Quotulatiousness

January 25, 2015

Ladies and gentlemen, Her Majesty Queen Elizabeth II

Filed under: Britain, Humour, Middle East — Tags: , , , , — Nicholas @ 05:00

Vox.com‘s Amanda Taub on a memorable visit for then-Crown Prince Abdullah of Saudi Arabia to Britain (and yes, this one is far too good to check):

During their meeting, she gleefully recounted the story of Abdullah’s first visit to Balmoral, her castle in Scotland. It all started innocently enough, with an offer to tour the estate:

    After lunch, the Queen had asked her royal guest whether he would like a tour of the estate. Prompted by his foreign minister the urbane Prince Saud, an initially hesitant Abdullah had agreed. The royal Land Rovers were drawn up in front of the castle. As instructed, the Crown Prince climbed into the front seat of the front Land Rover, his interpreter in the seat behind.

But then, a surprising twist! The Queen herself was Abdullah’s driver:

    To his surprise, the Queen climbed into the driving seat, turned the ignition and drove off. Women are not — yet — allowed to drive in Saudi Arabia, and Abdullah was not used to being driven by a woman, let alone a queen.

And she wasn’t just driving, she was DRIVING, leaving Abdullah a quivering wreck:

    His nervousness only increased as the Queen, an Army driver in wartime, accelerated the Land Rover along the narrow Scottish estate roads, talking all the time. Through his interpreter, the Crown Prince implored the Queen to slow down and concentrate on the road ahead.

That’s right: Queen Elizabeth basically spent an afternoon using her military-grade driving skills to haze the crown prince of Saudi Arabia.

H/T to Damian Brooks for the link.

January 4, 2015

“Google self-driving cars are timid”

Filed under: Humour, Technology — Tags: , , — Nicholas @ 04:00

The Oatmeal got a chance to ride in one of Google’s self-driving cars, and learned six things from his experience:

2. Google self-driving cars are timid.

The car we rode in did not strike me as dangerous. It struck me as cautious. It drove slowly and deliberately, and I got the impression that it’s more likely to annoy other drivers than to harm them. Google can adjust the level of aggression in the software, and the self-driving prototypes currently tooling around Mountain View are throttled to act like nervous student drivers.

In the early versions they tested on closed courses, the vehicles were programmed to be highly aggressive. Apparently during these aggression tests, which involved obstacle courses full of traffic cones and inflatable crash-test objects, there were a lot of screeching brakes and roaring engines and terrified interns. Although impractical on the open road, part of me wishes I could have experienced that version as well.

An abandoned Google car prototype

January 1, 2015

QotD: Henry Ford and the doubled wages – the real story

Filed under: Business, History, Quotations, USA — Tags: , , , , , — Nicholas @ 00:01

In 1913, turnover reached an unbelievable 370 percent, and Ford hired more than 50,000 people to maintain an average labor force of about 13,600. When profits swelled, he paid well for labor, creating an uproar when he doubled the basic wage to $5.00 a day, which triggered a virtual stampede of job seekers. Paying higher wages for labor was not altruistic in Ford’s eyes. Moreover, it wasn’t simply that Ford was trying to pay his workers “enough to buy back the product,” although he did preach a high-wage doctrine after the stock market crash in 1929. Rather, paying relatively high wages was, for Ford, a matter of smart business. He regarded well-paid skilled workers as important as high-grade material. By paying workers well, he effectively lowered his costs because higher wages reduced turnover and the need for constant training of new hires. (At the time, the newspapers saw Ford’s wage increase as an extraordinary gesture of goodwill.)

Mark Spitznagel, The Dao of Capital: Austrian Investing in a Distorted World, 2013.

December 10, 2014

QotD: Quality, innovation, and progress

Filed under: Economics, Liberty, Quotations, Technology — Tags: , , , , — Nicholas @ 00:01

Measured by practically any physical metric, from the quality of the food we eat to the health care we receive to the cars we drive and the houses we live in, Americans are not only wildly rich, but radically richer than we were 30 years ago, to say nothing of 50 or 75 years ago. And so is much of the rest of the world. That such progress is largely invisible to us is part of the genius of capitalism — and it is intricately bound up with why, under the system based on selfishness, avarice, and greed, we do such a remarkably good job taking care of one another, while systems based on sharing and common property turn into miserable, hungry prison camps.

We treat the physical results of capitalism as though they were an inevitability. In 1955, no captain of industry, prince, or potentate could buy a car as good as a Toyota Camry, to say nothing of a 2014 Mustang, the quintessential American Everyman’s car. But who notices the marvel that is a Toyota Camry? In the 1980s, no chairman of the board, president, or prime minister could buy a computer as good as the cheapest one for sale today at Best Buy. In the 1950s, American millionaires did not have access to the quality and variety of food consumed by Americans of relatively modest means today, and the average middle-class household spent a much larger share of its income buying far inferior groceries. Between 1973 and 2008, the average size of an American house increased by more than 50 percent, even as the average number of people living in it declined. Things like swimming pools and air conditioning went from being extravagances for tycoons and movie stars to being common or near-universal. In his heyday, Howard Hughes didn’t have as good a television as you do, and the children of millionaires for generations died from diseases that for your children are at most an inconvenience. As the first 199,746 or so years of human history show, there is no force of nature ensuring that radical material progress happens as it has for the past 250 years. Technological progress does not drive capitalism; capitalism drives technological progress — and most other kinds of progress, too.

Kevin D. Williamson, “Welcome to the Paradise of the Real: How to refute progressive fantasies — or, a red-pill economics”, National Review, 2014-04-24

December 8, 2014

RMR: Rick’s Rant – Turn Signals

Filed under: Cancon, Humour — Tags: — Nicholas @ 00:02

Published on 3 Dec 2014

Rick’s Rant for December 2nd, 2014.

December 5, 2014

The urban light-rail mania

Filed under: Economics, Environment, Politics, Railways, Technology — Tags: , , — Nicholas @ 00:04

If you live in a city, chances are that the politicians of your ‘burgh are talking light rail. Unless, of course, you already are suffering under the burden of a light rail project snarling traffic during construction … and snarling traffic in operation. Light rail, in general, is an attempt to resurrect the streetcar era by vast infusions of tax dollars. It’s an attempt to solve a traffic management problem in one of the more inefficient ways possible: to get a few people out of their cars and into modern streetcars instead.

I’m not anti-rail by any means. I travel five days a week on a heavy rail commuter train that does a pretty fair job of getting me where I need to go in a timely and economical fashion. Worse than that, I’m a railway fan — as I’ve mentioned before, I founded a railway historical society. I’m not against light rail due to some sort of anti-rail bias … I’m against it because it’s almost always too expensive, too inflexible, and too politicized.

Georgi Boorman wonders why so many cities are still falling into the light rail trap:

In a previous piece, I discussed the radical ideological roots of the mass transit scam. There are some, such as Seattle City Councilwoman Kshama Sawant (who urged Boeing factory workers to seize control of the plant and begin building mass transit) who believe centralization and a complete shift to mass transit are crucial for cities’ futures. Others simply buy into this myth that light rail and trolleys will somehow elevate their cities to the next level of sophistication — the very prospect of which is ignorant, at best, and self-indulgent, at worst.

The overwhelming evidence shows that these mass transit projects do little to improve our quality of life, in terms of easing congestion and expanding access to jobs and, despite popular perception, have no significant net environmental benefits since they rarely succeed in their express goal of removing cars from the road or decreasing congestion-induced idle times, a frequently cited contributor to greenhouse-gas emissions. As the satirical online newspaper The Onion reported, “98% of Americans favor public transportation for others.” That statistic may be fake, but we’ve all experienced the sentiment.

Even the writers of The Simpsons seem to understand the comical nature of light-rail adoption in American cities, brilliantly satirizing the salesmanship by transit authorities. The salesman, “Lyle Lanley,” begins by comparing the Simpsons’ town of Springfield to Shelbyville. “This is more of a Shelbyville idea,” he says slowly, turning his back to the crowd. “Now, wait a minute!” the Springfield mayor responds hastily, “We’re just as smart as the people of Shelbyville—just tell us your idea and we’ll vote for it!”

Gleefully, Lanley begins his presentation; with a grand sweeping gesture, the salesman uncovers a model of the city, complete with buildings, trees, and a brand new Springfield Monorail zooming through the town on its miniature tracks. Holding up a map labeled with all the towns to which he’s sold monorails, he exclaims, “By gum, it put them on the map!” Continuing his pitch, Langley heightens the townspeople’s imaginations and sells them on the “novel” idea of their very own monorail.

In other words, the buy-in had nothing to do with demand for a certain kind of transportation, and everything to do with wanting do the same as other cities that have, or are building, the same thing. Of course, 50 years ago the Seattle Center monorail (built by the German company Alweg) could easily have been said to have elevated the Emerald City at the 1962 World’s Fair, being the cutting-edge of rail technology at the time; but building monorails, light rails, and streetcars in 2014 is a regressive move that mirrors the past rather than engages with the present while leaving room for future innovation.

October 28, 2014

Self-driving trucks may be more significant (in the short term) than self-driving cars

Filed under: Business, Economics, Technology — Tags: , — Nicholas @ 07:25

At Samizdata, Brian Micklethwait looks at the likely short-term impact of driverless vehicles:

Robot passenger cars will eventually bring huge benefits. They will be epoch making, when the robot car epoch does finally arrive. I truly believe this. But in the shorter run, the problems of robot cars strike me as bigger than all the car and hi-tech companies are implying, and the benefits less immediate. Robot cars will presumably be good at finding their own parking spaces, and at making themselves useful to others if you aren’t using yours. Robot cars will presumably be less prone to error than humans, except when that turns out not to be the case. But what of those potholes?

In the meantime, making lorry (as we Brits call “trucks”) transport only somewhat more efficient will yield huge, very quantifiable, and fairly immediate benefits. Even if all they do to start with is robotise lorries on motorways, that would surely make a huge difference.

The motorway is the natural habitat of the big lorry, and is a place of far greater predictability than roads in general and hence more congenial for robots, especially robots in their early stages. Motorways are already highly controlled places, and are surely the right part of the road system to start introducing robots, not country lanes or city streets filled with complicated and unpredictable hazards.

Human lorry-drivers get tired, but robots don’t. A robot lorry could cross a continent with all the dogged, error-free serenity of a jumbo jet on autopilot crossing the same continent in the air.

At first, humans would need to sit in the lorries to check on their progress all the time, but pretty soon the human could be taking a nap and it wouldn’t matter. Not long after that, once everything has been shown to work, humans would not be needed to sit in lorries on motorways at all. Soon, all that the humans would need to do is collect the lorries (perhaps just the load bit) from their local off-motorway lorry parks, to which the robot lorries had driven themselves. Upon that solid technological foundation, lorries further into the future could then start travelling much faster. (I seem to recall a plan to concrete over railways and turn them into roads. Maybe that notion will be revived.) They could also make their way into the road system generally. The economic impact will surely be colossal, and more immediate than is the case for robot cars.

October 24, 2014

QotD: Poverty in the West is not like poverty in the rest of the world

Filed under: Economics, Quotations, Technology, USA — Tags: , , , — Nicholas @ 00:01

What is it, in terms of physical goods and services, that we wish to provide for the poor that they do not already have? Their lives often may not be very happy or stable, but the poor do have a great deal of stuff. Conservatives can be a little yahoo-ish on the subject, but do consider for a moment the inventory of the typical poor household in the United States: at least one car, often two or more, air conditioning, a couple of televisions with cable, DVD player, clothes washer and dryer, cellphones, etc. As Robert Rector and Rachel Sheffield report: “The home of the typical poor family was not overcrowded and was in good repair. In fact, the typical poor American had more living space than the average European. The typical poor American family was also able to obtain medical care when needed. By its own report, the typical family was not hungry and had sufficient funds during the past year to meet all essential needs. Poor families certainly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and the cable-TV bill as well as to put food on the table.” They also point out that there’s a strong correlation between having boys in the home and having an Xbox or another gaming system.

In terms of physical goods, what is it that we want the poor to have that they do not? A third or fourth television?

Partly, what elites want is for the poor to have lives and manners more like their own: less Seven-Layer Burrito, more Whole Foods; less screaming at their kids in the Walmart parking lot and more giving them hideous and crippling fits of anxiety about getting into the right pre-kindergarten. Elites want for the poor to behave themselves, to stop being unruly and bumptious, to get over their distasteful enthusiasms, their bitter clinging to God and guns. Progressive elites in particular live in horror of the fact that poor people tend to suffer disproportionately from such health problems as obesity and diabetes, and that they do not take their social views from Chris Hayes — and these two phenomena are essentially the same thing in their minds. Consider how much commentary from the Left about the Tea Party has consisted of variations on: “Poor people are gross.”

A second Xbox is not going to change that very much.

Kevin D. Williamson, “Welcome to the Paradise of the Real: How to refute progressive fantasies — or, a red-pill economics”, National Review, 2014-04-24

October 13, 2014

Statistical sleight-of-hand on the dangers of texting while driving

Filed under: Health, Media, USA — Tags: , , , , — Nicholas @ 10:15

Philip N. Cohen casts a skeptical eye at the frequently cited statistic on the dangers of texting, especially to teenage drivers. It’s another “epidemic” of bad statistics and panic-mongering headlines:

Recently, [author and journalist Matt] Richtel tweeted a link to this old news article that claims texting causes more fatal accidents for teenagers than alcohol. The article says some researcher estimates “more than 3,000 annual teen deaths from texting,” but there is no reference to a study or any source for the data used to make the estimate. As I previously noted, that’s not plausible.

In fact, 2,823 teens teens died in motor vehicle accidents in 2012 (only 2,228 of whom were vehicle occupants). So, my math gets me 7.7 teens per day dying in motor vehicle accidents, regardless of the cause. I’m no Pulitzer Prize-winning New York Times journalist, but I reckon that makes this giant factoid on Richtel’s website wrong, which doesn’t bode well for the book.

In fact, I suspect the 11-per-day meme comes from Mother Jones (or whoever someone there got it from) doing the math wrong on that Newsday number of 3,000 per year and calling it “nearly a dozen” (3,000 is 8.2 per day). And if you Google around looking for this 11-per-day statistic, you find sites like textinganddrivingsafety.com, which, like Richtel does in his website video, attributes the statistic to the “Institute for Highway Safety.” I think they mean the Insurance Institute for Highway Safety, which is the source I used for the 2,823 number above. (The fact that he gets the name wrong suggests he got the statistic second-hand.) IIHS has an extensive page of facts on distracted driving, which doesn’t have any fact like this (they actually express skepticism about inflated claims of cell phone effects).

[…]

I generally oppose scare-mongering manipulations of data that take advantage of common ignorance. The people selling mobile-phone panic don’t dwell on the fact that the roads are getting safer and safer, and just let you go on assuming they’re getting more and more dangerous. I reviewed all that here, showing the increase in mobile phone subscriptions relative to the decline in traffic accidents, injuries, and deaths.

That doesn’t mean texting and driving isn’t dangerous. I’m sure it is. Cell phone bans may be a good idea, although the evidence that they save lives is mixed. But the overall situation is surely more complicated than the TEXTING-WHILE-DRIVING EPIDEMIC suggests. The whole story doesn’t seem right — how can phones be so dangerous, and growing more and more pervasive, while accidents and injuries fall? At the very least, a powerful part of the explanation is being left out. (I wonder if phones displace other distractions, like eating and putting on make-up; or if some people drive more cautiously while they’re using their phones, to compensate for their distraction; or if distracted phone users were simply the worst drivers already.)

October 5, 2014

Jeremy Clarkson riles up Argentinian car fans

Filed under: Americas, Britain, Media — Tags: , , , , — Nicholas @ 00:02

For a change, it isn’t anything he said:

Top Gear‘s crew has had to abandon their cars at the roadside and flee Argentina after being pelted with stones. The incident happened after it emerged they were using a vehicle with a number plate that apparently refers to the Falklands War.

A Porsche with the registration number H982 FKL, which some people suggested could refer to the Falklands conflict of 1982, was among those abandoned. BBC bosses have said the number plate was merely a coincidence and was not chosen deliberately, but it led to protests in Argentina, including a demonstration by a group of war veterans who protested outside the hotel used by the show team.

[…]

The executive producer of Top Gear, Andy Wilman, said: “Top Gear production purchased three cars for a forthcoming programme; to suggest that this car was either chosen for its number plate, or that an alternative number plate was substituted for the original, is completely untrue.”

Even if Wilman is dissembling about the license plate … just how flipping sensitive do you have to be to object to a sort-of abbreviation, in a foreign language, in the characters on a license plate? Who would ordinarily notice or care what the license plate may or may not hint at, unless someone is busy trying to stir up trouble? That said, Top Gear thrives on controversy, so it’s quite possible that they hoped they’d draw some attention, but probably not to the extent of being forced out of the country.

Update: Clarkson is now accusing the Argentine government of setting a trap for the Top Gear film crew.

The presenter was said to have infuriated locals by driving through South America in a Porsche with the numberplate H982 FKL, seen as a goading reference to the 1982 Falklands conflict.

However, Clarkson said the plate was “not the issue” — he claimed it was an unfortunate coincidence and that he removed it two days into the trip — and blamed the state government for orchestrating an ambush by mobs armed with pickaxe handles, paving stones and bricks.

“There is no question in my mind that we walked into a trap,” Clarkson said.

“We were English (apart from one Aussie camera guy and a Scottish doctor” and that was a good enough reason for the state government to send 29 people into a night filled with rage and flying bricks.”

He claimed the crew were “plainly herded into an ambush” and said: “Make no mistake, lives were at stake.”

[…]

The team were confronted at their hotel by a group claiming to be war veterans.

“Richard Hammond, James May and I bravely hid under the beds in a researcher’s room while protesters went through the hotel looking for us,” Clarkson said.

They then fled by plane to Buenos Aires — having “rounded up the girls” on the team — leaving the rest of their crew behind.

The crew were forced to make a gruelling six-hour trek to the Chilean border, abandoning the Porsche and their camera equipment at the side of the road.

September 28, 2014

This is why you rarely see “Made in India” on manufactured goods

Filed under: Bureaucracy, Economics, India — Tags: , , , , — Nicholas @ 11:13

At The Diplomat, Mohamed Zeeshan talks about India’s self-imposed disadvantages in manufacturing both for domestic and export consumption:

Indian Prime Minister Narendra Modi’s maiden Independence Day speech was laced with inspiring rhetoric. But of the many things he said, the one slogan that inevitably caught public attention was this: “Come, make in India!” With those words, Modi was trying to make the case for turning India into the world’s next great manufacturing hub. Understandably, the Indian populace was thrilled.

India is one of the world’s ten largest economies (and is third largest on a purchasing power parity basis), with a total annual output of nearly $2 trillion. As much as 57 percent of this output is produced by a service sector that employs just 28 percent of the population, largely concentrated in urban parts of the country. That is no surprise, because most Indians lack the skills and education to join the more knowledge-intensive service sector. What they need is what successful developing nations all over the world have had ever since the Industrial Revolution: a robust and productive manufacturing sector.

Yet India’s manufacturing sector contributes just 16 percent to the total GDP pie (China’s, by contrast, accounts for almost half of its total economic output). Victor Mallet, writing in the McKinsey book Reimagining India, recently offered an anecdote that was illuminating. “One of India’s largest carmakers recently boasted that it was selling more vehicles than ever and that it was hiring an extra eight hundred workers for its factory,” he wrote, “But the plant employing those workers belongs to the Jaguar Land Rover subsidiary of Tata Motors and is in the English Midlands, not in job-hungry India.”

Mallet goes on to make a point that has been made frequently by Indian economists: The world doesn’t want to “make in India,” because it is simply too painful. There’s bureaucratic red tape, a difficult land acquisition act, troublesome environmental legislation, a shortage of electricity, and a lack of water resources. The only thing India doesn’t seem to lack is labor, but that merely adds to the problem. As Mallet points out in the same essay, aptly titled “Demographic dividend – or disaster?”, “India’s population grew by 181 million in the decade to 2011 – and (despite falling fertility rates) a rise of nearly 50% in the total number of inhabitants is unavoidable.” But the number of jobs being added to feed that population is inadequate.

However, the labor dividend is still important. India doesn’t need to reduce the number of hands on deck. It needs to weed out the challenges that stop them from being productive.

September 20, 2014

CBC warning to Canadians travelling in the United States

Filed under: Cancon, Law, Liberty, USA — Tags: , , , , — Nicholas @ 12:11

I’ve seen this CBC link mentioned several times by US commentators:

American shakedown: Police won’t charge you, but they’ll grab your money
U.S. police are operating a co-ordinated scheme to seize as much of the public’s cash as they can

On its official website, the Canadian government informs its citizens that “there is no limit to the amount of money that you may legally take into or out of the United States.” Nonetheless, it adds, banking in the U.S. can be difficult for non-residents, so Canadians shouldn’t carry large amounts of cash.

That last bit is excellent advice, but for an entirely different reason than the one Ottawa cites.

There’s a shakedown going on in the U.S., and the perps are in uniform.

Across America, law enforcement officers — from federal agents to state troopers right down to sheriffs in one-street backwaters — are operating a vast, co-ordinated scheme to grab as much of the public’s cash as they can; “hand over fist,” to use the words of one police trainer.

September 17, 2014

Creating jobs, good. Creating subsidized jobs, not so good.

Filed under: Economics, Government — Tags: , , , , , — Nicholas @ 09:33

Gregg Easterbrook on the difference between ordinary jobs and government subsidized job creation:

Elon Musk Recharges His Bank Account: Tesla’s agreement with Nevada to build a battery factory is expected to create about 6,000 jobs in exchange for $1.25 billion in tax favors. That’s about $208,000 per job. More jobs are always good. But typical Nevada residents with a median household income of $54,000 per year will be taxed to create very expensive jobs for others. Volkswagen is expanding its manufacturing in Tennessee, which is good. But the state has agreed to about $300 million in subsidies for the expansion, which will create about 2,000 jobs — that’s $150,000 per new job, much of the money coming from Tennessee residents who can only dream of autoworkers’ wages. The median household income in Tennessee is $44,140, about a third of the tax subsidies per new Volkswagen job. The Tesla handout was approved by the Democratic state legislature of Nevada; Tennessee’s Republican-controlled state government approved the Volkswagen corporate welfare deal.

At least it’s a bargain compared to federally subsidized solar jobs. A Nevada solar project — state that is home to Senate Majority Leader Harry Reid, President Barack Obama’s closest ally on Capitol Hill — cost $10.8 million in subsidies per job created. Local public interest groups noticed the extreme subsidy while the national media did not.

This cheeky website monitors giveaways state by state.

August 14, 2014

Ubersplaining

Filed under: Business, Humour — Tags: , — Nicholas @ 08:46

James Lileks on the mindbending phenomenon that is Uber being supported (and even loved) by evil right-wingnuts:

Many people on the right have embraced Uber, the company that lets you call a ride from your smartphone instead of standing on the corner with your hand up looking like a statue of Lenin leading the proletariat to the Future, or maybe to that tapas place downtown. This confuses people who regard conservatives as dumb apes who poke Shiny New Things with a stick and screech in alarm. How can they support Uber? It’s a Cool Thing, and they’re all middle-aged dorks in polyester plaid shorts and black socks with sandals who like to “get down” to bands that sing about pickup trucks, or they’re pale evil men who wear three-piece suits to bed and drift off to sleep fantasizing that they’re slapping the birth-control pills out of the hands of poor women. Uber is good, Uber is an app, for heaven’s sake — how can these cretins possibly be on its side? It’s like finding that all the kale in the country is fertilized by Koch products.

[…]

As for Uber itself, well, let’s take a look at the wonderful world of cars-for-hire. When I lived in D.C. in the 90s, I took a lot of cabs. Now and then you’d get a spotless ride with a courteous older driver who knew every street and alley. When I say “now and then” it was in the sense of “now and then, there’s a presidential election.”

For the most part, the cabs had seats that felt like the thin battered beds of a hot-sheet motel and a sweat-and-barf perma-funk that made you roll down the windows in January. The fare wasn’t set by distance or time, but by zones, which encouraged the drivers to drive fast. While this made for speedy trips, and the not-unpleasant sensation of feeling your cheeks ripple with G-forces as he shot down the Dupont Circle tunnel like someone testing a rocket car on the Salt Flats of Utah, the occasional moments of weightlessness when you hit a bump reminded you that you were doing 50 mph in a car whose shock absorbers didn’t, and whose brakes probably wouldn’t.

When I moved back to Minneapolis I had no occasion to take the cab, except for trips back from the airport. The cars weren’t exactly new; when you looked at the fleet idling in the bays, it made you think, “this is what Havana would look like if Castro took over in 1982.”

August 8, 2014

Revisiting the economic brain-fart that was “Cash for Clunkers”

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 07:44

If you listen to big government fans, you’ll often hear how much better it is for the economy for the government to spend money — much better than letting the taxpayers spend that money themselves — because the government is able to get a much higher “multiple” for every dollar that it spends. The “Cash for Clunkers” story may support that theory, but only if you reverse the sign: the program may have been more economically helpful to the auto makers and the taxpayers if they’d just piled up a few billion bank notes and set them on fire. The program ran for two months, and the government doled out $3 billion in subsidies to new car buyers (their old cars were destroyed). The new car owners benefitted, although it seems to merely have brought forward intended new car purchases in most cases, and the auto makers seemed to benefit by moving out a lot of unsold inventory.

However, a new National Bureau of Economic Research working paper shows that the program actually ended up costing the auto makers between $2.6 and $4 billion. Coyote Blog quotes the WSJ‘s summary:

The irony is that the goals were to help Detroit through the recession by subsidizing sales and to please the green lobby by putting more fuel-efficient cars on the road. By pulling forward purchases that consumers would make later anyway, the Obama Administration also hoped to add to GDP. Christina Romer, then chair of the Council of Economic Advisers, called Cash for Clunkers “very nearly the best possible countercyclical fiscal policy in an economy suffering from temporarily low aggregate demand.”

The A&M economists had the elegant idea of comparing the buying behavior of Texas drivers who owned cars that barely qualified for cash (those that got 18 miles per gallon of gas or less) and those that barely did not (19 mph). Using state DMV sales records, this counterfactual allowed them to isolate the effects of the Cash for Clunkers incentives and show what would have happened without the program.

The two groups were equally likely to purchase a new vehicle over the nine month period that started with Cash for Clunkers, so the subsidy did not create any extra auto business. But in order to meet the fuel efficiency mandate, consumers who got the subsidy were induced to purchase smaller vehicle models with less horsepower that cost on average $2,500 to $3,000 less than those bought by their ineligible peers. The clunkers bought more Corollas, and everybody else more Chevys.

Extrapolated nationally, auto revenues may have plunged by more than what the government spent. And any environmental benefits cannot be justified under the federal social cost of carbon estimate of $33 a ton. Prior research from 2009 and 2013 has shown that the program cost between $237 and $288 a carbon ton.

By taking all those used cars off the road and destroying them, the program also created a nasty price spike in the used car market (which hurt the poor almost exclusively). As P.J. O’Rourke said:

… cash for clunkers was just sinful. You’re taking a bunch of perfectly good vehicles, inexpensive vehicles that could be used by people without much in the way of material means, and crushing them. If someone took a valuable resource — something that could really be useful to people — and destroyed it, they’d be in jail if they were private citizens.

Steve Chapman probably put it best back in 2009, “Cash for Clunkers has been a thrilling moment for advocates of expanded government, who say it proves what we can accomplish when our leaders put their minds to it. They are absolutely right. The program proves the federal government is unsurpassed at two things: dispersing money and destroying things.”

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