Ever noticed long defunct gas stations with a price sign still displaying the price per gallon for regular around $2.00 (the day they went out of business, years and years ago). Over the years when driving by the defunct stations have you thought: "Was that ever a great price!”
Now when driving by, it comes to mind: "Yes that was a good price but not as good as the price today!"
On a recent trip past a particular defunct station also noted some junk cars sitting on the property. The junk cars and the old "$2.08 sign" might remind one of something. That something is the infamous cash-for-clunkers.
One of the arguments for cash-for-clunkers was gas mileage. That is, trade in that old gas guzzler with a taxpayer subsidy and receive a new fuel efficient vehicle. As the argument went, the new fuel efficient vehicle will save you money at the pump. Hence instead of paying $2,500 per year for fuel you will only pay $1,500 per year. In effect, one phase of the argument for cash-for-clunkers was: one would be lowering their price/cost for oil by buying the new fuel efficient vehicle.
Moreover, as the argument went on, James and Jane Goodfellow would enjoy $1000 additional dollars in their pocket and they would consume such savings and this would help the economy.
Putting aside the basic point that cash-for-clunkers was merely an exercise in accelerating consumption into the present, at an extremely high price to taxpayers, what about the argument point that one would be lowering their price/cost for oil by buying the new fuel efficient vehicle -and- would enjoy $1000 additional dollars in their pocket and they would consume such savings and this would help the economy?
How is it that the argument to lower the price one spends for gasoline (oil) in the cash-for-clunkers proposition (a select few that actually used the cash-for-clunkers program) is "good". On the other hand, a group of talking heads, pundits and advocates depict innovation and spontaneous/emergent order of the market lowering everyone's price for oil as "bad"? In both cases James and Jane Goodfellow lowered their price/cost of oil consumption, albeit for a select few in one example and the many in the other example, yet one avenue to lower price/cost consumption of oil is good while the other avenue is bad. Huh?
To one extent or the other, could it be that good vs. bad in the oil price argument finds its base argument as:
(1) advocacy of collective action where politicos can take credit vs. spontaneous/emergent order were credit is highly dispersed and no one individual can take political credit,
(1a) "good" is only if, credit for good can be politically assigned,
(1b) "bad" is where credit is politically unassigned.
Wednesday, January 28, 2015
Cash-for-Clunkers, Low Oil Prices and Political Credit Assignment
Labels: cash for clunkers, collective action, emergent order, oil prices, political assignment of good, politicos, spontaneous order
BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV. Undergraduate Minor in General Insurance. Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA. Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C.. Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College. 38 years insurance industry experience.