[svxcess]

'

This program is a prime example of the "Broken Window Fallacy"

Cash for Clunkers boils down, in the simplest terms to taxpayers paying $3 billion to destroy maybe $2 billion worth of productive assets, on the idea that somehow this is good for the economy.

If anyone wants to invoke Bastiat and his “what is seen and unseen”, this is a pretty good example of his Broken Window Fallacy — the seductive notion that destroying assets is good for the economy because people earn income from replacing them.

A more concise understanding of this can be found here:

http://freedomkeys.com/window.htm



They used to say "War is good for the economy" and point to the fact that World war II got us out of the Great Depression. But let's take the "Broken Window Fallacy and relate it to something more understandable.

Let's replace the word "War" with "Terrorism"...


September, 11, 2001

The loss of the World Trade center towers, and other buildings and capital is bad enough, but thousands of people, many experts in their field who are not easily replaced, perished when terrorists destroyed the towers. The physical losses are in the billions of dollars; the human losses are incalculable.

It is true that some people will be made better off temporarily as insurance money compensates the owners in part for their losses and new construction begins.

Anyone who has ever had to make an insurance claim on lost or destroyed property knows that the ordeal is hardly without cost.



But didn't it create opportunity and help the economy?

Only a tiny number of New Yorkers were employed either cleaning up the rubble, or rebuilding after this gruesome task was completed.

The billions of dollars that insurance companies paid for losses came from funds that would have been invested elsewhere. Other projects that were being planned died, as they were starved for lack of available capital to invest. Insurance companies wer forced to raise rates to cover losses. This gave consumers less to spend.

But the events of 9/11 got us into Afghanistan and then Iraq. Billions have been spent on this and thousands of lives again lost... and counting.

We are still at war... and what about the economy?






So for everyone reading this, if you have bought a car using the cash for clunkers program, please send me a thank you for helping you to buy it, as it will be paid for by my (and even your) taxes, along with those paid by millions of other Americans.

Anf those of your grandchildren's as well.


.