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Unformatted text preview: Stilley 1 Thomas Stilley ECON 004: Section 4 Clair Smith 20 November 2009 Government policy should not favor some industries at the expense of others, but that is exactly what Cash for Clunkers does. The program helps consumers who can take advantage, and it increases profit and employment in the auto industry. But funding for the program comes from all other taxpayers, so it harms the consumers and industries not supported by the program. Thus Cash for Clunkers creates winners and losers based on political considerations, not economic values. Government spending can stimulate the economy, but this program is misguided because it distorts the economys allocation of resources across consumers and industries. Cash for Clunkers is not about giving out $1 billion to 0.075% of the population in order to get them to destroy their functioning cars and buy new ones from companies whose lobbyists are persuasive and powerful(Baker). Rather, it is about the allocation of money that would have been spent in other (likely more productive) ways, or saved. I t is about the that would have been spent in other (likely more productive) ways, or saved....
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This note was uploaded on 03/16/2010 for the course ECON 09 at Pennsylvania State University, University Park.