Quote:
Originally Posted by Iexpedite
I thought you were saying poor people. To me they are typically who government subsidies go to. They are widely considered financially irresponsible as well as poor decision makers. What did I miss?
Were you going for corporate subsidies? There were definitely some bad decisions being made at GM.
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Government subsidies that
go to poor people are really giveaways to the companies that poor people have to buy from. A subsidy for new cars (or electric cars or home solar installations) is a giveaway to companies that rich people (or simply people with good credit, which effectively counts as rich) buy from. We pretend it's better policy because it helps a "good" industry get established... and people with trust funds and home equity get nice new toys that they can feel good about. That's
much better policy than just shoveling money into Walmart's pockets via food stamps.
By making new cars artificially cheap (by $4500) and reducing the available pool of used cars (raising the price of the remaining supply and thus narrowing the difference between new and used cars, again distorting the market to make new cars more attractive), the progam was a direct subsidy to new car manufacturers and dealers. So direct, in fact, that it was paid to the new car dealers.
While it was a direct subsidy to the car industry, it encouraged the public to make the bad decision to scrap low value cars and buy brand new ones.
Most cars I've ditched were at the end of their usable lives, while the ones that didn't deserve scrapping went on to new homes. The most economical car is the one that doesn't need to be built.