuring their survival. Instead of C for C, I would be more in favor of taking cars off the road by encouraging better public transit through giving young people and very old drivers cash for transit passes and bikes (as Den Mark has suggested).

  14. Roger - April 8, 2009

    The reason why the C for C is so successful in Germany is that it has a well-developed auto recycling culture. Autos are taken completely apart and the various metal and plastic parts sold on the raw materials market for reuse. A high percentage of the parts in new German automobiles are now of recycled materials.

  15. Jay - April 8, 2009

    As long as the program is temporary and the old materials are recycled, it sounds like a great way to help people who would otherwise find it hard to afford to trade up to a more efficient vehicle. It may have more value as a way to heighten awareness and interest in greening up our daily lives than it would when judged solely by the cost-per-ton CO2 reduction criteria. It’s the sort of thing that would have political traction.

  16. Tom Harrison - April 8, 2009

    As it turns out, cars are the most completely recycled products sold in the US. They are valuable, big, and come to the junk yard on a single piece.
    I don’t think the legislative challenge here would be particularly difficult. To get the new car, the old one has to get destroyed, the new one has to be new and meet environmental and other standards.
    And maybe they should only be sold to 16 – 21 year old males (preferably with alcohol on their breath) — then we could really increase the rate at which we’re selling new cars :-)

  17. Anonymous - April 8, 2009

    Not all that clever…

  18. Tom - April 8, 2009

    I agree with Chad regarding personal responsibility. And I find the comments, in whole, stimulating and well reasoned.
    The border discussed is government involvement in personal affairs, or the tax dollar taken to remedy a popular fault in our lifestyles.
    Carbon, a recent target in environmental efforts, is little understood by most citizens. Given that it is necessary for our existence as carbon based life forms, I still hold some affinity for it.
    But that is not the nucleus of my argument.
    Let us presume that some of us are poor, managing to house, feed and cloth ourselves and our nearest kin. The resource of cash is a major tool in our battle for equilibrium. If the objects of our spending become more expensive, our plight becomes worse and our approach to poverty closer.
    Removing ‘clunkers’ from the choice of vehicles will mean having to spend more for transportation form our meager capital base.
    As Michelle Obama says, ‘some of us will have to suffer.’
    I may burn more fuel and create more carbon by driving an old Mercury, but I am more able to maintain a capital base by keeping the old car and not being forced to spend 3-4 times as much for that same transport.
    We can argue mpg’s, carbon footprint, the decline of the ozone layer and social responsibility. But when it comes to my pocketbook, keep your hands out of it unless you have three and are willing to lose one.
    The government needs to learn to economize as well as its citizens do when times are tough. If I have any left over, I will help my neighbors or feed starving children in Africa.
    By the way, my carbon footprint would cost $ 76.00 to offset with an annual payment.

  19. Roger - April 8, 2009

    I too have found the exchange of comments stimulating. As with the evolving national discussion on our future, these comments also seem to be treading along similar themes of being concerned with “government meddling” or intervention into the private sphere, the concern of course focusing on government spending.
    What I find interesting is why, with the beginning of the Obama administration, is this suddenly such a hot topic? Why weren’t we having this discussion when we were wildly spending two trillion dollars on an absolutely useless war in the hot sands of the Middle East deserts? Why were we not concerned about government “spending” our taxes back in 2003, back when we still had a surplus?
    Now that this “government spending” is focusing on our own well-being, in getting us out of an economic crisis and in investing in our commonly shared infrastructure, why are we protesting and crying out “socialism”!?!
    Europeans who visit the US are shocked to see the tattered state of its infrastructure, of its crumbling cities and potholed streets and rusting bridges. In comparison, “socialist” countries like Germany and France are gleaming with community pride, the streets are well-maintained, clean, and the cities are wonderfully humane places to live.
    What has happened is that false American conservatism, of that which has evolved since Nixon and Reagan, has completely destroyed any appreciation of the “common-wealth” of this country. This country has lost all sense of responsibility over keeping its air clean and waterways healthy, and of investing in its future through well-maintained transportation systems and a healthy industrial base. What we’ve become, to Europeans, is not a responsible super-power, but a middling third-world country. We can thank Reagan and our hatred of “socialism” for this…

  20. Tom - April 8, 2009

    I agree, in part, with Roger in that the European (mainland) life is easier than here in that most transportation, medicine, education are heavily subsidized by government. Fees for these are very reasonable, or, at least were, forty years ago.
    Of course, if you want to pay sixty percent (60%) tax to achieve that, you may. Just become a citizen of your favorite country. We may be on the way to a sixty percent tax without the management and oversight that the French have. With just two parties, convenient alliances are easy and agreements are frequent. Such facile government spending is not easily achieved with four or five parties watching each other.
    Germany had a forestry program in the sixteenth century. We started a bit later with our programs and have not had to learn how to get by with very little or put up with invading forces disrupting our way of life. We have had it easy by comparison, which can also mean that we have not had to make good decisions under extreme duress or learn deep discipline in government.
    I see the fruits of easy life expressed down to our local govt in lackadaisical attitudes on how to spend our monies. If our neighbors do not care to take care of our assets, then, how can we expect someone across the country to bear that responsibility.
    By the way, our govt is approx half socialist in its structure and delivery of services. It is a republic, but tax monies flow to every town, county and state for basic services. Laws, regulations and control reach far in exchange. These monies are spent effectively in some places, not so well in others.
    In Germany, people over sixty-five get free beer. Maybe that’s to help them forget how much they paid over a lifetime.
    I like it here just fine, but living there would produce less stress, less worrying about basic needs of living. maybe I should become German and learn to forget about all this with my free braus.

  21. Roger - April 9, 2009

    Tom, the reason for mentioning Germany here is to use a well-known technique known in business parlance as benchmarking: what are the “other guys” doing, what can we learn from them to improve performance? A sure sign that all is not well is when a company reacts defensively when benchmarking, and to block out any attempt at learning.
    Another reason for mentioning Germany is that it was the country that introduced C for C, and it is where we got the idea (good benchmarking!). In fact, the program is working so well there that just yesterday the German government significantly raised the funding to expand and continue the program. C for C is clearly having a significant impact in keeping the German automobile industry healthy and robust, it is also notably improving oil consumption and air quality. With a full-scale auto recycling culture in place, materials are quickly flowing back into manufacturing. The result? A lot of people are happily employed and contributing to the country’s “common-weal”.
    And yes, I agree entirely with what you say about socialism and this country, that’s why I put it in quotes in my earlier posting. Of course the US is completely dependent on massive government regulation and spending, the use of the word “socialism” is purely a rhetorical device used by conservatives. The hypocrisy of Sarah Palin’s anti-socialist rhetoric, in a state rampant with “bridges to nowhere” and government dole-outs to its citizens, was not lost on the news media (and ditto with the governor of South Carolina, whose state would literally collapse without massive federal aid from Washington). This country would be much better off if Republicans would refrain from such infantile politicking, and instead help the democratic process by working *with* Democrats in intelligently solving our problems.
    I lived and worked in Germany for almost ten years. About 50% of my paycheck was deducted for various taxes and benefits, as well as there being a some 15% sales tax on most goods. We all grumbled, but there was no serious complaining, because we noticed tangible benefits in our lives: well-maintained roads, clean and safe cities, robust industry, an extensive social welfare net, etc. etc. And you know what? Even after that 50% deduction, I could still afford a nice home, an Alfa Romeo, a BMW motorcycle, and enough left over for world travel. I was, in a word, enjoying the benefits of the common-weal. This is true for most people there, life is good in Germany (and in most other European countries).
    The best thing we could do, in terms of benchmarking, is to introduce a program in which all card-carrying Republicans be given a free one-week trip to “socialist” Germany. For most Republicans the experience would be an ideology-changing shocker: “Hey, what are all these people doing driving BMWs, Mercedes, and Audis? Geez, I haven’t hit a pothole since coming here, and look at all those people contentedly riding their bicycles in well-marked bike lanes? Whose paying for all these ultra-modern, extensive public transportation systems? How can all those homeowners afford having their roofs covered with solar panels, and who is paying for all those huge energy-producing wind towers? Why aren’t Germans totally stressed out with a mountain of personal debt and carrying two jobs (if they’re lucky to be working at all), as we are in the free-wheeling “democratic” US? How can they afford the time and leisure to sit and drink coffee in all those outdoor cafes?

  22. Tom - April 9, 2009

    Roger,
    A well reasoned response bolstered with personal experience. I had a similar one in France, albeit forty years ago. I tried to see the reality of life there, though heavily influenced by excellent wine and gastronomic masterpieces and a history which makes ours pale. Life was as you describe even with fuel prices and taxes many times ours.
    In the middle of Lyons, a city the size of Cleveland (which city’s river caught fire), people fished in the Rhone. Not my choice, but it was done. And the water was clear, in 1967.
    I agree wholeheartedly about the political junket to one of these countries for our conservative decision makers, as well as liberals. The role of government is to create and protect the common-weal, not to ignore or diminish it. And conservation is for all resources, including human, the main asset of any nation.
    I would pray for the united focus on a bridge to some constructive common ground as well as a combined will to build it. There appear to be too many choices and no clearly reasoned path. This time of stress may winnow out the chaff and present us with more clarity.
    Thank you for the excellent dialogue.
    FYI: I have lived a low impact life – started first organic landscaping company in NC, founded the compost industry in NC, farmed organically, cofounded a major river group in NC, designed and delvered a study on cancer effects of drinking polluted water, etc. I agree with low C strategies. I do not trust govt choices in spending on peripheral policy items when basic needs are ignored. Jobs, health, infrastructure, runaway credit should have been in the pipeline twenty years ago to abate the effect of this time. Ignoring a growing poverty level is a sin, in my opinion.

  23. veeek - April 15, 2009

    Although it has surface appeal, this idea has great potential to be just another back-of-the-envelope, government-sponsored, taxpayer-financed scam for which no one takes responsibility. I’d like to see some really hard data. Here are some objections:
    1. Would the $4500 be as efficient as other plans? Or would that old abandoned junker suddenly turn into $4500 for someone already planning a new car?
    2. If I buy a gas-hog hybrid truck or Mercedes SUV hybrid that gets 22 mpg, would that qualify? Why not??
    3. Buying a new car involves heavy costs besides the direct vehicle cost, and this plan does not address them. If I buy a new car I pay a huge sales tax and then pay increased insurance and higher vehicle registration costs for several years, etc. Depreciation is another huge hidden cost. The $45oo would not go far.
    3. Other, better methods exist for getting older cars off the road. I’ve heard in Japan, they charged higher registration fees for older cars than for newer cars, and this could be adapted here. BTW, if someone has a low income they could get a break on this.
    4. In Germany, I’ve heard of another method. Older cars were periodically and thoroughly inspected, by an engineer no less, and the tough inspection could fail the car for emissions problems or for rust on the muffler, for example. If you did not get it fixed, you did not drive.
    It’s a nice “brainstorming” type idea, but I’d say it’s back to the drawing boards or the back of another envelope.

  24. Tom - April 15, 2009

    Add to #23:
    Don’t forget property tax for the county. If I had a new vehicle at $ 30,000, taxes would be $ 200, not the $ 5 I now pay for my 1986 Mercury which gets 20 mpg on the road.
    Or the $ 26 paid for a 1993 Lincoln Town car which got 27 mpg on the road.

  25. Roger - April 15, 2009

    I’m not sure where you are getting your gas mileage data, but according to fueleconomy.gov, your two cars each get around 18 mpg, average, and that’s for a vehicle in good running condition. Only the most naive person in the world would believe that an older Lincoln Town Car can get 27 mpg (unless you’ve done a major makeover on the vehicle). The cost to run those two cars will be around $1700 this year per vehicle for gas, and they will each throw out 9 tons of greenhouse gas emissions. A Toyota Prius, by contrast, will cost about $600 a year for gas, and will spew out less than half those emissions.

  26. Tom - April 15, 2009

    Roger,
    So mush for government records. I have maintained a mileage log for thirty years. having managed a small business fleet, mileage is one factor indicating the condition of a vehicle and when it is time to trade.
    The only victim of such misreporting, which you imply, would be me and my pocktebook. I assure you that these records are true. Otherwsie, I would have gone broke in that time trying to live a lie. And I would not have been able to take my company from a pick & shovel with one hundred dollars in my pocket to one recognized on the eastern seaboard.
    Put your money where you government records are. I have.
    The Prius, by the way for those of you who have enough money to tell others how to spend theirs, would cost more than fuel for five vehicles for one year in payments alone.
    I pray that those who are so involved in self righteous opinions will develop some compassion for those less fortunate.

  27. David ben-Avram - April 15, 2009

    Amen, Tom. A well maintained, conservatively driven car is capable of great fuel economy despite what the populous thinks! Simple changes like replacing a mechanic (engine-driven) engine fan with an electrical fan can improve fuel economy even more (~1mpg). Really, Roger, who do you believe? The owner who sees real numbers or the government’s statistics. Now, surely not all cars fair so well (and that should be addressed), but Roger’s posting on the blasted TERRA PASS website, so he obviously cares (or, at the very least, is aware)!

  28. Roger - April 15, 2009

    Again, Tom, I think you need to look more closely at the general picture, rather than your own situation: the average price of an American car this year is just shy of $30,000, and this certainly reflects what I’m seeing on the roads where I live. The Prius, the last I checked, costs $21,000, significantly less than the American average.
    I don’t know who you are looking at for your target American demographic group, but it looks to me like the vast majority of Americans can certainly afford a Prius.
    Oh, and I think that 18 mpg for a Lincoln is pretty darn generous; my suspicion is the actual average is closer to 16 mpg or even lower.

  29. Jeremy - April 15, 2009

    Rabbit trails:
    1) The question’s not whether people can afford a car, is it?
    2) Just because the average cost of American cars is $30k (surprising), what’s the point? The average cost means nill. There are less expensive models and more expensive models. Average is a mathematical result not reflective of the norm.
    3) The Lincoln gets better mile that you thought. Get over it.

  30. veeek - April 15, 2009

    Tom and Roger:
    —I lived in Germany, too, for three years, and was frequently amazed how much better (in my opinion) the quality of life was relative to the US. I do disagree with you, though, in your thoughts that just willy-nilly adapting a socialist government and lifestyle over here would cure our problems, because the quality of life, the relative responsiveness of their governments, and the thriving under their system, are enormously complex questions related to the entire society. Plenty of Germans prefer living in the US, too, FWIW, and up to a few years ago Europe was a perpetual hotbed of war and strife (and eliminating that had precious little to do with Karl Marx).
    —The hypothetical traveler who enjoys a pot-hole free ride and a carefree walk along the Rhine might also question people who lived under socialist governments in Eastern Europe a few years ago, before the traveler commits to socialism (I had a good friend who fled Czechoslavakia in 1968 and he said it was like the Department of Motor Vehicles was running the country).
    —There’s good socialism (and capitalism), and there’s bad socialism (and capitalism). The elements of socialism (and capitalism) currently envisioned for this country are not altogether benign, and may not lead us to a flower-strewn Euro-paradise.

  31. Roger - April 15, 2009

    Veeek, I think Europe got over this counter-productive and useless labeling of “socialism” and “capitalism” in their politics long ago, which is one of the reason’s for Europe’s success. Germany calls their system a “social democracy”, which nicely captures their concept of an open democracy that recognizes the importance of the “common-weal” in a peaceful and productive society. The fact that many Americans label countries like Germany “socialist’ is more a reflection of the problems this country is experiencing rather than anything having to do with reality in Germany.
    By benchmarking with countries like Germany the point is not to willy-nilly copy or imitate what others do, but rather to recognize that goals can be more successfully achieved by others, in other ways, and to learn from them. Germans have a much greater trust and confidence in government and the progress of their society, which is a reason for their willingness to be taxed so highly, and a reason for their success.
    I recognize that this kind of trust does not exist in the US, which is ironic: this is, after all, a government by the people and for the people! What this lack of trust is saying is that we do not trust ourselves and our abilities to run our own common-weal, which, in the complex society we’ve become, is scary.

  32. Anonymous - April 15, 2009

    Hello Roger — good point. Descriptors and labels like “capitalism” and “socialism” are only concepts and although they are a necessary evil, should be taken with a grain of salt. At best they are inaccurate, and to paraphrase Feynman, the enemy of accuracy is not so much inaccuracy as a conviction we are accurate when we are not.
    Yes, it’s hard to say why we don’t trust the government (especially ever since the term “credibility gap” was coined under LBJ’s presidency), and this too is a complicated question. I guess the short answer is that the likelihood of trustability has not been so good, and campaign rhetoric and elevated hopes to the contrary, the current government has given little or no indication they will be any different.
    THe cash-for-clunkers idea is perhaps a good case in point. I could easily be wrong, and would like to see some hard data or a better explanation, but this just seems to be another scheme that an image-conscious politician with no downside risk or accountability has thought up. The trustability to workability ration just seems too low and the money should be spent more efficiently elsewhere, IMHO.

  33. veeek - April 15, 2009

    Roger: Oops! Forgot to sign in for the last post!! Thanks for your comments, Veeek.