Claim: Cash-For-Clunkers MASSIVELY Distorted GDP

[Francesca R]

I know you're tongue-in-cheeking that comment but actually, a liquidation sale of parking meters might not be a bad idea.

Don't see how you can do that without selling them the property right in part of the street, which is not practical for urban centres where one shop might front the street, and offices might be above that, and residences above that.

Road pricing is an OK idea, but that's not road privatisation.

BTW my example was a "Gubmint going out of business due to falling sky . . . 25% off city-centre parking!!" idea.

This would immediately create an economic boost, because it would create a market selection mechanism for those who most need/desire the services or goods from those stores.

Even in private shopping real estate, the parking and common areas are pooled and managed in the same way a state would do. So I don't think the market is voting with your feet.

 

[drkitten]

Don't see how you can do that without selling them the property right in part of the street, which is not practical for urban centres where one shop might front the street, and offices might be above that, and residences above that.

Sell someone the right to install a parking meter there, the same way you can buy the right to make a film of a book without buying a physical copy (or the copyright) of the book.

Indeed, you may be able to get a better deal (for the city) if there are lots of people who want that particular right -- auction it off to the highest bidder. As an apartment dweller, I might want to put a parking meter that charges $1000/hr there, so that I and only I can park in front of my apartment for free. The shopkeeper might want free parking but only for ten minutes. Whichever one of us wants it more badly (is willing to pay more) gets it.

 

[kevinquinnyo]

[...]

Not really. If you calculate it in terms of price per hour, parking in front of the store is usually more expensive if it's legal at all to park by the hour (and otherwise, the stores will usually lobby to have parking durations shortened). [...]

No, I don't think so. If the average cost to park in an urban area is $1 per hour, and if the average lot is $10, then you'd have to stay 11 hours to have wasted a dollar parking in the meter.

The cost of a city meter is too low. It should be higher, and truly, it should fluctuate based on demand, ie - if there is an event or a saturday night, versus a sunday at 3 pm, etc.

The commuters generally want someplace to park their car for the day while they work in the office. And, of course, the residents often want someplace to park their car for a week at a time if necessary.

The problem is that if you go with a simple free-market, first-come-first-served, that's exactly what you don't get. Because the residents are there first, they get first choice of the parking spots and will grab and hold the choice ones. The commuters are generally there second (the shop workers need to be there before the shop can open) and will grab any convenient spots the residents have left. The results are that the customers have to park a good distance away and walk to the shops, which makes shopping much less convenient.

The result is a classic tragedy of the commons. In the case of a large box store like Wal*Mart, the store can create and enforce a policy that all employees must park at the far reaches of the parking lot (and that overnight parking for non-employees is prohibited); in the case of a metered urban street, no single shopkeeper controls enough of the parking area to be able to create/enforce such a policy, and any attempt to create such a policy would result in comparative loss by the single shopkeeper foolish enough to try.

So again we see that the free-market fails to protect the unmanaged commons and the only way to get the desired result is with an external force akin to government.

The shopkeeper doesn't need to create a policy. The people who would own the meters would eventual nestle into an equilibrium price that keeps everyone happy. (piss off the residents too much, lose money, piss off the shopkeeper too much, lose money, piss off the customers too much, lose money)

 

[Emperor_Gestahl]

I might want to put a parking meter that charges $1000/hr there, so that I and only I can park in front of my apartment for free.

I think the maximum fine would be rather lower than $1,000/hr, no one would ever pay you! Riffraff would be just as likely to jump in that spot as any other. High prices might mean more violations so more revenue for the city (more than from the meters they sold to get it!), but a whole new era of parking ticketry can't be good for the local economy on balance.

 

[Rodney]

According to business columnist John Crudele of the NY Post:

The Cash for Clunkers program gave Detroit a temporary lift, but it cost taxpayers dearly. About 500,000 old vehicles were turned in and new-car buyers got around $2 billion in government rebates.

That was the intended part.

But while the engines of the old cars were rendered inoperable, all of the other parts of these clunkers went to salvage yards. And for years to come these parts will be helping other clunkers stay on the road and pollute the planet.

So the heavily-touted environmental aspect of the clunker program really didn't pan out.

Worse, the salvage industry is now awash in so many used parts that it is griping.

"Feds missed opportunity to keep Cash for Clunkers program Green," was the headline of a press release recently put out by the United Recyclers Group.

See http://www.nypost.com/p/news/business/white_house_solutions_creating_new_lkG0pnzcDQaYTnMbbdVXaL

 

[kevinquinnyo]

Well, of course.

None of it panned out. It was a big scam.

 

[Meadmaker]

But we in Detroit thank you for your support.

And your money.

 

[ZirconBlue]

Because, of course, there is no such thing as an automotive aftermarket supplying replacement parts.

 

[JCL]

According to business columnist John Crudele of the NY Post:

The Cash for Clunkers program gave Detroit a temporary lift, but it cost taxpayers dearly. About 500,000 old vehicles were turned in and new-car buyers got around $2 billion in government rebates.

That was the intended part.

But while the engines of the old cars were rendered inoperable, all of the other parts of these clunkers went to salvage yards. And for years to come these parts will be helping other clunkers stay on the road and pollute the planet.

So the heavily-touted environmental aspect of the clunker program really didn't pan out.

Worse, the salvage industry is now awash in so many used parts that it is griping.

"Feds missed opportunity to keep Cash for Clunkers program Green," was the headline of a press release recently put out by the United Recyclers Group.

See http://www.nypost.com/p/news/business/white_house_solutions_creating_new_lkG0pnzcDQaYTnMbbdVXaL

677,xxx C4C trade-ins last year

There were 14,000,000 autos scrapped last year

http://www.msnbc.msn.com/id/34710881/ns/business-autos/

So Cash for Clunkers was about 5% of the total. Is the claim that a 5% increase in used parts, except engines, is destroying the auto recycling/used parts business, and adding to contaminating the environment?

 

[Puppycow]

The testable claims are:
1) "Vehicle output is clearly going off a cliff next quarter."
2) "Q4 is likely to be very weak"
3) (Combination of 1 and 2) "Next quarter, not only are we unlikely to get Q3's boost, but motor vehicle output data could subtract from GDP as well. So watch out for the cliff..."

Now we have an answer!

Economy in U.S. Grew at 5.7% Pace, Most in Six Years

So, claim 2 goes right out the window. 1 and 3 look dubious too.

 

[Francesca R]

1 was incorrect; the contribution was less than in Q3 but still positive:

Motor vehicle output added 0.61 percentage point to the fourth-quarter change in real GDP after adding 1.45 percentage points to the third-quarter change.
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

 

[IchabodPlain]

Well, of course.

None of it panned out. It was a big scam.

What "it" are you referring to? GDP growth? Nope -- you're wrong.

Care to try again with more specifics and less hyberbole?

 

[ServiceSoon]

Now we have an answer!

Economy in U.S. Grew at 5.7% Pace, Most in Six Years

So, claim 2 goes right out the window. 1 and 3 look dubious too.

Shouldn't the claim be that car sales will fall of a cliff next quarter?

Your article says the economy grew 5.7% compared to the last, but that 5.7% growth wasn't from the sale of cars. The article is generic by saying "the increase of inventories," but for what industry?

The gov spent 3 billion dollars. Assuming that the average car cost $20,000 and received the full rebate of $4,500 then this plan helped sell 3B / $4,500 = 666,666 cars.

666,666 cars times the amount per car the consumer spent $15,000 = $10B. The gov spent 3B to get a 10B return on their investment.