ObamaNation Building, Part V

Cash for Clunkers

Douglas Wilson

The cash for clunkers program is a variation on a theme, one that highlights the economic illiteracy of our times, and the greediness of our leaders and people. Free money -- who could be against that? Well, me, for starters.

Here is the theme. Henry Hazlitt (Economics in One Lesson) pointed out what he called the "broken window fallacy." If you were to walk downtown in your little burg, and throw a brick through the front window of fifty or more shops, in what ways would this provide economic stimulus? It most certainly would provide an economic stimulus . . . to the local glazier. He would be as busy as a one-legged butt-kicker, and it would be his best quarter ever. Moreover the stimulus would be concentrated in one place, and the local teevee news reporter could toodle on down there, and the guy would look into the camera and say something like "this was the best quarter ever." And the folks at home would think, whoa. Prosperity is busting out all over.

Now of course we still lock up public spirited brick-throwers, but this is simply the force of our ancient superstitions, still held by those throwbacks among us who still identify vandalism as destructive. Those superstitions have started to erode, however, because we have already bought into the economic fallacy involved. We have come to think that this would be a good idea, provided only that the mayor be the brickthrower, and we have passed a law, making the whole thing legal. Well, as Dickens has somebody say somewhere, the law is an ass.

The problem, of course, is that all the cash that puddles around the glazier in visible ways had to come from some other place. Say that the glazier took in $100,000 extra. That is $100,000 that could not be spent elsewhere. But the "elsewheres" are diverse. One shop was going to buy a new cash register, but now won't. One shopkeeper was going to take a vacation he will now postpone. And insurance doesn't help, because this just pushes it back a step. The money the insurance companies pay out is money that comes from somewhere. Money is a creature, and therefore cannot be in two places at once. If it goes to the glazier, it doesn't go somewhere else. And the television reporter does not have the competence to round up all the places that suffered a cumulative loss of $100,000 dollars. And since we can't film it, it must not exist.

Wealth is only created under the blessing of God, as He prospers our work over time. That is how it is created. Wealth is not created by taking money from one place and putting it in another. As well tell your wife that you got her some new furniture just because you moved the couch across the living room.

So rearrangement is not wealth creation. Those in Congress who are cheering the cash for clunkers program are either scoundrels or fools, or both. They are both lying and stealing, which is twenty percent of the Ten Commandments. At a minimum.

First posted in Blog and Mablog