switching gears

Dear [Senators/Congressman],

I got my first job when I was 16. I remember my first paycheck–it was $50. I was so excited because my monthly allowance had been $50 and here I had made the same amount in a part-time work week as a grocery store cashier.

I also remember going shopping soon after, thinking about how much my $50 would buy. It didn’t buy much, obviously–I looked at a few shirts before it hit me: to buy this shirt, I’d have to work X number of hours; to buy that shirt, I’d have to work Y number of hours; and if I wanted shoes or jeans or a purse on top of that, those were more hours I’d have to work.

Suddenly, my paycheck took on a whole new light. It wasn’t just cash in my teenage pocket–it was the monetary worth of my time.

I learned the value of “stuff” pretty quickly, and the value of hard work even quicker. I took pride in the fact that I no longer had to ask my dad for money to buy things that I wanted. I gained a new respect for the things he provided our family with from his paychecks.

I’m well out of college now and have been paying more and more attention to the fact that a large population of American citizens have no concept of the value of hard work, money, or what “stuff” costs.

And you–our political leaders–do very little to help them learn. Instead, you provide handouts. Handouts that send the message, “It’s okay, you don’t have to learn any important life lessons, you just have to ask and we’ll take care of you.” The recipients of such handouts rarely stop to think about who is actually paying for their benefits, and if they do realize who’s paying, they probably don’t care because hey, it’s not THEM.

And you have perpetuated the same attitude of entitlement across the broader population with the recent bailouts and programs like “Cash for Clunkers” (the CARS program). You’re printing up money that doesn’t exist to hand out to Americans to do what? Seems to me you’re trying to create a false sense of confidence in a failing economy. And you don’t seem to care who’s going to pay for it.

What good does the CARS program actually do for the environment? From the studies I’ve read, little to none. There’s nothing “green” about manufacturing new cars or destroying the “clunkers” just to save a few MPG per vehicle. Someone who trades in a Hummer (that has years and years of use ahead of it) can “upgrade” to another SUV that gets slightly better gas mileage, but the Hummer gets destroyed.

The CARS program has run out of money. That’s fine; I say END THE PROGRAM. It served its purpose of handing out cash to the people who jumped on the offer; there’s no reason to throw more money into it. Especially when that money is being printed out of thin air.

End the program, save my children the burden of paying for my neighbor’s new car.

Thank you.

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2 Comments

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2 responses to “switching gears

  1. Dave

    The cars program is the first true success story of the stimulus package, since it is the first piece to actually demonstrate the Keynes-ian money multiplyer effect on which the package was based. Basically, the theory is, for every dollar the gov’t spends a larger multiple of that amount will be added to the GDP. In the context of the cars program this is clearly evident. A $35-4500 credit from the gov’t helps someone buy a $20-30,000 car. Increased demand and increased revenue for car companies leads to job creation in the auto industry. More employed people means more consumers, means more consumer spending. The cycle continues as demand for products and services increase and, ultimately the GDP goes up and the economy as a whole becomes more healthy.

    Additional benefits include the loosening of credit markets to support car loans. Increased supply-side spending in the long run. And, since the size of the credit is connected to the amount of decrese in mpg from old car to new, a modest increase in nationwide fuel efficiency. This environmental “side benefit” is, in my opinion, just that. An extra, add on thing that is neither the focus of this program nor a real progress maker in terms of environmental policy. If this program was PRIMARILY an environmental one than yes, too much spending for too little a result. However, as an economic shot-in-the-arm, CARS is one of the biggest success stories of the obama administration thus far.

    • endapathy

      Okay, I give you points for the “economic shot-in-the-arm” analogy. You make some good points, but I still don’t agree that the program is really a “success” for the economy. (I also give you points for explaining Keynesian money multiplier because I had no idea what that was.)

      First, okay, it’s a shot in the arm. A shot of adrenaline, perhaps. But is that what the economy really needs? And wouldn’t you rather spend a billion dollars on a vaccination? Something that provides lasting protection? I realize we’re spending upwards of $700 billion to find a cure, but a $1 billion shot of adrenaline doesn’t really help.

      The auto industry may have experienced a jump in sales, but that will level back out once the money runs out again; the automakers may have been able to postpone more layoffs, but I don’t think the program actually created new jobs. I mean, I might be wrong, but weren’t the cars already manufactured? And if they weren’t, was there really enough demand to create new jobs? I think not; I’d guess just enough to keep some people employed a little longer than they otherwise would have been. And all that’s going to happen to the clunkers is they’re going to get destroyed. Which might create some wrecking-ball operator jobs for a few weeks, but nothing that’s really going to last.

      Lest I sound heartless, I do realize that every little bit helps; that some jobs are better than no jobs. My underlying problem with the program–and the entire stimulus–is that we don’t have the money. How can we actually stimulate an economy using money we don’t have? Your point about loosening up credit is completely valid, but credit is one of the major reasons we’re in this mess to begin with. How can people buying things with credit actually be contributing to the economy? It’s like Monopoly money–it’s not real until there’s cash to back it up.

      The program had enormous interest, it was successful as a shot in the arm; you’re totally right. I just don’t agree that it really stimulated anything more than the amount of interest our children are going to be paying back on this debt.

      We’ve been off the gold standard for what, 30-some years now? A little longer? I’m not sure. But it all comes down to the same principle: we don’t have another $2 billion to throw into this thing; and when that money runs out, then what? We just keep throwing money into it? When will it end? When will the shot of adrenaline be big enough?

      (Sorry if this came through more than once; it didn’t work the first time!)

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