Wednesday, August 05, 2009

Some subsidies are worse than others

Kudlow, at National Review:

As a free-market capitalist who does not believe in artificial spending and pump-priming from Uncle Sam, I'm going to eat a little crow with the following statement: At this moment in history, if we're going to use fiscal stimulus as Washington insists, I favor extending the cash-for-clunkers car-rebate program.

That's a damn big "if," and you can put me down as a no on it.

On the other hand, I'll go so far as to allow that "Cash for Clunkers" is far from the worst of the "stimulus" ideas. If the idea is to help the auto industry, subsidizing the purchase of new cars makes more sense than just writing checks to the Big Three and griping at them about how they should run their businesses better.

For one thing, Joe Sixpack sees some tangible benefit. He can go out and get a new car cheaper. He can park it in front of his house. He can drive it to work. Sure, he's paying that money to Uncle Sugar on the back end in taxes, inflation or future claims that he's responsible for the government's debt (and so are all the people who don't or can't avail themselves of the program) ... but all those things are true of the straight-up bailouts as well, and he doesn't get a car out of them. If we're going to play the whole "broken window fallacy" game, at least C4C includes a new window; the other bailouts are just the window-breakers running around yelling "nyah, nyah" with wads of your cash falling out of their pockets.

Had I been elected to Congress last November, I wouldn't have supported "Cash for Clunkers," or any of the other bailouts. And if Todd Akin resigned tomorrow and I was appointed to fill his seat, I'd gladly sponsor legislation to shut all those programs down, in any or no particular order. But "Cash for Clunkers" would not top my list of programs to get exercised about.

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