Monday, August 3, 2009

Eat the poor

Many people consider government to be an organization that, among other things, aids the poor. We will present an example where people with more money are helped by government at the expense of the poor.

I am referring to the cash for clunkers program. This program is in fact a welfare program for the middle class. In order to be eligible for this program a person must be able to buy a new car. This excludes the poor from reaping any benefit from the program. In addition the program will destroy used cars. The only cars available to a family of limited means are used cars. It is a simple economic fact that destroying used cars will decrease the supply of used cars and therefore raise their price. The result will be that the poor will pay the bill for all those

Another sad effect of this program will be the effect on the middle class. Many people will take advantage of this program. Many of those people will go in to debt to purchase a new car. This will add to the already high debt burden that many people face. This incentive distorts the market and causes people to take on more debt when they should be paying off debts. This will delay economic troubles, not solve them.

1 comment:

Anonymous said...

So true on all counts! And without a car, it is impossible to get a job to get you out of that bottom tier (or in many cases, to get a job at all).

I had taken the title a bit more literally, though -- Soylent Green came immediately to mind.