Wednesday, August 05, 2009

Cash for Clunkers

One obvious effect of the government getting involved in free enterprise is run-away price inflation. Over the last twenty years the three areas of our economy that have experienced the greatest price increases have been higher education, real estate, and medicine -- all three areas where the government has insinuated itself to "help" things out.

In higher education, easy-to-get student loans, government scholarships, and faculty research grants have fattened to coffers of colleges and universities while at the same time caused tuitions and fees to skyrocket. The (previous) rapid increase in home prices can be directly attributed to the $500,000 family exclusion of capital gains tax on primary residence sales and the government's coercion of banks to finance mortgages to sub-prime borrowers. And, in health care, the tax-deductibility of company-paid health insurance, Medicaid, Medicare, and government-guaranteed health care to all Americans has also caused this sector of our economy to experience escalating costs far beyond the Consumer Price Index.

Now the government is pumping the new car sales market with its $4,500 "cash-for-clunkers" program. After quickly running through the first one billion of our grandchildren's money to pay for this feel-good program, Congress is ready to ante up another $2,0o0,000,000. And I predict that this will not be the end of such give-aways. Surely, our Washington solons will try to buy their way back into to office next year by continuing to pour money into this program. With what results? I safely predict that, before too long, automobile companies and dealers will increase the prices of their cars to sop up every last cent of this government largess ... creating yet another sector of our economy with out-of-control price inflation. Enough!! Let's all go back and read "Atlas Shrugged."

2 comments:

  1. I agree that the cash for clunkers is flawed. They should have just sent everyone a check for $4500 instead of bailing-out GM. Then people could spend it on anything they needed. I disagree with your avowal of godless Objectivism (Atlas Shrugged) - self interest+laissez-faire+greed took us down that primrose path to financial disaster. Also, it was the free market that brought most of the illegal aliens into this country.

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  2. So saith Vladimir Ilyich.

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