Cash for Clunkers: Smothering Innovation?

(Written by Hank Green: 7/31/09)

Congratulations America! When we give you free money, you take it! And that is the only lesson learned from the "Cash for Clunkers" legislation. The stated environmental goals, of course, were thrown out of the window ages ago. But we gave Americans (and car companies) more free money to sell and buy the inefficient vehicles of today so they won't need to buy the efficient vehicles of tomorrow.

Here's how Cash for Clunkers should've worked. You bring in an old, extremely inefficient and polluting car or truck. The government gives you some money for taking that car off the road, allowing you (who would otherwise not be able to afford it) to get a more efficient used car, or an extremely efficient new car. New cars, originally, had to be extremely efficient.

Then the environment took a back seat to the auto industry and, unfortunately, it wasn't wearing it's seatbelt when the whole thing slammed into a brick wall.

So, with the environment flying through the windshield, suddenly you can get a cash for clunkers credit for a 15 mpg truck or an 18 mpg SUV or, and honestly this is the worst of it all, a 22 mpg car! Of course, the government has mandated a fleet-wide efficiency of 27 mpg in just two years for cars. So, yeah, we've basically set ourselves up to have a bunch of extremely inefficient cars on the road for the next ten years while new, efficient cars sit on dealer lots, not getting sold because everyone interested in a new car bought one on July 30th 2009. Just one year before true alternative vehicles hit dealer lots. Just two years before the fleet-wide average was bumped up 5 mpg. So basically, what I'm trying to say is *facepalm*.

Welcome to the government trying to spur innovation and, instead managing to stifle it extremely effectively.