Thursday, August 20, 2009

A way to bring the $4,000 GM car here

It appears that the clunker program is about to be put to bed as the $3 billion has been spent.It's probably run it's course anyway and dealers are dropping out in droves.Pretty amazing that they would turn their backs on a free $4,500 but that is the cost of government regulation.

Interesting that GM now plans to build a $4,000 car that we can't buy here and they have no intention to ever sell here.Why?The cost of government regulation,of course.Meeting the federal safety and emissions standards takes the car out of our marketplace.Now,that certainly is another debate completely on the merits of these standards.No one would argue that they would prefer a less safe car that pollutes more.

I just find the comparison compelling.For less than the cost of the clunker bailout which is another wealth redistribution program,you can buy a brand new car.For the taxpayers $4,500,we gain a few mpg and less carbon emissions but we junk an otherwise perfectly usable car.This helps the car makers with the sales.It hurts charities and now requires the new owner to take on a car payment and carry full coverage insurance.No clear cut winner either way.

Would it be better to make a $4,000 car available to the masses which provides a brand new car with a warranty and gives them options on their clunker.Sell it,keep it,donate it,whatever.This option is at no cost to taxpayers and would most certainly be a jobs creator and the sales numbers would likely dwarf the clunker program results.There are,of course,a number of Americans that would never drive a small death trap car,but due to economic reality,many more would.

Which brings us to the question of priority.The only reason Congress ever put in place the clunker program is that they could do it under the guise of being green and climate friendly.Selling the new GM car at $4,000 would not do this and thus would never fly.We know that the economic reasons for any of these actions are only valid if we don't compromise the Pelosi planet.

Why not follow the cap and trade template we are going to have shoved down our throat?We will allow polluter companies to purchase credits rather than actually comply and reduce emissions.I'm not even going to address the validity of these,this is just for comparison.So,why not allow consumers to pay the penalty credit for a car that doesn't meet U.S. emissions standards?Conversely,consumers buying cars that exceed the government regulations would get rebates.

The estimated cost of a carbon offset credit is predicted by the CBO to trade at $28.This approach would not be a large expense in the scenario above.You could even throw in the other argument you would hear about safety.A less safer vehicle would result in more injuries and those costs would be borne by society in increased healthcare.So you need a penalty for that as well.

The cheapest car available currently in the U.S. is just under $10,000.Tack on the penalties to the $4,000 car and you'll still be well under this number.I don't support any of these scenarios at face value,however,we have to deal in reality and these issues are here to stay.In the interest of compromise,why not use this as a work-around to the rules in play?Car sales would go up and jobs accordingly.More to come...

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