Sunday, April 4, 2010

When Governments screw up the free market


I'm sure US readers remember the recent 'Cash For Clunkers' program, where the US Government paid those driving older vehicles to trade in their 'clunkers' on more modern, more fuel-efficient alternatives. The rebates were up to several thousand dollars per vehicle. The 'sting in the tail' was that vehicles traded in under this program had to be destroyed - they couldn't be resold. This removed a large number of perfectly serviceable used vehicles from the market, with the (unforeseen) result that used car prices rose, making it more difficult for those with limited means to afford a vehicle.

It seems that something similar happened in the UK - with similar results. The Daily Mail reports:

Sitting nose to tail on a disused airstrip, these cars form a tiny part of the massive backlog of vehicles destined for the scrap heap.




The number standing idly on the runway has swelled to around 14,000 as mechanics struggle to cope with the popularity of the Government's scrappage scheme, which ended last week.

The former airfield in Thurleigh, Bedfordshire, is one of a number of 'holding areas' packed with vehicles sold through Lord Mandelson's £400 million [about US $610 million] incentive scheme.

Under the policy, manufacturers matched the £1,000 [about US $1,525] per car put up by the Treasury - giving customers a £2,000 [about US $3,050] saving on a new vehicle.

The £28 million [about US $42.7 million] haul will eventually be sent to a licensed scrappage yard where the cars' oil and petrol will be removed and parts recycled before the shells are crushed.

Almost all of the 400,000 vehicles sold through the scheme are still roadworthy and many could be driven for another five years, according to experts.

However, the vast collection --which includes a fine range of BMWs, Volvos and Peugeots - must be destroyed under the scheme's rules.


There's more at the link, including larger photographs.

If those vehicles were still available on the market, many who can't afford new cars might buy them, and derive economic benefit from them. Now, they can't - and because those cars have been removed from the 'pool', the price of similar used vehicles has risen. So much for Government 'assistance' . . . helping to make affordable transportation unaffordable! (Not to mention wasting taxpayers' money into the bargain!)

Grrr . . .

Peter

7 comments:

Ian said...

The automobile is freedom. Freedom to live where you want, shop where you want, travel where you want.

Fascists in government, and their supporters have been trying to limit ownership of automobiles for decades. They are smart enough to not go after cars directly, but have used 'safety' and 'environment' as an excuse to make cars as expensive as possible. this drives the poorer people out of the car market. Not satisfied there, the fascists are now attempting to limit access to used cars for the same reason.

Without a car, people are forced to live in tenements, and rely on 'public' transportation for shopping and getting to work. This limits their option of where to live, work or shop.

Jerry said...

I can't wait to see the "Top Gear" response to this foolishness.

Anonymous said...

Aaaaand the $4000 gets counted as income. So you have a new car, are making new-car payments and may get to pay more income tax. Meanwhile, despite what seem to be concerted efforts by the powers that be, Toyotas are still selling briskly, new and used.

LittleRed1

Michael W. said...

Look on the bright side Peter. At least in the U.S. I would bet a majority of the cars traded in had Obama for President bumper stickers on them so at least we don't have to look at them while we drive around. -grin-

Anonymous said...

What Ian said.

Jim

Noons said...

What baffles me is how a government and its party who does this is not kicked out, to never be re-elected.
This sort of thing 60 years ago would result in a strong stimulus to the tar and feathers business...

Chip said...

And they think they can fix Health Care too.