Diary

Cash for broken windows

Was just answering a note from a friend and thought I’d share my quick observation back to him —

You know, a lot of people don’t realize it but this whole cash for clunkers thing is a variation of the ‘broken window’ theory found in economic study.

It’s a giant government program to aggressively destroy wealth. The used cars turned in have obvious value. By crushing them and turning them into scrap, you might take something worth $10,000 and turn it into a pile of garbage worth $100. Further, it damages the quality of life for poorer people who’s selection of used vehicles is unnaturally reduced, thereby constraining their available choices and raising the price of those that remain. And, of course, we fools who still work and support ourselves and our families, we’re further impoverished by paying for this foolishness.