Monday, October 05, 2009

You can't create wealth by destroying productive assets

Someone ought to tell the government. Cash for Clunkers was stupid. The WSJ has more on the subject and includes an estimate that $2,000 in wealth was destroyed for every one of these transactions.

The problem is that people in government consider it a great success and therein lies the problem. The PEOPLE aren't completely stupid all of the time. I believe that people who might otherwise be trading cars presently are waiting to see if the government reinstitutes the program. I am suggesting that the business that car dealers might otherwise be getting is not happening because people think another program might be just around the corner. After all, it was a "successful" program, right? If it was so successful and since the economy is still stalling, why not bring it back? Why trade now if the government might play Santa Claus and steal $4500 from someone else to put into my pocket in a few months. I think I'll wait. How's that for stimulus?

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